General sentiment soared in a week dominated by Nvidia’s impressive performance and encouraging guidance for Q1 2024. The chipmaker helped the S&P 500 reach another all-time high with the Japanese benchmark index achieving the same feat after 34 years.

Strangely enough, buoyant market sentiment brought about gains for gold and saw the dollar attempt to stabilise. Should PCE inflation data for January come in better-than-expected, the dollar decline may well continue – something that is likely to add to gold's bullish recovery.

Sterling has performed well over the last week and with little to no ‘high impact’ data on the horizon, the currency may remain propped up on the whole. The Euro ’s recent attempts to advance against a number of G7 currencies appear to be waning as price action hints towards fatigue at the end of this last week.

GBP/USD has been steadier than the UK data alone might suggest with markets convinced rate cuts are coming but not any time soon. That thesis should support sterling in a data-light week.

ECB governing council members reiterated a lack of urgency to cut interest rates despite improved wage growth data. Lack of bullish euro drivers suggest vulnerability.

The weekly gold candle shows a restrictive range of just $25 as the precious metal looks for a driver to help break its current lethargy.

This article explores the technical outlook for three major U.S. dollar pairs: EUR/USD , GBP / USD , and USD/JPY . In the piece, we also discuss potential market scenarios ahead of key U.S. PCE data.

Major Risk Events in the Week Ahead

First up, Japanese inflation data could impact the yen even further should price pressures follow the recent trend lower – raising doubts around one of the Bank of Japan’s two conditions for policy normalisation. Potentially bullish for EUR/JPY but this is fraught with complexity as the Japanese finance ministry could deploy the use of FX intervention at any time.

The Reserve Bank of New Zealand (RBNZ) is scheduled to provide an update on monetary policy where there is a 30% chance we could see another rate hike on Wednesday. Inflation has not come down as quickly as hoped and market estimations only envision a potential first rate cut in November.

German unemployment and inflation data for Feb comes into view after the Bundesbank intimated that Germany may have already entered a recession.

US data is likely to be seen as the major focus of the week. A second look at US Q4 GDP has the potential to provide intra-day volatility but a major reaction is unlikely in the absence of a massive deviation from the first estimate. Then on Friday, US PCE data provides another crucial piece of the inflation puzzle and could influence rate cut bets and, by extension, the US dollar.

Chinese manufacturing PMI data is also due on Friday but it would appear that recent support measures are providing support for out of favour Chinese markets.