Forex Today: Dollar on the back foot ahead of the Fed, cryptos recover, covid news eyed

Here is what you need to know on Wednesday, July 28:

Tension is mounting ahead of the Federal Reserve's decision, keeping currencies in range and the dollar on the back foot. Concerns about covid in the US and China's techlash are offset by robust earnings by US firms and optimism coming from the UK's falling infections. Cryptocurrencies have been recovering. 

The Federal Reserve is set to leave its policy unchanged and provide hints about when it considers tapering down its bond-buying scheme. Rising inflation and an improving labor market provide hope, yet some signs of a slowdown and the spread of the Delta virus are worrying. 

Fed Chair Jerome Powell is set to address the press. In his last appearance, he said the conditions for reducing purchases are still "a ways off." 

Previews: 

• Federal Reserve Preview: Three reasons why Powell could pause, pummeling the dollar
• Fed Interest Rate Decision Preview: The horns of an inflation dilemma

The US dollar is trading in a narrow range ahead of the event, typical of such days. The greenback is thus consolidating losses suffered on Tuesday when it edged lower amid falling US Treasury yields and positioning ahead of Wednesday's big event. 

The market mood is mixed as Wall Street is mostly pleased with earnings reports from tech giants Microsoft, Apple and Alphabet (Google). In China, authorities are trying to soothe investors after Beijing's "techlash" sent shares tumbling earlier in the week. 

US coronavirus:The US Center for Disease Control & Prevention (CDC) called on Americans to wear face masks indoors in places with high levels of covid cases, responding to the rapid spread of the Delta strain. The announcement somewhat dampened the mood. 

On Tuesday, US data was mostly positive. While Durable Goods Orders for June missed expectations, they came on top of significant upward revision for May, showing that investment is still robust. The data feeds into Thursday's Gross Domestic Product release. The Conference Board's Consumer Confidence gauge beat estimates, contrary to other surveys. 

US June Durable Goods: More than meets the eye

EUR/USD is holding above 1.18, little moved by the disappointing drop in Germany's GfK Consumer Climate survey to -0.3.

GBP/USD is trading above 1.3850, benefiting from seven consecutive days of falls in COVID-19 infections, a result of restrictions and a high vaccination rate. The effects of Britain's July 19 reopening are yet to be felt. 

AUD/USD is steady around 0.7350 after Consumer Price Index came out at 0.8% in the second quarter in Australia. Authorities are set to extend lockdowns.

USD/CAD is hovering below 1.26 ahead of Canada's release of its inflation figures. WTI Crude Oil is hovering around $72.

Bitcoin is trading closer to $40,000 once again, recovering from the fall-related to Amazon's denial it would be accepting cryptocurrencies. Ethereum is somewhat lower, changing hands under $2,300. 

See Analyzing inter-market correlations to see if reflation trade is coming to an end – July 2021