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MARKET FORECAST: GOLD, US DOLLAR, EUR/USD, GBP/USD
- Gold prices decline on rising US Treasury yields and strengthening American dollar
- EURUSD and GBP/USD inch lower, but manages to stay above important technological levels
- The United States inflation The report is likely to be a source of volatility in the coming week.
Most read: US Dollar Looks to US CPI for Fresh Signals; Settings in EUR/USD, GBP/USD, Gold
Gold prices retreated last week in response to rising US Treasury rates. Despite rising bond yields, which can sometimes negatively impact risk assets, U.S. stocks posted strong performance, with the S&P 500 and Nasdaq 100 closing at new records.
PERFORMANCE OF THE S&P 500 AND THE NASDAQ 100
Source: TradingView
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In the currency market, the US dollar rose for the fourth consecutive week, although gains were limited. Against this backdrop, both EUR/USD and GBP/USD declined, but ultimately managed to hold above key support levels. Meanwhile, USD/JPY rose strongly, moving closer to reclaiming the 150.00 level.
Looking ahead, volatility could accelerate in the new week, courtesy of a high-impact event on the US economic calendar: the release of January inflation data on Tuesday. This could mean treacherous market conditions, so traders should be prepared for the possibility of wild price swings between assets.
NEXT US CPI REPORT
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In the grand scheme of things, a better-than-expected US CPI report should be positive for US yields and the US dollar, but bearish for stocks and gold prices. The S&P 500 and Nasdaq 100, for example, may struggle to maintain their upward trajectory if disinflation progress disappoints.
On the other hand, if inflation numbers surprise to the downside, the opposite scenario is likely to play out, resulting in lower yields and a weaker US dollar. This, in turn, should provide support for both stocks and precious metals, at least in the near term.
For a comprehensive analysis of the factors that can influence the financial markets and become a potential source of volatility in the coming trading sessions, check out the following selection of key forecasts compiled and prepared by the DailyFX team.
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FUNDAMENTAL AND TECHNICAL FORECASTS
Weekly Sterling Forecast: A week of increased news activity could be painful
The British pound remains relatively elevated despite the recent strength of the US dollar. This week may make life a little more difficult for sterling bulls.
Gold Price Forecast: US Inflation Will Dictate Direction, Volatility Looms
This article analyzes the fundamental and technical outlook for gold prices ahead of next week’s key US inflation data, examining possible scenarios that could unfold in the near term.
US Dollar Forecast: EUR/USD, GBP/USD and USD/JPY Price Action Setups
Next week the US CPI tops the all-important data agenda. This forecast considers how major currency pairs are shaping up ahead of the US CPI release.
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