Daily Forex News by XtremeMarkets.com

xtrememarkets · January 20

GBP/JPY rises toward 212.40 ahead of key UK jobs data

The GBP/JPY pair trades slightly higher around 212.45 during the Asian session on Tuesday, supported by broad weakness in the Japanese Yen (JPY). The Yen came under pressure after Japan’s Prime Minister, Sanae Takaichi, announced plans for a snap general election on Monday.

PM Takaichi confirmed that the lower house of parliament will be dissolved on January 23, with elections scheduled for February 8. On the fiscal front, she pledged to move away from what she described as “excessively tight fiscal policy,” including a proposal to suspend the consumption tax for two years.

These policy signals are viewed as inflationary for Japan’s economy and could reinforce expectations for further interest rate increases by the Bank of Japan (BoJ). The central bank is set to deliver its first monetary policy decision of the year on Friday and is widely expected to keep rates unchanged at 0.75%, while maintaining a hawkish bias toward future tightening.

Meanwhile, the Pound Sterling (GBP) is posting modest gains against the Yen but remains broadly subdued ahead of the United Kingdom’s employment data for the three months ending in November. Market forecasts suggest the ILO unemployment rate eased to 5.0% from 5.1% in the prior period, marking a slight improvement from its highest level since October 2021.

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xtrememarkets · January 21

UK CPI forecast to tick higher in December, curbing expectations of BoE rate cuts

The UK Office for National Statistics (ONS) is set to publish the December Consumer Price Index (CPI) data on Wednesday at 07:00 GMT, a release closely watched by financial markets. Economists anticipate a mild pickup in inflation, suggesting price pressures may be regaining momentum.

Inflation remains a key input for the Bank of England (BoE) and a major driver of movements in the British Pound (GBP). With the next Monetary Policy Committee (MPC) meeting scheduled for February 5, markets largely expect policymakers to keep the Bank Rate unchanged at 3.75%. However, this week’s inflation data is likely to influence expectations around the future policy path.

What to expect from the December UK inflation data
Headline CPI is forecast to rise to 3.3% year-on-year in December, slightly above November’s 3.2%. On a monthly basis, consumer prices are expected to rebound by 0.4%, reversing the 0.2% contraction seen in the prior month.

Core CPI—which excludes volatile food and energy prices and is more closely monitored by the BoE—is expected to remain steady at 3.2% annually. Month-on-month, core inflation is projected to increase by 0.3%, following a 0.2% decline in November.

Potential impact on GBP/USD

At its December meeting, the BoE’s MPC voted narrowly (5–4) to cut the policy rate by 25 basis points to 3.75%, marking the fourth rate reduction of 2025. While policymakers acknowledged easing inflationary pressures and early signs of labour market cooling, they emphasized that any further easing would proceed cautiously.

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xtrememarkets · January 22

EUR/USD Price Forecast: Probes 1.1700 resistance after EMA bounce

EUR/USD ticks higher after posting mild losses in the prior session, hovering near the 1.1700 mark during early Asian trade on Thursday. From a technical standpoint, the daily chart still shows the pair trading within a descending channel, pointing to a prevailing bearish undertone.

The pair is holding marginally above the 50-day Exponential Moving Average (EMA), while the nine-day EMA has stabilised following recent weakness. The flattening of the medium-term average suggests consolidation rather than a renewed directional move. With the faster EMA still positioned below the 50-day, buyers require stronger follow-through to build upside momentum.

Momentum indicators offer cautious support. The 14-day Relative Strength Index (RSI) sits near 52 and is edging higher, reflecting a neutral but improving bias. A continued rise in the RSI would help validate any upside breakout, whereas a stall around the midpoint could keep prices confined to a range.

On the downside, a move back below the 50-day EMA at 1.1674 and the nine-day EMA at 1.1672 would shift focus toward the seven-week low at 1.1589, last seen on December 1, ahead of the lower boundary of the descending channel near 1.1570.

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xtrememarkets · January 23

Japanese Yen hovers near one-week low against USD ahead of BoJ press conference

The Japanese Yen (JPY) remains under pressure near its weekly low versus the US Dollar following the Bank of Japan’s (BoJ) widely anticipated decision to keep short-term interest rates unchanged. Market participants remain cautious, refraining from fresh directional bets as they await guidance on the timing of any further policy tightening. In this context, comments from BoJ Governor Kazuo Ueda during the post-meeting press conference are expected to play a decisive role in shaping near-term JPY price action.

