Choppy market action continues mid-week

Major currency pairs are struggling to make a decisive move in either direction in the first half of the week as investors continue to search for the next catalyst. Nevertheless, the cautious market mood early Wednesday seems to be helping the US Dollar stage a rebound. Eurostat will publish the revisions to March Harmonized Index of Consumer Prices (HICP) data later in the session. In the late American trading hours, the Federal Reserve will release its Beige Book.

The US Dollar Index (DXY) closed in negative territory on Tuesday despite hawkish comments from Federal Reserve officials. Early Wednesday, the DXY clings to small gains as US stock index futures are down between 0.2% and 0.5%. In the meantime, the benchmark 10-year US Treasury bond yield is back near 3.6% following the technical correction witnessed in the previous day.

The UK’s Office for National Statistics reported on Wednesday that inflation, as measured by the Consumer Price Index (CPI), edged lower to 10.1% on a yearly basis in March from 10.4% in February. This reading came in above the market expectation 9.8%. The annual Core CPI, which strips volatile food and energy prices, stayed unchanged at 6.2% in the same period, compared to analysts’ estimate of 6%. Supported by these data, GBP/USD has gained traction early Wednesday and was last seen trading above 1.2450.

EUR/GBP cross came under renewed bearish pressure and dropped below 0.8800 after UK inflation figures.

EUR/USD is struggling to build on Tuesday’s recovery gains but manages to hold steady slightly above 1.0950. European Central Bank (ECB) Chief Economist Philip Lane and Governing Council member Isabel Schnabel will be delivering speeches later in the day.

USD/JPY has gathered bullish momentum on rising US Treasury bond yields and advanced toward mid-134.00s. Bank of Japan (BoJ) Executive Director Tokiko Shimizu said on Wednesday that it is appropriate to continue easing policy for time being.

Gold lost its traction following Tuesday’s rebound and dropped below $2,000. Rising global yields after UK inflation data seem to be weighing on XAU/USD mid-week.

Bitcoin gained more than 3% on Tuesday and seems to have gone into a consolidation phase slightly above $30,000 early Wednesday. Ethereum is having a hard time finding direction as it continues to move up and down above $2,000.

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