Forex Today: Dollar consolidates gains, trading conditions to remain thin

Eren Sengezer FXStreet

Here is what you need to know on Thursday, November 25:

The dollar continued to gather strength against its major rivals following the high-tier data releases from the US and the US Dollar Index came within a touching distance of 97.00 before going into a consolidation on Thursday. The European Central Bank (ECB) will release its Monetary Policy Meeting Accounts, ECB President Christine Lagarde and Bank of England Governor Bailey will be delivering speeches as well. Market conditions are likely to remain thin in the second half of the day due to the Thanksgiving holiday in the US.

The data from the US revealed on Wednesday that the Core Personal Consumption Expenditures (PCE) Price Index climbed to 4.1% on a yearly basis as expected. The FOMC's November meeting minutes revealed that some policymakers wanted the Fed to be prepared to adjust the pace of reductions in asset purchases to counter persistently high inflation. In the meantime, San Francisco Fed President Mary Daly said that she would support an acceleration of tapering if the economic recovery and the inflation outlook remains unchanged.

The benchmark 10-year US Treasury bond yield continued to climb higher toward 1.7% and Wall Street's main indexes closed mixed.

EUR/USD dropped to its lowest level since June 2020 at 1.1185 on Wednesday and clings to modest daily gains in the early European session above 1.1200 on Thursday.

GBP/USD extended its weekly slide toward 1.3300 but managed to stage a modest rebound. Ireland reportedly sees a "window of opportunity" to reach an agreement on Brexit's Northern Ireland protocol.

USD/JPY capitalized on rising US Treasury bond yields and renewed multi-year highs near 115.50. The pair was last seen moving sideways around 115.40.

Gold briefly dipped below $1,780 on Thursday pressured by rising US Treasury bond yields. XAU/USD is currently posting recovery gains above $1,790.

USD/CAD, which advanced to its strongest level in nearly two months at 1.2745 earlier in the week, is edging lower toward 1.2650 on recovering crude oil prices on Thursday.

Cryptocurrencies: Bitcoin stays directionless below $60,000 on Thursday and Ethereum consolidates its weekly losses while holding above $4,000.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD looks weak below 1.1800

EUR/USD has slipped back under pressure, breaking through the 1.1800 support and drifting towards the weekly lows near 1.1770 ahead of the opening bell in Asia. The move reflects renewed strength in the US Dollar, with steady geopolitical tensions keeping its demand firm. Moving forward, the release of the German labour market report and flash inflation figures should keep European investors entertained on Friday.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.