Forex Today: Dollar correction continues as focus shifts to key data releases

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

The positive shift in risk sentiment weighed heavily on the dollar in the early European session and caused the US Dollar Index to decline toward 108.00. Reflecting the upbeat mood, US stock index futures are up between 0.65% and 1% on the day. IFO will release the finding of its business sentiment survey for Germany and the European Central Bank will publish the accounts of its July policy meeting. Later in the day, the US Bureau of Economic Analysis' second estimate of the second quarter GDP and the weekly Initial Jobless Claims data will be featured in the US economic docket. Central bankers could also be giving interviews to news outlets on the sidelines of the Jackson Hole Symposium.

Following China’s Cabinet introduction of a stimulus package worth $146 billion on Wednesday, Li Zhong, China’s Vice Minister of Human Resources and Social Security, said Beijing will focus on expanding jobs and promoting fiscal and monetary policies. The Shanghai Composite Index was last seen rising 1% daily.

In the meantime, crude oil prices rose for the third straight day on Wednesday on uncertainty surrounding the revival of the Iran nuclear deal. The barrel of West Texas Intermediate (WTI) was last seen consolidating its daily gains at around $95.

EUR/USD has gathered recovery momentum early Thursday and advanced beyond parity. The shared currency seems to be capitalizing on risk flows in the second half of the week. In an interview with Madame Figaro, European Central Bank President (ECB) Christine Lagarde said that there will be repercussions on prices, insurance premiums and on the financial sector if more and more climate disasters occur. Meanwhile, the data from Germany showed that the economy expanded at an annualized rate of 1.8% in the second quarter, higher than the flash estimate of 1.5%.

GBP/USD failed to register daily gains despite a recovery attempt during the American trading hours on Wednesday. With the dollar facing broad selling pressure, the pair gained traction and advanced to the mid-1.1800s in the early European session.

USD/JPY stays under bearish pressure and edges lower toward 136.50 in the early European morning. Bank of Japan (BOJ) board member Toyoaki Nakamura reiterated earlier in the day that the BOJ must patiently maintain powerful monetary easing.

Gold extended its rebound into a third straight day and was last seen trading near $1,760. 

Bitcoin extends its sideways grind near mid-$21,000s and Ethereum trades at around $1,700, gaining nearly 3% on a daily basis.