Forex Today: Focus shifts to UK inflation

The US Dollar (USD) briefly fell to three-week lows. Its corrective decline deepened as investors weighed hopes of a possible US-Iran agreement, with the reports still unconfirmed.

Stronger appetite for risk assets drove another daily decline in the US Dollar Index (DXY), which briefly returned to the 101.50 area, marking three-week lows. The regular MBA Mortgage Applications release is next on the calendar, ahead of the EIA’s weekly US crude oil inventories report.

A further recovery in EUR/USD stalled near 1.1260 as the rally lost momentum. The next notable release on the domestic calendar is the euro area’s flash Consumer Confidence reading on 22 October.

Five-week highs just above 1.3400 came into view as GBP/USD gained further momentum. Across the Channel, the key Inflation Rate release is the main focus, alongside Public Sector Net Borrowing data.

Range-bound trading persisted in USD/JPY, although the pair moved lower this time, slipping back to the low 158.00s. Japan’s economic calendar is led by the Balance of Trade figures.

A third consecutive daily gain brought AUD/USD up to test the key 0.7000 level. Australia’s next scheduled releases are the preliminary S&P Global Manufacturing and Services PMIs on 23 October.

Fresh selling pressure hit front-month WTI futures after an earlier climb above the psychological $100.00-per-barrel level. Prospects of an agreement to resolve the Middle East crisis appear to have weakened the commodity’s recent strong upward momentum.

Tuesday saw gold extend its losses towards $4,100 per troy ounce. The pullback continued despite a softer US Dollar and broadly lower US Treasury yields across most maturities.