Meanwhile, domestic political uncertainty, concerns over Japan’s fiscal position, and an overall risk-positive market environment continue to weigh on the safe-haven Yen. A modest rebound in the US Dollar has also provided support to the USD/JPY pair. However, persistent speculation that Japanese authorities could step in to curb excessive currency weakness is prompting traders to remain cautious before positioning for further downside in the Yen.

Japanese Yen maintains bearish tone amid political and fiscal concerns

As widely expected, the Bank of Japan concluded its two-day policy meeting on Friday by maintaining the short-term interest rate at 0.75%. Attention now turns to Governor Ueda’s press briefing, which could offer fresh clues on the future policy path and influence the near-term direction of both the JPY and USD/JPY.

Earlier data showed that Japan’s National Consumer Price Index (CPI) eased to 2.1% year-on-year in December from 2.9% previously. Core CPI, which excludes fresh food, slowed to 2.4% from 3.0% in November. Meanwhile, CPI excluding both fresh food and energy dipped slightly to 2.9% from 3.0%, though it remains comfortably above the BoJ’s 2% target.

These inflation readings continue to support expectations that the BoJ may pursue further policy normalization. Adding to the optimism, a private-sector survey revealed that Japan’s manufacturing activity expanded in January for the first time in seven months. The S&P Global flash manufacturing PMI climbed to 51.5—its highest level since August 2024—while the services PMI improved to 52.8 from 51.1.

On the political front, Prime Minister Sanae Takaichi is set to dissolve parliament ahead of a snap election scheduled for February 8, aiming to secure a stronger mandate to advance fiscally expansionary reforms. However, investor confidence has been shaken by her proposal to temporarily cut the 8% food consumption tax, triggering a sharp sell-off in government bonds and adding further pressure on the Yen.

At the same time, easing geopolitical tensions—following US President Donald Trump’s announcement of a potential NATO-related deal involving Greenland—have reduced demand for traditional safe-haven assets, further undermining the JPY.

In contrast, expectations of a more hawkish BoJ stance stand in sharp divergence with growing market conviction that the US Federal Reserve will cut interest rates at least twice this year. Additionally, broader de-dollarization trends have offset strong US economic data, pulling the US Dollar back toward a two-week low and potentially limiting further upside in USD/JPY.

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xtrememarkets · January 26

EUR/USD Price Forecast: Pair climbs toward four-year high near 1.1920

The EUR/USD pair advances around 0.36%, trading close to the 1.1900 level during Monday’s Asian session. The pair gains strength as the US Dollar continues to weaken, extending last week’s losses ahead of the Federal Reserve’s monetary policy decision scheduled for Wednesday.

At the time of writing, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is down nearly 0.4% around the 97.00 mark, its lowest level in four months.

The US Dollar remains under strong selling pressure as investors stay concerned about the United States’ long-term trade relationships with key partners. These worries persist even after recent geopolitical frictions and trade tensions between Washington and several European Union members have eased.

Market expectations suggest the Federal Reserve will keep interest rates unchanged within the 3.50%–3.75% range on Wednesday, according to the CME Fed Watch tool. This would mark the Fed’s first pause following three consecutive rate cuts. The central bank lowered rates by a total of 75 basis points in late 2025 to support a weakening labor market.

Looking ahead, the Euro’s direction this week will largely depend on the release of preliminary Q4 Eurozone Gross Domestic Product (GDP) data and Germany’s Harmonized Index of Consumer Prices (HICP) figures for January.

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xtrememarkets · January 27

Japanese Yen eases from near three-month peak against USD; upside outlook remains intact

The Japanese Yen (JPY) trades modestly lower during the Asian session on Tuesday, snapping a two-day winning streak and pulling back from its strongest level since November 2025 against the US Dollar. The pullback comes as investors grow increasingly uneasy about Japan’s fiscal position following Prime Minister Sanae Takaichi’s expansive spending and proposed tax-cut measures. A generally positive risk mood further weighs on the safe-haven JPY, while domestic political uncertainty persists ahead of the snap election scheduled for February 8.

That said, downside momentum in the Yen appears limited. Speculation that Japanese authorities could step in to curb excessive currency weakness continues to deter aggressive bearish positioning, especially as the Bank of Japan (BoJ) maintains a hawkish policy bias. Meanwhile, the US Dollar remains pinned near a four-month low amid expectations that the Federal Reserve will deliver two additional rate cuts this year. This divergence keeps a lid on any meaningful USD/JPY recovery, with traders awaiting direction from the highly anticipated two-day FOMC meeting that begins later today.

