US DOLLAR MOVES SIDEWAYS AHEAD OF FOMC MINUTES

The British pound was little changed after the Office of National Statistics (ONS) published the latest consumer inflation data. The numbers revealed that the headline and core inflation rose on a year-over-year basis. The two rose by 5.5% and 4.4%, respectively. But they also declined by 0.1% and 0.4% on a month-over-month basis. A notable figure showed that house prices in the UK rose by 10.8% in December. The number confirmed the readings of Halifax and Nationwide Societies. Therefore, considering that UK’s unemployment rate has also declined, analysts expect a series of rate hikes by the Bank of England.

The US dollar eased slightly against key currencies as traders waited for the Fed minutes scheduled for later today. The minutes will provide more color about deliberations by the Federal Open Market Committee (FOMC) when it met in January. The initial single-page statement noted that members were now embracing a hawkish tone in a bid to slow inflation. Recent data suggests that economic strength is continuing. For example, the unemployment rate is still low while the rate of inflation has risen to the highest level in over 40 years.

European stocks and American futures were mixed as investors focused on Ukraine and Russia. Yesterday, Russia hinted that it was seeking to de-escalate by pulling some of its troops.  country has long insisted that it had no intention to attack Ukraine. However, in a statement, Nato said that Russia continued to increase the number of troops near the border. Nato chief, Jens Stoltenberg said that the organization was prepared for the worst even as negotiations continue. In Germany and France, the DAX and CAC 40 indices were little changed while in the US, the Dow Jones declined by 35 points.

EURUSD

The EURUSD pair rose to an intraday high of 1.1397 after strong EU industrial production data. This price was the highest it has been since February 10. It was also along the 23.6% Fibonacci retracement level. It remains above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved above the descending trendline. Therefore, there is a possibility that the pair will keep rising ahead and after the FOMC minutes.

GBPUSD

The GBPUSD pair rose to an intraday high of 1.3575 after the latest UK inflation data. On the four-hour chart, this price is slightly above the 25-day moving average. It has also moved above the important support at 1.3490, which was the lowest level on Tuesday. The MACD has moved slightly above the neutral level. Therefore, the pair will likely keep rising ahead of the FOMC minutes.

USDZAR

The USDZAR pair declined after the latest South Africa inflation data. The numbers showed that prices eased slightly in January. The pair is trading at 15.07, which is slightly above this week’s low of 14.98. On the four-hour chart, the pair moved slightly below the 25-day and 50-day moving averages while the Relative Strength Index has moved slightly above the oversold level. Therefore, the pair will likely keep falling in the near term.