Tensions rise in the forex market ahead of the US inflation data

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Significant pairings continued to lack directional momentum and traded between narrow intraday ranges. The dollar gained support from rising government bond yields, which reached 1.97 percent on the US 10-year Treasury note. On the other hand, the strength of yields was barely enough to keep the dollar from falling.
The EUR/USD pair temporarily broke beyond the 1.1400 barriers before settling in the 1.1410 range. By the end of the day, comments from European Central Bank member Francois Villeroy had placed some pressure on the common currency, claiming that the market had overreacted to President Christine Lagarde's remarks last week.
Boris Johnson, the Prime Minister of the United Kingdom, reshuffled his government. Mark Spencer has taken over as the new leader of the Commons, replacing Jacob Rees-Mogg as Brexit Minister. Chris Heaton-Harris will take over as chief whip, with Paymaster General Michael Ellis taking on the additional post of Cabinet Office minister. The decision comes as the lockdown parties are embroiled in a controversy threatening Johnson's leadership. The GBP/USD exchange rate is now hovering at 1.3550.

The AUD/USD pair is trading near the 0.7140 level for the second day in a row. Lower oil prices hampered demand for the Canadian currency. Therefore, the USD/CAD pair crept higher and hovered around 1.2700. The dollar gained ground versus the safe-haven CHF and JPY.

Gold soared to a new two-week high of $1,828.36 per troy ounce, where it remained through the day. WTI is currently trading at $89.80 per barrel.

Market participants anticipate the release of US inflation data for January on Thursday.




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