Forex Today: Dollar holds its ground, markets gear up for another bout of flight to safety

Here is what you need to know on Tuesday, January 25:

Safe-haven flows continue to dominate the financial markets amid escalating geopolitical tensions and renewed concerns over a global economic slowdown. The US Dollar Index climbed to its highest level in two weeks above 96.00 on Monday before retreating modestly in the late American session. Although the S&P 500 Index ended up closing the day in the positive territory on dip-buying, US stocks futures indexes are losing between 0.7% and 1.25% early Tuesday. IFO survey from Germany and CB Consumer Confidence data from the US will be looked upon for fresh impetus but risk perception is likely to remain the primary market driver ahead of Wednesday's FOMC meeting.

According to the latest reports, Russia has deployed around 100,000 troops alongside heavy weaponry at the Ukrainian border and markets grow increasingly concerned about a possible invasion. In response, the White House has announced that more than 8,000 troops were put on high alert and ready to be deployed. 

Meanwhile, China’s Commerce Ministry said in a statement on Tuesday that China was facing a "grim" foreign trade situation in 2022, citing inflation, supply chain issues and the loss of momentum in global economic recovery.

USD/RUB gained more than 2% on Monday and reached its highest level since November 2020 at 79.5. Russia's central bank announced that it will stop buying foreign exchange on the domestic market and helped the pair stage a correction. USD/RUB was last seen posting small daily losses at 78.60.

EUR/USD stays under modest bearish pressure after closing in the negative territory on Monday and trades within a touching distance of 1.1300.

GBP/USD dropped to its lowest level in three weeks at 1.3439 on Monday but managed to erase a small portion of its losses. The pair seems to have gone into a consolidation phase below 1.3500 early Tuesday.

USD/JPY fell below 113.50 but reversed its direction with Wall Street's main indexes rising sharply ahead of the closing bell late Monday. Nevertheless, the pair's recovery seems to have lost its momentum around 114.00.

Gold took advantage of falling US Treasury bond yields and rose 0.5% on Monday. XAU/USD is staying relatively quiet around $1,840 early Tuesday.

AUD/USD edged higher toward 0.7200 after the data from Australia showed that the Consumer Price Index jumped to 3.5% on a yearly basis in the fourth quarter from 3% in the third quarter. The risk-averse market environment, however, forced the pair to turn south. AUD/USD was last seen posting small daily losses at 0.7135.

Bitcoin recovered decisively but lost its bullish momentum before reaching $40,000. BTC/USD is down 2.5% little below $36,000 in the early European session. Despite a late rebound, Ethereum closed in the red on Monday and continues to stretch lower toward the critical $2,000 handle.