Eyes on EU and US inflation figures on last day of Q1

The US Dollar continued to weaken against its rivals on Thursday as risk flows dominated the action in financial markets. Eurostat will release the preliminary Harmonized Consumer Price Index (HICP) data for March on Friday alongside the February Unemployment Rate. Later in the day, the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, will be featured in the US economic docket. Since this will be the last day of the month as well as the first quarter, position adjustments could ramp up the volatility and trigger wild fluctuations ahead of the weekend.

Wall Street’s main indexes closed in positive territory on Thursday led by strong gains recorded in technology and real estate stocks. Following Wednesday’s modest rebound, the US Dollar Index (DXY) stayed under bearish pressure and registered its lowest daily close since early February slightly above 102.00. Early Friday, the DXY clings to small recovery gains but struggles to gather bullish momentum.

The US Bureau of Economic Analysis (BEA) announced on Thursday that it revised the annualized Gross Domestic Product (GDP) growth for the fourth quarter to 2.6% from 2.7% in the previous estimate. The annual Core PCE inflation in the US is forecast to remain unchanged at 4.7% in February.

US February PCE Inflation Preview: Bad news for the Dollar, good news for the Fed?

EUR/USD climbed above 1.0900 in the American session on Thursday before going into a consolidation phase in the Asian session on Friday. The data from Germany showed earlier in the day that Retail Sales declined by 1.3% oın a monthly basis in February. This reading came in much worse than the market expectation for an increase of 0.5% but was largely ignored by market participants. Meanwhile, Annual HICP in France declined to 6.6% in March from 7.3% in February, compared to the market expectation of 6.5%.

GBP/USD climbed to its highest level in three months above 1.2420 in the early Asian session before staging a technical correction and retreating below 1.2400 in the European morning. The UK’s Office for National Statistics reported on Friday that the GDP expanded by 0.6% on a yearly basis in the fourth-quarter following the 0.4% growth recorded in the first quarter. This reading surpassed the market expectation of 0.4% and helped Pound Sterling stay resilient against its rivals.

Following Wednesday’s modest pullback, USD/JPY regained its traction and rose above 133.00 on Friday. The data from Japan showed that Industrial Production increased by 4.5% on a monthly basis in February. Additionally, Tokyo Consumer Price Index edged lower to 3.3% on a yearly basis in March from 3.4% in February.

Gold price recovered decisively on Thursday and continued to stretch higher early Friday. XAU/USD was last seen trading slightly above $1,980.

Bitcoin reversed its direction after having climbed above $29,000 and closed in negative territory on Thursday. BTC/USD was last seen moving sideways at around $27,000. Ethereum struggled to find direction on Thursday and extended its sideways grind near $1,800 to start the last day of the week.

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