The U.S. dollar remained uncertain on Monday as it fluctuated without any clear direction, especially due to mixed U.S. Treasury yields. This lack of movement was likely a result of the cautious stance taken by traders ahead of the release of the January consumer price index (CPI) statistics, scheduled for Tuesday. The upcoming report is expected to reveal a moderation in annual headline inflation, which could impact the U.S. central bank’s decisions.
Traders were advised to closely monitor how official CPI results compare to consensus forecasts, particularly focusing on the trend in core metrics. Depending on the outcome, gold prices could be affected, as sticky inflation might delay the timing of a potential FOMC rate cut and reduce the likelihood of aggressive easing in 2024. Conversely, lower-than-expected CPI figures could prompt a different reaction, potentially leading to corrections in bond yields and the U.S. dollar. This, in turn, could boost the prices of precious metals.
In addition to gold prices, the article also delved into the technical outlook for USD/JPY and GBP/USD. The former saw modest upward movement on Monday, consolidating above technical support, while the latter experienced a moderate comeback after a prior sell-off. Resistance and support levels for both currency pairs were identified and discussed in the technical analysis section, providing traders with valuable insights into potential price movements in the coming days.