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xtrememarkets · January 28

EUR/USD slips below 1.2000 as US Dollar rebounds, focus shifts to Fed decision

The EUR/USD pair moves lower toward the 1.1990 region during the early European session on Wednesday, ending a four-day winning streak. The pullback comes after the pair retreated from a fresh five-year high, driven by a modest rebound in the US Dollar (USD). Market attention now turns firmly to the US Federal Reserve’s interest rate decision later in the day.

On Tuesday, US President Donald Trump stated that he would soon announce his choice for the next Federal Reserve Chair, adding that interest rates would decline under the new leadership. These remarks have raised concerns among investors about the Fed’s independence if a Trump-backed candidate is appointed. Such uncertainty could limit upside potential for the USD and offer underlying support to EUR/USD.

Investors widely expect the Federal Reserve to keep interest rates unchanged within the 3.50%–3.75% range. However, traders will closely analyze the accompanying statement and press conference for signals on the timing and pace of potential rate cuts.

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xtreamforex26 · January 30

Japanese Yen remains under pressure after weak Tokyo CPI; USD/JPY rises toward 154.00

The Japanese Yen (JPY) continues to trade on the back foot during Friday’s Asian session. Modest US Dollar (USD) buying, combined with lingering yen weakness, keeps the USD/JPY pair supported near the 154.00 level. Softer Tokyo inflation data has cooled expectations for an early interest rate hike by the Bank of Japan (BoJ). At the same time, concerns over Japan’s fiscal position—amid Prime Minister Sanae Takaichi’s reflation-focused policies—and political uncertainty ahead of the February 8 snap election are weighing further on the JPY.

That said, speculation about potential coordinated intervention by US and Japanese authorities to support the yen may deter traders from taking aggressive bearish positions. In addition, global trade tensions sparked by US President Donald Trump’s tariff threats, along with broader geopolitical risks, could help limit downside for the safe-haven JPY. Meanwhile, the USD lacks strong upside momentum due to lingering concerns over Federal Reserve independence and expectations of lower US interest rates, warranting caution before betting on sustained USD/JPY gains.

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xtreamforex26 · February 3

Japanese Yen Holds Firm Against USD as Intervention Talk Counters Fiscal Worries

The Japanese Yen (JPY) maintains a modest upside bias against a slightly weaker US Dollar (USD) during Tuesday’s Asian session, supported by renewed speculation over possible joint currency intervention by Japan and the United States. Comments from Japan’s Finance Minister Satsuki Katayama reignited such concerns, while expectations of a more hawkish Bank of Japan (BoJ) further underpin the JPY. As a result, USD/JPY has retreated from the more-than-one-week high posted on Monday.

That said, the Yen’s upside remains limited amid domestic political uncertainty ahead of the February 8 snap election and lingering fiscal concerns linked to Prime Minister Sanae Takaichi’s reflationary agenda. In addition, a generally positive tone in global equity markets weighs on demand for the safe-haven JPY. Meanwhile, the nomination of Kevin Warsh as the next Federal Reserve Chair provides support to the USD, helping cap deeper losses in the USD/JPY pair.

Katayama’s remarks revive intervention concerns, supporting the Yen

Finance Minister Satsuki Katayama stated on Tuesday that Japan will continue to closely coordinate with US authorities when necessary, in line with a joint statement issued by both countries last September, and will respond appropriately to currency moves.

She also defended Prime Minister Takaichi’s earlier comments highlighting the broader economic benefits of a weaker Yen, clarifying that the remarks were made in general terms rather than as a policy signal.

Meanwhile, the Summary of Opinions from the BoJ’s January meeting revealed that policymakers discussed growing inflationary pressures stemming from Yen weakness, reflecting a relatively hawkish tone among board members.

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xtreamforex26 · February 4

EUR/USD edges higher above 1.1800 ahead of Eurozone inflation data

The EUR/USD pair trades modestly higher around 1.1830 during early European trading on Wednesday. However, upside momentum may remain capped as investors stay cautious following the swift resolution of a partial US government shutdown. Market attention later in the session will turn to the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data, which could influence near-term price action.

According to reports, US President Donald Trump signed legislation on Tuesday to end the partial government shutdown that began over the weekend. The bill narrowly passed the House of Representatives with a 217–214 vote. This development, combined with Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair, may lend support to the US Dollar by easing concerns surrounding fiscal uncertainty and central bank independence.

