Forex News

ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner say the Dollar is modestly supported into US CPI, helped by a tech-led risk-off tone and short-term undervaluation versus G10 peers. They expect January CPI to match consensus, reinforcing recent hawkish repricing in Federal Reserve expectations, but still see medium-term bearish sentiment encouraging selling into USD rallies.

Greenback supported but rallies sold

"Today’s US CPI report is likely to have a smaller market impact than Wednesday’s payrolls. The Federal Reserve has been signalling little urgency to cut again, and it’s mostly the jobs market that can move the needle."

"Incidentally, we don’t expect surprises in January’s inflation. We are aligned with consensus on a 0.3% month-on-month/2.5% year-on-year print for both headline and core CPI. That should endorse the latest hawkish repricing in Fed expectations, which has brought the dollar further into short-term undervaluation."

"That undervaluation argues – in our view – that the balance of risks is tilted to the upside in the coming days for the greenback. However, the price action of this week strongly suggests an inclination to sell the USD rallies, and we struggle to see the dollar recover substantially from here."

"One slightly encouraging development for the dollar is the seemingly positive reaction to the latest round of US tech selloff, and an indication that some safe-haven value has been restored."

"The tech selloff appears to be offering the dollar some support, suggesting that a degree of safe‑haven value has been restored. The USD is currently cheap against most G10 currencies; however, medium‑term bearish sentiment may still encourage selling into rallies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Deutsche Bank analysts describe a broad risk-off session where the S&P 500 logged a third straight decline, led by heavy losses in software and mega-cap tech. AI disruption concerns hit logistics and commercial real estate, while financials and equal-weighted indices also retreated, signalling a widening selloff beyond the Magnificent 7 and recent market leaders.

Broader equity pullback led by technology

"Overall the S&P 500 (-1.57%) slid to a third consecutive decline."

"Once again, software stocks in the index were one of the worst hit, falling -1.49%, but it was a rough day for tech in general, with the Magnificent 7 (-2.24%) and the NASDAQ (-2.03%) both losing significant ground."

"Tech stocks were in the driving seat of yesterday’s selloff, although unlike some sessions recently, the move was a broad-based one as investors reckoned with the AI-led disruption of various industries."

"S&P Financials (-1.99%) also saw a sharp decline, as the KBW Bank Index (-3.21%) posted its worst performance since October."

"There were signs of the selloff broadening out, with the equal-weighted S&P 500 (-1.31%) falling back from its record high the previous day, whilst Europe’s STOXX 600 (-0.49%) also fell back from Wednesday’s record."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Commerzbank’s strategy team keeps a constructive view on the Euro versus the Dollar, forecasting EUR/USD at 1.19 in Q1 2026 and a gradual rise to 1.22 by year-end. The bank sees robust US growth near 3% and a solid Euro area backdrop, but expects Fed to cut rates to 2.75% by the end of the first quarter next year, while the ECB holds at 2.0%, supporting a moderately higher EUR/USD over the forecast horizon.

Euro seen grinding higher versus Dollar

"Our economists have revised up their above-consensus US GDP forecast for 2026 further to 3.0% from 2.7%."

"ECB keeps rates unchanged at 2%, Fed cuts to 2.75% by March next year, BoE cuts to 3.25% by summer, BoJ hikes to 1.25% by year-end."

"12-Feb-26 EUR/USD 1.19 2026 Q1 1.19 Q2 1.20 Q3 1.22 Q4 1.22."

"Due to favourable financing conditions, the US economy should continue to expand solidly in 2026, but at a slightly slower pace."

"In light of the structural changes amid multiple crises (extensive state intervention, debt build-up, de-globalisation, war), the long-term prospects for sustainably higher growth should remain muted amid structurally higher inflation."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Gold attracts fresh buyers following the previous day’s downfall to the weekly low.
• Dovish Fed bets act as a headwind for the USD and underpin the precious metal.
• Traders now look to the latest US consumer inflation figures for a fresh impetus.

Gold (XAU/USD) sticks to modest intraday gains through the early European session on Friday, though it remains below the $5,000 psychological mark as traders keenly await the release of the US consumer inflation figures.

The crucial Consumer Price Index (CPI) report will be looked upon for more cues about the Federal Reserve's (Fed) policy path. The outlook will, in turn, play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the non-yielding bullion.

In the meantime, the upbeat US Nonfarm Payrolls (NFP) report released on Wednesday forced investors to scale back their bets for a Fed rate cut in March. This keeps the USD Index (DXY), which tracks the Greenback against a basket of currencies, afloat above a two-week low, which, in turn, triggered the overnight decline in Gold prices. That said, traders are still pricing in the possibility that the US central bank will lower borrowing costs two more times in 2026. Furthermore, Thursday's unimpressive US Jobless Claims data caps the USD.

