Forex Today: Focus shifts to UK inflation

Improving risk sentiment has deepened the US Dollar’s (USD) correction, briefly sending it to three-week lows. Investors continued to weigh hopes of a possible US-Iran agreement following reports that remain unconfirmed.

A marked improvement in appetite for risk assets has kept the US Dollar Index (DXY) under pressure for another day, with the index briefly returning to the 101.50 area, its lowest in three weeks. On the data calendar, the regular MBA Mortgage Applications release comes next, ahead of the EIA’s weekly update on US crude oil inventories.

The rebound in EUR/USD has continued, though the advance lost momentum near 1.1260. The euro area’s flash Consumer Confidence reading on 22 October is the next notable release on the domestic calendar.

Five-week highs just above the 1.3400 level came into view as GBP/USD gained further momentum. In the UK, attention turns to the key Inflation Rate release, alongside Public Sector Net Borrowing data.

Range-bound trading has persisted in USD/JPY, with the pair weakening this time and moving back to the low 158.00s. Japan’s Balance of Trade figures will be the main highlight of its economic calendar.

A third straight session of gains has brought AUD/USD up to test the important 0.7000 level. Australia’s next scheduled releases are the preliminary S&P Global Manufacturing and Services PMIs on 23 October.

Fresh selling pressure has weighed on front-month WTI futures after prices earlier climbed above the psychological $100.00-per-barrel level. Expectations of an agreement to end the Middle East crisis appear to have weakened the commodity’s recent strong upward momentum.

Tuesday brought a further decline in Gold towards $4,100 per troy ounce, extending its earlier losses. The pullback in the precious metal occurred even as the US Dollar weakened and US Treasury yields fell across most maturities.