USD Ticks Higher, Stocks Consolidate

It looks like the medium-term trend could turn bullish for the EURUSD pair (bearish for the USD) if bulls push the single currency above the critical 1.1520 resistance.

"A surprisingly strong U.S. January NFP jobs report provided some support to the dollar and reminded us that the Fed is still likely to lead the hawkish re-assessment of central bank policy underway around the world," said analysts at ING, in a note.

The US CPI inflation is due on Thursday, expected to accelerate further higher to 7.3% year-on-year, up from 7.0% in December. The core indicator is also forecast to continue rising and print 5.9%, against 5.5% scored previously. On the other hand, monthly changes will likely decline very marginally.

Interest rates futures are slowly pointing to a 50 bps rate hike in March, although several FOMC participants already said they do not plan to start the lift-off with a 0.5% rate increase. We will see.

US yields are rising again, pushing the 10-year yield to fresh cycle highs above 1.95%. However, there is a crucial resistance at that level, and if yields move above 2%, we could see another leg higher, targeting 2.2% in the initial reaction. 

At the same time, the 2-year yield jumped further, attacking the 1.4% threshold for the first time since February 2020.

US stocks barely moved on Monday, ending flat. Today's session appears to be the same, with US equity benchmarks trading near yesterday's closing levels.

Elsewhere, precious metals soared yesterday, for whatever reason, but traders are taking some profits from the rally, dragging the metals lower today.