Photo by Dmitry Demidko on Unsplash

Gold prices have been climbing north for the third session in a row on Wednesday, recovering this week due to a weaker dollar. The greenback keeps bleeding amid a deeper retreat in US Treasury yields that have already slipped to weekly lows. Also, the safe-haven demand for the US currency has waned since the start of the week as risk sentiment keeps improving, in part due to upbeat quarterly earnings out of the United States.

Despite the technical retreat, the dollar remains within a broader uptrend and could regain the upside momentum later this week should Friday’s NFP employment report confirm labor market strength. Of note, even if the figures come in lower than expected, pointing to a slowdown in employment growth at the start of the year, expectations for a March rate hike by the Fed will stay elevated.

Technically, the USD index could extend the decline in the near term, especially as the prices have already derailed the 96.00 figure, trading at 1.5-week lows around 95.85. Should this support zone give up anytime soon, the index will target the 95.60 support zone that could trigger a bounce that will take the prices back above 96.00 in the coming days.

As for the euro, the EURUSD pair exceeded the 1.1300 figure during the European hours on Wednesday to notch local highs around 1.1330. The common currency received a boost from fresh economic data. The Eurozone CPI jumped by 5.1% in January from 5.0%, surprising traders to the upside as the consensus forecast was for a lower figure of 4.4%. Still, further gains in the euro could be limited ahead of the ECB meeting due on Thursday, as the central bank will hardly deliver a hawkish message.