The first half of the week has seen major currency pairs struggling to make any decisive moves as investors continue to search for the next market catalyst. However, the cautious market mood on Wednesday seems to be helping the US Dollar stage a rebound. Despite hawkish comments from Federal Reserve officials, the US Dollar Index (DXY) closed in negative territory on Tuesday, but has since made small gains. The benchmark 10-year US Treasury bond yield is also back near 3.6% following a technical correction the previous day.
UK inflation figures reported on Wednesday by the Office for National Statistics revealed that the Consumer Price Index (CPI) edged lower to 10.1% on a yearly basis in March from 10.4% in February. However, the annual Core CPI, which strips volatile food and energy prices, remained unchanged at 6.2% in the same period. This reading came in above market expectations of 9.8%. These data have supported the GBP/USD, which has gained traction and is trading above 1.2450.
The EUR/GBP cross, on the other hand, came under renewed bearish pressure and dropped below 0.8800 after the UK inflation figures were released. Meanwhile, the EUR/USD is struggling to build on Tuesday's recovery gains, but manages to hold steady slightly above 1.0950. The European Central Bank's (ECB) Chief Economist, Philip Lane, and Governing Council member Isabel Schnabel are scheduled to deliver speeches later in the day.
The Bank of Japan's (BoJ) Executive Director, Tokiko Shimizu, said on Wednesday that it is appropriate to continue easing policy for the time being, which has led to bullish momentum for the USD/JPY pair. Gold lost its traction following Tuesday's rebound and dropped below $2,000 as rising global yields, after the UK inflation data, weigh on XAU/USD mid-week.
Bitcoin gained over 3% on Tuesday and is currently in a consolidation phase above $30,000. Meanwhile, Ethereum continues to move up and down above $2,000 and is struggling to find a clear direction.
Major currency pairs are still choppy and struggling to make any definitive moves as investors remain cautious, waiting for the next market catalyst. The US Dollar is making small gains, while the GBP/USD has gained traction supported by UK inflation figures. The EUR/GBP cross has dropped, while the EUR/USD struggles to build on Tuesday's recovery gains. The Bank of Japan has said that it is appropriate to continue easing policy for the time being, leading to bullish momentum for the USD/JPY pair. Gold has lost its traction, while Bitcoin gained over 3% on Tuesday and is currently in a consolidation phase above $30,000.
