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US Dollar Up Ahead of US CPI; Setups on Gold, USD/JPY and GBP/USD


  • THE US Dollar evolves without directional conviction Monday before the United States CPI data
  • January US inflation report to attract market attention on Tuesday
  • This article focuses on the technical perspectives of gold price, USD/JPY And GBP/USD

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The US dollar, as measured by the DXY index, traded nervously at the start of the new week, oscillating up and down around a flat line without making significant progress in either direction, amid mixed US Treasury yields.

Monday’s moderate moves in the foreign exchange arena, along with low volatility, could be attributed to cautious positioning ahead of a high-impact event on the U.S. economic calendar Tuesday morning: the release of U.S. data. consumer price index for January.

The upcoming report is expected to show that annual headline inflation moderated to 2.9% last month from 3.4% previously, a welcome development for the US central bank. Core CPI is also expected to slow, but more gradually, to 3.7% from 3.9% in December.

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To assess the potential market response to data on major financial assets, traders should compare official results to consensus forecasts, paying particular attention to the trend of basic indicators.

If progress on disinflation hits a roadblock and CPI numbers surprise to the upside, yields and the US dollar are likely to extend their recent rebound, weighing on gold prices. Indeed, persistent inflation could push back the timing of the FOMC’s first rate cut and reduce the chances of aggressive easing in 2024.

On the other hand, if the CPI numbers are lower than expected, the opposite reaction could occur, especially if the deviation is large. Under such circumstances, bond yields and the greenback could undergo a sharp downward correction in the short term, thereby boosting precious metals.

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Gold (XAU/USD) fell on Monday, but losses were limited as the precious metal lacked strong directional conviction – a sign of market indecision. For more attractive trading setups to develop, resistance at $2.065 or support at $2.005 must give way.

If resistance is broken, a rally towards $2,085 could quickly follow. With continued strength, attention will soon shift to the all-time high near $2,150. Conversely, if the support is crossed, attention will shift to $1,990, followed by $1,975. Below this area, the next key technical floor lies at $1,965.


Gold Price Chart Created Using TradingView

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USD/JPY edged higher on Monday, consolidating above technical support at 148.90. If prices continue to rise in the coming days, resistance will emerge around the psychological level of 150.00. Bulls may struggle to break through this barrier, but in the event of a bullish breakout, a retest of the 152.00 area is likely.

Conversely, if the pair turns lower and breaks the support at 148.90, the selling momentum could accelerate, paving the way for a decline towards 147.40. Further losses from this point could focus attention on the 146.00 handle, followed by 145.50, the 50-day simple moving average.


USD/JPY chart created using TradingView

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GBP/USD staged a moderate comeback after a selloff earlier in the month, reclaiming its 200-day simple moving average and consolidating above the 1.2600 mark. If the cable rally continues over the next few trading sessions, resistance looms at 1.2675 (50-day SMA), followed by 1.2740.

On the other hand, if GBP/USD resumes its bearish reversal and falls below 1.2600, trendline support and the 200-day simple moving average appear at 1.2565. The bulls will have to defend this technical zone tooth and nail; failure to do so could result in a move towards 1.2500.


GBP/USD chart created using TradingView

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