Forex Today: Major currency pairs remain quiet to start the big central bank week

Here is what you need to know on Monday, January 29:

The action in financial markets remain subdued early Monday as investors prepare for this week's key central bank meetings and macroeconomic events. The European economic docket will not feature any high-tier data releases. Later in the day, the Federal Reserve Bank of Dallas will release the Texas Manufacturing Business Index for January.

The US Dollar Index (DXY) registered small gains in the previous week, supported by upbeat data releases. The index holds steady at around 103.50 in the European morning on Monday, while the benchmark 10-year US Treasury bond yield continues to fluctuate in a tight channel above 4%. In the meantime, geopolitical tensions remain high at the beginning of the week, following news of a drone strike on a US base near Jordan's border with Syria killing three and injuring more than 20 troops. Reflecting the cautious mood, US stock index futures trade modestly lower on the day. On Wednesday, the Federal Reserve will announce monetary policy decisions following the first meeting of the year.

EUR/USD seems to have gone into a consolidation phase at around 1.0850 after closing the second consecutive week in negative territory. On Tuesday, Eurostat will release the Euro area's preliminary Gross Domestic Product (GDP) growth for the fourth quarter.

GBP/USD ended the previous week virtually unchanged and extended its sideways grind at around 1.2700 early Monday. UK inflation expectations for the twelve months ahead fell from 4.2% in October to 3.9% and 3.5% in November and December, respectively, a survey conducted by US bank Citi and polling firm YouGov showed on Monday. The Bank of England will announce policy decisions on Thursday.

Following the previous week's indecisive action, USD/JPY trades marginally lower on the day slightly below 148.00 on Monday. In the Asian session on Tuesday, December Unemployment Rate data from Japan will be looked upon for fresh impetus.

Gold registered small losses last week but managed to regain its traction early Monday. At the time of press, XAU/USD was up 0.5% on the day at $2,028.