Forex Today: Dollar buying continues as focus shifts to PMI surveys

Here is what you need to know on Tuesday, August 23:

The US Dollar Index (DXY) built on the previous week's gains and climbed above 109.00 on Monday. The DXY was last seen closing in on multi-year highs it set at 109.29 in July with the dollar preserving its strength on safe-haven flows. US stock index futures were down between 0.3% and 0.5% in the early European morning. The S&P Global will release the preliminary August Manufacturing and Services PMI surveys for Germany, the euro area, the UK and the US later in the day. The European Commission will publish the Consumer Confidence Index data and the US economic docket will feature July New Home Sales and the Richmond Fed Manufacturing Index later in the day.

The dollar rally picked up steam on Monday during the American trading hours as Wall Street's main indexes opened deep in negative territory. Investors grow increasingly concerned over a global recession and they might be positioning themselves for hawkish comments at the Jackson Hole Symposium later this week following Fed policymakers' remarks last week. 

Meanwhile, crude oil prices recovered sharply on Monday and the barrel of West Texas Intermediate closed modestly higher. Saudi Energy Minister told Bloomberg that they could consider cutting production due to the physical and futures markets getting increasingly strayed away from fundamentals.

EUR/USD closed below parity for the first time since late 2002 on Monday and extended its slide toward 0.9900 early Tuesday. 

GBP/USD continues to push lower toward 1.1700 in the European morning on Tuesday and trades at its weakest level since March 2020.

USD/JPY gained more than 50 pips on Monday but struggled to gather further bullish momentum on Tuesday. The benchmark 10-year US Treasury bond yield retreated to the 3% area, not allowing the pair to gain traction.

Gold dropped to a fresh multi-week low of $1,727 on Monday but managed to stage a modest recovery before closing the day slightly below $1,740. Falling US T-bond yields help XAU/USD limit its losses for the time being.

Bitcoin stays on the backfoot early Tuesday and declines toward $21,000. Ethereum is already down more than 3% on the day and trades below $1,600.