EURUSD slips from bull’s radar as US Dollar pares weekly loss

Firmer US Q4 GDP renewed hawkish Fed bets as traders await the US PCE Inflation data on Friday. The same join the Reuters poll suggesting challenges to economic growth and US policymakers' struggle to win over debt ceiling troubles to add strength to the US Dollar.

As a result, the commodities and Antipodeans extend the post-GDP losses while the USDJPY becomes an exception amid the BoJ’s attempt to limit YCC policy.

That said, GBPUSD appears the biggest loss versus the greenback as UK Chancellor Hunts resists stepping back from Conservatives’ pressure to retreat from tax hike plans. On the same line is the EURUSD pair as ECB hawks jostle with the upbeat US data and firmer Treasury yields.

It should be noted that the Gold price confirms a bearish chart formation during the second day of downside but Crude oil struggles to defend a three-week uptrend.

Moving on, BTCUSD and ETHUSD both print two-day losses as USD rebound joins regulatory fears surrounding the crypto industry.

Following are the latest moves of the key assets:

• Brent oil prints mild gains around $87.50 while bracing for three-week uptrend.
• Gold snaps five-week winning streak on confirming rising wedge, down 0.25% intraday near $1,925 by the press time.
• USD Index extends post GDP rebound to 102.00 at the latest.
• Wall Street closed mixed with mild gains and allowed the Asia-Pacific bulls to track the upside momentum. However, equities in Europe and the UK are mildly offered at the latest.
• BTCUSD and ETHUSD seesaw near the multi-day high, down for the second consecutive day near $22,980 and $1,580 as we write.

US Dollar rebounds ahead of next week’s Fed

As widely expected, the US GDP offered a positive surprise and triggered the US Dollar’s corrective bounce from the multi-month low, which in turn teases the DXY bulls ahead of the Fed’s preferred inflation gauge i.e. US Core PCE Price Index. Also keeping the greenback buyers hopeful were the upbeat Durable Goods Orders and hopes of overcoming debt ceiling problems.

However, the market players aren’t totally convinced as details of the data dump showed easing inflation pressure, which in turn challenges the Fed’s hawkish bias and may push the policymaker towards pivoting the rates after February.

Elsewhere, the EURUSD pares recent gains as the absence of ECB talks joins the firmer US data and a recovery in the US bond yields. 

Alternatively, the Bank of Japan’s defense of the Yield Curve Control (YCC) policy drowned the USDJPY pair while the AUDUSD remains depressed amid downbeat PPI data and the broad US Dollar strength.

Gold appears lucrative for the sellers as it confirms a rising wedge but Crude oil remains sidelined and stays on the buyer’s radar amid hopes of more energy demand and the OPEC+ favor for output cuts.

Elsewhere, BTCUSD and ETHUSD keep grinding as the crypto industry news struggles to convince buyers amid fears of more US regulations.

• Strong buy: GBPUSD
• Strong sell: ETHUSD, USDJPY
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Nothing more important than the Fed’s favorite inflation gauge

Although the risk catalysts and the second-tier sentiment data may entertain market players, the market players will be more interested in the US Core PCE Price Index for December, the Fed’s preferred inflation number, as traders appear divided on the policy pivot. Should the inflation precursor arrive softer, the US Dollar may reverse its latest gains and could decline further, amid hopes of dovish Fed rate hikes. The same, however, might enable the EURUSD bulls to refresh multi-month highs as the ECB hawks remain united.

May the trading luck be with you!