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xtreamforex26 · February 5

EUR/GBP edges higher near 0.8650 ahead of BoE and ECB policy decisions

The EUR/GBP pair trades modestly higher around the 0.8650 level during the late Asian session on Thursday. The uptick comes as the Pound Sterling underperforms, with traders remaining cautious ahead of the Bank of England’s (BoE) monetary policy announcement scheduled for 12:00 GMT.

The BoE is widely expected to keep interest rates unchanged at 3.75% following a rate cut at its previous meeting. Policymakers had earlier signaled that monetary policy would continue on a “gradual downward path.” As a result, market participants will closely analyze the policy statement and Governor Andrew Bailey’s press conference for clearer guidance on the future interest rate outlook.

The UK central bank is likely to maintain its stance on gradual easing, citing subdued labor market conditions and expectations that inflation will return to the 2% target in the second quarter of this year. However, recent data showed that Consumer Price Index (CPI) inflation picked up in December after easing in October and November, adding a layer of uncertainty to the outlook.

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xtreamforex26 · February 6

Australian Dollar stays under pressure amid cautious market mood

The Australian Dollar (AUD) extended its losses against the US Dollar (USD) for a third consecutive session on Friday, as broad risk aversion weighed on global markets. The risk-sensitive, commodity-linked AUD came under selling pressure after a sharp decline in global equities, driven largely by a tech-led sell-off and renewed concerns over heavy investment in artificial intelligence, which dented overall investor confidence.

Adding to the downside, Reserve Bank of Australia (RBA) Governor Michele Bullock stated that the central bank lifted the Official Cash Rate (OCR) because the economy is more capacity-constrained than previously assessed, requiring tighter monetary policy. Bullock emphasized that demand growth must be restrained unless supply capacity improves at a faster pace.

Meanwhile, Australia’s Trade Balance data released on Thursday showed that the trade surplus widened to AUD 3,373 million in December 2025, up from a downwardly revised AUD 2,597 million in November and slightly above market expectations of AUD 3,300 million. Exports rose 1.0% month-on-month (MoM), recovering from an upwardly revised 4.0% fall in November, supported mainly by metal ores and minerals. Imports declined by 0.8% MoM, a sharper drop than the revised 0.2% contraction previously recorded, largely due to weaker demand for other merchandise goods.

Earlier this week, the RBA raised the OCR by 25 basis points to 3.85%, citing stronger-than-expected economic growth and persistently high inflation. As the tightening cycle continues, markets now assign an 80% probability to another rate hike in May and are pricing in around 40 basis points of additional tightening over the remainder of the year.

US Dollar eases after recent gains

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, edged lower after two straight sessions of gains and was hovering near the 97.90 level at the time of writing.

Market participants are awaiting the preliminary February reading of the Michigan Consumer Sentiment Index, scheduled for release later in the North American session.

The US Dollar softened as recent labor market data pointed to easing employment conditions, reinforcing expectations that the Federal Reserve may adopt a more dovish stance. Markets are currently pricing in two interest-rate cuts this year, with the first potentially beginning in June, followed by another in September.

According to the CME Fed Watch Tool, there is nearly a 77.3% probability that the Federal Reserve will keep interest rates unchanged at its March policy meeting, with expectations building for an initial rate cut in June.

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xtreamforex26 · February 11

EUR/USD moves higher above 1.1900 ahead of US January NFP report

The EUR/USD pair advances toward 1.1915 in early European trading on Wednesday, supported by a softer US Dollar. Investors are likely to adopt a cautious stance later in the session as they await the delayed US January employment report, which could shape expectations around Federal Reserve policy.

Disappointing US Retail Sales figures weighed on the Greenback and provided support to the pair. According to data released by the US Census Bureau on Tuesday, Retail Sales were flat at $735 billion in December, following a 0.6% increase in November. The result fell short of market expectations for a 0.4% rise. On an annual basis, Retail Sales grew by 2.4% in December, down from 3.3% previously.

Cleveland Fed President Beth Hammack stated that interest rates may remain unchanged for an extended period as policymakers assess incoming data. Dallas Fed President Lorie Logan added that while inflation is expected to ease further, she would require clear signs of significant weakness in the labor market before backing additional rate cuts.

Economists forecast that US Nonfarm Payrolls increased by 70,000 in January, with the Unemployment Rate seen holding steady at 4.4%. Stronger-than-expected labor market data could lend fresh support to the US Dollar against the euro in the near term.

