Forex Today: Recession Fears Weigh on Sentiment, Spotlight on US PMI and Powell Testimony

This is what you need to know to trade today Thursday June 23:

Markets remain risk averse on Thursday as investors are increasingly worried about a global recession. US stock index futures and major European equity indices push lower in European morning and the dollar continues to find demand as a safe haven. Later in the session, the FOMC Chairman, Jerome Powell, will testify before the House Financial Services Committee. The S&P Global Manufacturing and Services PMI It will also feature on the US economic calendar along with weekly data from the Labor Department on initial jobless claims.

In the early hours of the day, data from Germany and France showed that business activity in the private sector grew at a softer pace than expected in June. Also, the Eurozone Composite PMI fell to 51.9 from 54.8 in May, missing market expectations.

During his appearance before the Senate Banking Committee on Wednesday, Powell acknowledged that Fed rate hikes could spark a recession. Asked about the possibility of the Fed considering a 100 basis point rate hike in the near future, Powell said that wouldn’t take any rate hike size off the table. Following these comments, the 10-year US Treasury bond yield lost nearly 4% on Wednesday and continued to push lower early on Thursday, underlining the market’s caution.

Having spent the Asian session on Thursday in a relatively tight range below 1.0600, the EUR/USD lost its traction and dropped towards 1.0500. Disappointing Eurozone PMI data appears to be weighing on the common currency.

The GBP/USD suffers heavy losses early Thursday and trades below 1.2200. The British pound is having a hard time finding demand as investors continue to shy away from risk-sensitive assets. The UK’s FTSE 100 index is down almost 1% on the day.

Despite the strength of the dollar, the pair USD/JPY is turning down, trading in negative territory below 135.50. The yen appears to be taking advantage of safe-haven money flows so far today.

The Prayed It struggles to find a direction and is trading up and down in a tight range near $1,840. Despite the fall in US bond yields, the renewed strength of the dollar does not allow XAU/USD to gain traction.

The AUD/USD remains under strong bearish pressure and trades below 0.6900. Although the Australian PMI data was better than expected, the AUD continues to lose interest as market participants seek shelter.

The Bitcoin recovers and trades near $20,500 early on Thursday, after briefly dipping below $20,000 on Wednesday. Similarly, the ethereum up more than 4% near $1,100 after Wednesday’s 6.75% drop.