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Forex Today: Dollar Recovery Loses Strength Ahead of Key Data Release

This is what you need to know to trade today Wednesday, August 3:

The DXY dollar index snapped a four-day losing streak on Tuesday as it escalating geopolitical tensions it allowed safe-haven money flows to continue to dominate financial markets. There appears to be a modest improvement in risk sentiment early on Wednesday, with US stock index futures up 0.2-0.3% and DXY consolidating its recovery gains above 106.00. The European economic calendar will include retail sales data for June, before the ISM publishes the US services PMI report for July. later in the day. Investors will be watching political developments and statements from the Federal Reserve.

Despite stern warnings from China, the Speaker of the US House of Representatives, Nancy Pelosi has landed in Taiwan, becoming the highest-ranking American politician to visit the country in 25 years.. As an initial response, the Chinese Ministry of Foreign Affairs has issued a statement, noting that Pelosi’s visit seriously violated the sovereignty and territorial integrity. In addition, China has announced that military exercises, including live-fire drills, will be held in areas surrounding Taiwan starting August 4. Previously, Pelosi has said in a press conference: “we want Taiwan to always have freedom with security, we do not deviate from that.”

Meanwhile, the president of the Chicago Fed, Charles Evans said on Tuesday that a 50 basis point rate hike would be a reasonable assessment for the September monetary policy meeting if inflation does not improve. These comments helped push US bond yields higher, with the benchmark US 10-year yield rising more than 6% on the day and topping 2.7% on Tuesday before entering a consolidation phase. early Wednesday.

The pair EUR/USD lost over 100 pips on Tuesday and closed the day below 1.0200. The pair is having a hard time gaining traction in the European morning and is trading in a tight range above 1.0150.

The GBP/USD fell sharply on Tuesday as sterling found no demand on risk-off sentiment in the markets. The pair remains relatively calm above 1.2100 early on Wednesday. Later in the day, S&P Global will publish the final version of the Services PMI and Composite PMI for the UK.

Driven by rising US Treasury yields, the USD/JPY He rallied decisively from a two-month low of 130.43 and gained nearly 200 pips on the day. The pair is now trading in a tight range above 133.00 on Wednesday.

The Prayed turned down on rising US yields and broad dollar strength on Tuesday and closed in negative territory for the first time since last Wednesday. However, XAU/USD appears to have regained its bullish momentum and is now moving towards $1,770.

The Bitcoin continues to move sideways near $23,000 and the ethereum It struggles to find a direction while holding steady above $1,600.

Source: Fx Street

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