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xtreamforex26 · February 12

EUR/USD weakens as US jobs data trims Fed rate cut bets

The EUR/USD pair trades in negative territory for the third consecutive day near 1.1860 during the early European session on Thursday. Traders will keep an eye on the US weekly Initial Jobless Claims data. On Friday, the attention will shift to the US Consumer Price Index (CPI) inflation report.

The Greenback strengthens against the Euro (EUR) as traders trim bets for a March Federal Reserve (Fed) rate cut after the upbeat US jobs data. The Bureau of Labor Statistics revealed on Wednesday that the US Nonfarm Payrolls (NFP) climbed by 130,000 in January, stronger than the expectation of 70,000. The Unemployment Rate fell to 4.3% in January from 4.4% in December, better than the projection of 4.4%.

According to the CME Fed Watch tool, financial markets are now pricing in nearly a 94% probability that the Fed will leave rates unchanged at its next meeting, up from 80% from the previous day.

Across the pond, the growing acceptance that the European Central Bank (ECB) would likely hold interest rates steady for the rest of the year could support the shared currency. ECB President Christine Lagarde said during the press conference that the central bank would maintain its data-dependent and “meeting-by-meeting approach” and would not be “recommitting to a particular rate path.

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xtreamforex26 · February 20

EUR/GBP slips below 0.8750 after stronger UK Retail Sales

The EUR/GBP pair edged lower to around 0.8735 in early European trading on Friday. The Pound gained against the Euro following better-than-expected UK economic figures. Later in the day, markets will focus on the preliminary Purchasing Managers’ Index (PMI) reports from the Eurozone, Germany, and the United Kingdom.

Figures released by the Office for National Statistics (ONS) showed UK Retail Sales rose 1.8% month-on-month in January, up from 0.4% previously and well above the 0.2% increase economists had predicted. On a yearly basis, sales increased 4.5%, compared with 1.9% previously (revised from 2.5%), also beating the 2.8% forecast. The stronger data supported the Pound, drawing immediate buying interest.

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xtreamforex26 · February 23

NZD/USD trims early advance while the US Dollar stays weak

The NZD/USD pair pulled back from its intraday highs during Monday’s early European session after meeting resistance near the key 0.6000 level. Even so, the pair remains slightly positive, trading around 0.5980, supported by a softer US Dollar amid fresh uncertainty surrounding US trade policy.

At the time of writing, the US Dollar Index (DXY), which measures the Greenback against six major currencies, has fallen about 0.35% to roughly 97.45.

The Dollar lost appeal after the US Supreme Court ruled President Donald Trump’s tariff policy unlawful. In response, Trump proposed a 15% global tariff plan to counter the impact of the ruling, increasing policy uncertainty.

Additional pressure on the Dollar comes from weak economic data. Fourth-quarter GDP figures disappointed, and the S&P Global Purchasing Managers’ Index (PMI) for February showed slower-than-expected growth, reinforcing concerns about economic momentum.

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xtreamforex26 · February 24

EUR/USD rises toward 1.1800 as trade tensions pressure the US Dollar

The EUR/USD pair trades firmer near 1.1795 in early Asian trading on Tuesday, supported by a softer US Dollar (USD). Ongoing uncertainty surrounding US trade tariffs is weighing on the Greenback and helping the Euro (EUR) gain ground. Meanwhile, markets are also watching the US January Producer Price Index (PPI) report due later this week.

On Friday, the US Supreme Court invalidated several tariffs previously introduced by President Donald Trump. Despite the ruling, the administration signaled it will continue its trade stance and plans to introduce a fresh 15% tariff on Saturday.

In response, the European Union has taken a cautious approach. The European Parliament’s trade leadership indicated the EU may pause ratification of a trade agreement with the United States until greater clarity on Washington’s trade policy is provided. The renewed uncertainty around trade relations has pressured the USD and supported the currency pair.

European Central Bank (ECB) President Christine Lagarde stated Monday that policymakers must remain flexible when setting interest rates. She added that decisions will continue to be made on a meeting-by-meeting basis, noting that risks to the economic outlook currently appear balanced.

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xtreamforex26 · February 25

GBP/USD Holds Firm Above 1.3500 After Trump’s State of the Union Address

The GBP/USD pair extends its advance for a fourth straight session, trading near 1.3510 during Wednesday’s Asian session. The Pound Sterling remains supported as the US Dollar stays under pressure following US President Donald Trump’s first State of the Union address of his second term before Congress.

