Markets Week Ahead: Gold Dips as Stocks Fly; EUR/USD, GBP/USD Await US Inflation

In the FX market, the U.S. dollar climbed for the fourth consecutive week, although gains were limited. In this context, both EUR/USD and GBP/USD edged lower, but ultimately managed to hold above key support levels. USD/JPY, meanwhile, rallied strongly, coming close to regaining the 150.00 handle.

Looking ahead, volatility could accelerate in the new week, courtesy of a high-impact event on the U.S. economic calendar: the release of January inflation data on Tuesday. This could mean treacherous market conditions, so traders should be prepared for the possibility of wild price swings across assets.



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In the grand scheme of things, a hotter-than-expected U.S. CPI report should be positive for U.S. yields and the U.S. dollar, but bearish for stocks and gold prices. The S&P 500 and Nasdaq 100, for instance, may face challenges in sustaining their upward trajectory if progress on disinflation disappoints.

On the flip side, if inflation numbers surprise to the downside, the opposite scenario is likely to unfold, resulting in lower yields and a weaker U.S. dollar. This, in turn, should provide support for both equities and precious metals, at least in the short term.

For a comprehensive analysis of the factors that may influence financial markets and become a potential source of volatility in the upcoming trading sessions, check out the following selection of key forecasts compiled and prepared by the DailyFX team.

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