The US Department of Labor (DOL) reported that the number of US citizens submitting new applications for unemployment insurance fell to 227K during the week ending February 7. This was higher than 222K estimated, but lower than the previous week’s revised 232K print. Moreover, Continuing Claims rose to 1.862 million during the week ending January 31, highlighting the underlying weakness in the labor market that has been prevalent over the past year. This, in turn, acts as a tailwind for the USD and revives demand for the Gold.

Furthermore, a turnaround in the global risk sentiment – as depicted by a generally weaker tone around the equity markets – turns out to be another factor driving flows toward safe-haven Gold. It remains to be seen, however, if the XAU/USD pair can build on the momentum or if bulls opt to wait for the crucial US Consumer Price Index (CPI) report before placing fresh bets.

XAU/USD 1-hour chart

Gold’s mixed technical setup warrants caution for aggressive traders

The overnight breakdown through the weekly trading range could be seen as a key trigger for the XAU/USD bears. The lack of follow-through selling and resilience below the $4,900 mark warrants some caution. The Moving Average Convergence Divergence (MACD) turns higher through the Signal line near the zero level, and the histogram flips positive, suggesting a transition to improving bullish momentum.

Moreover, the Relative Strength Index (RSI) stands at 44.72 (neutral) after rebounding from oversold territory, supporting a tentative recovery in intraday tone. With the RSI still below 50, rallies could be capped, whereas a MACD slip back beneath the Signal line and zero would reassert bearish pressure and extend consolidation. Nevertheless, the momentum remains supported while the MACD holds above zero and the positive histogram widens, though a contracting histogram would hint at fading impetus.

(The technical analysis of this story was written with the help of an AI tool.)

• The US Consumer Price Index is expected to rise 2.5% YoY in January.
• Core CPI inflation is expected to ease modestly, but above the Fed’s goal.
• EUR/USD could test its recent multi-year highs at 1.2082. 

The US Bureau of Labor Statistics (BLS) will publish January’s Consumer Price Index (CPI) data on Friday, delayed by the brief and partial United States (US) government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s (Fed) 2% target. 

The monthly CPI is forecast to remain steady at 0.3%, matching the December figure, while the annualized reading is expected at 2.5%, slightly below the 2.7% posted in the previous month. Core readings are expected at 0.3% MoM and 2.5% YoY, little changed from the previous 0.2% and 2.6%, respectively. 

Inflation data is critical for Fed officials, although the CPI is not their preferred gauge. Policymakers base their monetary policy decisions on the Personal Consumption Expenditures (PCE) Price Index. Nevertheless, CPI figures are a strong indication of where price pressures are heading and therefore tend to trigger relevant market movements. 

What to expect in the next CPI data report?

The anticipated figures are not expected to produce any shock. The CPI has been below 3% since mid-2024, but stubbornly above the desired 2%. The lowest reading in the last two years was 2.3%, posted in April 2025. One might believe that, as long as inflation remains within those parameters, the impact on financial markets will be moderate.

But it is not as simple as that. Indeed, a 2.3% or a 3% print will shake the foundations. The nearer the figure comes to the 2% goal, the higher the chances of a soon-to-come interest rate cut. Conversely, a reading near 3% wouldl dilute the odds for lower rates. That would be easy to interpret if it weren’t for US President Donald Trump’s desire for lower rates and his actions over the last year, which have sought to force policymakers' hands to the point of calling into question the Fed’s independence.

President Trump has nominated Kevin Warsh as the next Fed Chair, as Jerome Powell's term ends in May. Powell has refused to reduce interest rates simply because President Trump wants them to. Trump hopes that putting a hawk at the head of the Fed will support his case. Still, if inflation is closer to 3% than 2%, Warsh would have a hard time pleasing Trump. 

Meanwhile, a strong Nonfarm Payrolls (NFP) January report adds another factor to the Fed’s picture. The surprise improvement in the employment sector is good news for the Fed, which has lately worried that the labor market had cooled a bit too much. Yet it’s also worth reminding that an overly strong labor market also works against interest rate cuts. A strong reading that followed several weak ones is not a concern. But a couple more strong NFP reports are likely to take their toll on rate moves. 

How could the US Consumer Price Index report affect EUR/USD?

Back to the CPI release, market participants will rush to price in the Fed’s potential response to the data as soon as it is released. A reading in line with the market expectations will have no material impact on the USD trend. A yearly reading of 2.4% or below would be considered extremely positive and boost the odds for an interest rate cut, while spurring demand for the USD. On the contrary, a reading of 2.7% or higher will diminish the odds for lower rates and trigger broad USD weakness.

