Forex Today: Choppy action continues as focus shifts to US CPI

Here is what you need to know on Wednesday, August 10:

Major currency pairs are struggling to make a decisive move in either direction as market participants remain on the sidelines while waiting for the US Bureau of Labor Statistics to release the July inflation report. The market mood remains cautious early Wednesday with the US stock index futures trading in negative territory and the benchmark 10-year US Treasury bond yield holding steady at around 2.8%. The Consumer Price Index (CPI) in the US is expected to decline to 8.7% on a yearly basis in July from 9.1% in June and the annual Core CPI is forecast to edge higher to 6.1% from 5.9%: 

US July CPI Preview: What is the base effect and why it matters.

After having closed the previous day flat, the US Dollar Index continues to move up and down in a tight range above 106.00 in the European morning. St. Louis Fed President James Bullard said on Tuesday that he would like the rates to move up to 4% by the end of the year and added that the Fed is prepared to hold rates "higher for longer" should inflation continue to surprise to the upside.

US CPI Preview: It is the hard core that counts, five scenarios for critical inflation data.

Earlier in the day, the data from China revealed that the annual CPI rose to 2.7% in July from 2.5% in June. This reading failed to trigger a noticeable market reaction during the Asian trading hours. Meanwhile, in a whitepaper published on Wednesday, China reiterated its policy of 'one country, two systems' for Taiwan and said that it will not rule out the use of force.

EUR/USD extends its sideways grind near 1.0200 into the third straight day on Wednesday. Germany's Destatis reported that the annual CPI stood at 7.5% in July, matching the flash estimate and the market expectation.

GBP/USD failed to hold reclaim 1.2100 after having risen above that level during the European trading hours on Tuesday. The pair returned to the 1.2070 area early Wednesday.

USD/JPY closed the day virtually unchanged near 135.00 on Tuesday. The pair continues to fluctuate in a narrow band near that level mid-week.

Gold touched its highest level in a month above $1,800 on Tuesday but went into a consolidation phase. At the time of press, XAU/USD was posting modest daily losses near $1,790.

Bitcoin lost nearly 3% on Tuesday and erased all the gains it recorded on Monday. BTC/USD stays on the backfoot early Wednesday and trades in negative territory below $23,000. Ethereum continues to push lower and trades below $1,700 after having fallen 4% on Tuesday.