In his speech, Trump claimed his administration had delivered a significant economic turnaround, pointing to easing inflation and a stronger economic backdrop. He also emphasized efforts to combat illegal immigration and restrict fentanyl trafficking across US borders. However, Trump signaled the possibility of raising tariffs on nations that challenge existing trade arrangements, particularly after the Supreme Court blocked several of his broad global tariff measures.

Despite the recent softness in the US Dollar, expectations that the Federal Reserve may maintain current interest rates for an extended period could limit further downside. Boston Fed President Susan Collins stated that keeping rates within the current range remains appropriate for now. Similarly, Richmond Fed President Thomas Barkin said policy settings are well-positioned to address economic uncertainties.

In the UK, economic data painted a weaker picture of the retail sector. The Confederation of British Industry (CBI) reported that its Retail Sales Balance declined sharply to -43 in February from -17 in January, falling short of expectations. Retail activity has been under strain since mid-2023, with February marking a notable drop. Businesses described seasonal trading as disappointing and anticipate continued pressure due to subdued consumer demand.

Meanwhile, Bank of England Governor Andrew Bailey told the Treasury Committee that a potential rate cut in March remains under consideration. He highlighted that services inflation stood at 4.4% in January, above the Bank’s forecast of 4.1%. Chief Economist Huw Pill also urged caution, noting that policymakers should not be overly encouraged by headline inflation moving closer to the 2% target.

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xtreamforex26 · February 26

Canadian Dollar stays firm above 1.3650 as US tariff worries weigh on USD

The USD/CAD pair trades slightly lower near 1.3670 during Thursday’s early European session. The US Dollar weakens against the Canadian Dollar as uncertainty around US economic policy and renewed concerns over higher import tariffs pressure the Greenback. Investors are now awaiting Canada’s Gross Domestic Product (GDP) figures and the US Producer Price Index (PPI) report due on Friday.

On Wednesday, US Trade Representative Jamieson Greer said that President Donald Trump is considering increasing tariffs to 15% or more on several countries in the coming days. The authority would apply for up to 150 days unless Congress grants an extension. These remarks have reduced confidence in the US Dollar and encouraged selling pressure.

Ongoing geopolitical tensions may also support crude oil prices, which typically benefits the Canadian Dollar. Canada is a major oil exporter, so stronger oil prices usually strengthen the CAD. Traders are also watching developments in the US-Iran nuclear discussions, as officials from both countries are scheduled to meet in Geneva for another round of indirect talks.

Market attention now shifts to the US January PPI data. Economists expect producer inflation to rise 0.3% month-on-month, slower than December’s 0.5% increase. On a yearly basis, PPI is forecast to grow 2.6% compared to the previous 3.0%. However, a stronger-than-expected reading could reduce expectations of future rate cuts and provide short-term support to the US Dollar against the Canadian Dollar.

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xtreamforex26 · February 27

EUR/USD edges higher near 1.1800 ahead of Germany’s flash inflation release

The EUR/USD pair moves slightly higher, trading around 1.1810 during the late Asian session on Friday, as investors await Germany’s preliminary inflation figures for February, including data from its major states.

Germany’s flash Harmonized Index of Consumer Prices (HICP) is projected to rise 0.5% month-on-month, recovering from a 0.1% decline in January. On an annual basis, inflation is expected to hold steady at 2.1%.

However, the German inflation reading is unlikely to significantly alter expectations for the Eurozone’s interest rate path. European Central Bank (ECB) President Christine Lagarde stated on Thursday, during her address to the European Parliament’s Committee on Economic and Monetary Affairs (ECON), that she remains confident inflation will stabilize around the ECB’s 2% target in the near term.

Regarding policy guidance, Lagarde emphasized that interest rate decisions will depend on the evolving inflation outlook and associated risks. She reiterated that the ECB will maintain a data-dependent, meeting-by-meeting approach when determining its monetary policy stance.

On the other side, the US Dollar softens slightly ahead of the release of the US Producer Price Index (PPI) data for January, scheduled for 13:30 GMT. The US Dollar Index (DXY), which measures the Greenback against six major currencies, is trading 0.1% lower near 97.65 at the time of writing.

Market participants will closely analyze the PPI report for fresh insights into inflation trends. Producer price data could meaningfully influence expectations for the Federal Reserve’s policy direction, especially as several Fed officials have recently supported keeping interest rates steady due to persistent inflation risks.

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