Valeria Bednarik, FXStreet Chief Analyst, notes: “Ahead of the US CPI announcement, the EUR/USD pair consolidates just below the 1.1900 mark. The daily chart shows the positive momentum receded, but also that buyers hold the grip, as the pair continues developing well above all its moving averages, with the 20-day Simple Moving Average (SMA) providing dynamic support in the 1.1820 region. The same chart shows technical indicators remain within positive levels, but are losing their upward slopes. Finally, the pair has retreated for three consecutive days on approaches to the 1.1930 level, converting the area into a relevant resistance zone.”

Bednarik adds: “A clear advance beyond 1.1930 should result in a test of the 1.1980 level, en route to the recent multi-year high at 1.2082. On the other hand, a clear breach of the 1.1800-20 price zone should open the door to a steeper decline, initially targeting 1.1760 and heading towards the 1.1700 threshold.” 

Nordea’s Ole Håkon Eek-Nielsen and Jan von Gerich, reiterates their call for no interest rate cuts from the Federal Reserve. Strong US growth, a tight labour market, a weaker Dollar and higher commodity prices are seen limiting disinflation. Nordea also expects higher long-end US yields as deficits stay large.

Nordea doubles down on Fed on-hold

"We keep seeing no cuts from Fed. With decent growth momentum in an economy with a weak supply side in the labour market, it seems likely that unemployment will stay at low levels. With a weakening USD, higher commodity prices and perhaps some way to go on tariff effects, it seems far from obvious that inflation eases all the way to 2% either."

"Unchanged interest rates from Fed would surprise markets, even though the amount of expected cuts have eased a bit since last autumn. We also see long end rates going higher, partly given the “sell America” trade going further, but also from high public deficits in western countries and weaker demand side given an increasing share of the population in retirement age."

"Reducing the balance sheet would probably run into higher and more volatile spread between SOFR and the Fed funds rate, at least if no other major changes were done to bank regulation. Higher long end rates would also seem likely. Both these consequences might be contained by sufficient short end rate cuts, but that is most likely reliant upon no big increase in inflation expectations."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• NZD/USD's reversal from 0.6075 highs extends below 0.6030 on Friday.
• Risk aversion is buoying the safe-haven US Dollar and weighing down the Kiwi.
• Investors remain cautious ahead of the US CPI release due later on Friday.

The New Zealand Dollar (NZD) is coming under increasing bearish pressure on Friday, amid a firmer US Dollar (USD), favoured by the dismal market mood. The pair trades below 0.6030 at the time of writing, after pulling back from 0.6076 highs on Thursday, drawing closer to the 0.6000 psychological level.

An AI-induced reversal in Wall Street has extended into Asian and European equity markets, triggering a risk-averse market mood that is underpinning demand for safe havens like the US Dollar. Investors, however, remain cautious ahead of the release of the US Consumer Price Index (CPI) numbers, due later in the day, which might provide further clues about the US Federal Reserve’s (Fed) easing calendar.

US CPI is expected to have remained steady at 0.3% in January, and to have eased to a 2.5% annualized growth from December’s 2.7% reading. The risk is on a sharper-than-expected decline in price pressures, which, in the light of the disappointing figures recently seen in the US, would boost hopes of immediate Fed cuts.

Technical Analysis

The 4-hour chart shows the NZD/USD retreating from Thursday's high with a potential Double Top formation in progress. This is a common figure to anticipate trend shifts.

Technical indicators show mounting bearish pressure. The Relative Strength Index (RSI) has dropped below the key 50 level. The Moving Average Convergence Divergence (MACD) histogram shows expanding red bars, and the MACD line has crossed below the signal line, which suggests that sellers are taking control.

Support at the 0.6020 area is holding bears for now, and closing the path to the 0.6000 level and the weekly low, at 0.5997. Key support is at 0.5928, the February 6 low, and the neckline of the Double Top pattern. Immediate resistance aligns at the area between weekly highs at 0.6577 and the late January highs at 0.6095. Further up, the 2025 peak, at the 0.6120 area, would come into focus.

(The technical analysis of this story was written with the help of an AI tool.)

Danske Research Team expects the second estimate of Euro area Q4 2025 GDP to confirm modest employment growth. National data show strong job gains in Spain but slight declines in France and Germany, leading the bank to project Euro area employment up 0.1% quarter-on-quarter. They see continued job growth as positive but indicative of a cooling labour market.

Employment growth slows as economy cools

"In the euro area, the second estimate of GDP growth in 2025Q4 will also reveal how much employment changed in the final quarter of last year."

"National data show that employment rose sharply in Spain while declined marginally in France and Germany."

"We thus expect aggregate euro area employment rose 0.1% q/q."

"The continued growth in employment is positive for the economy, but the low employment growth rate is also showing that the labour market is cooling."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)