Forex Today: Dollar rebounds alongside yields, eyes on EU inflation data

Here is what you need to know on Tuesday, May 31:

The greenback is staging a rebound against its rivals early Tuesday as US Treasury bond yields push higher following the three-day weekend in the US. Eurostat will release the preliminary Harmonised Indices of Consumer Prices (HICP) data, the European Central Bank's inflation gauge, for May during the European session. Later in the day, the US economic docket will feature the Housing Price Index for March, the Conference Board's Consumer Confidence data and the Federal Reserve Bank of Dallas' Texas Manufacturing Survey. Additionally, US President Joe Biden will meet with FOMC Chairman Jerome Powell to discuss the economy and inflation.

The benchmark 10-year US Treasury bond yield, which lost 1.5% last week, is already up more than 3% so far this week at 2.84%. The US Dollar Index is rising 0.3% at 101.70 in the European morning.

During the Asian trading hours, the data from China showed that the business activity in the manufacturing and service sectors continued to contract in May. On a positive note, the city of Shanghai is reportedly on track to fully resume normal life from June 1 as initially planned. Nevertheless, the market mood remains cautious with S&P Futures trading virtually unchanged on the day.

Meanwhile, the European Union has agreed to ban 90% of Russian oil imports by the end of 2022. Crude oil prices shot higher on this development and the barrel of West Texas Intermediate was trading at its highest level since early March at $119.20, rising 1.8% on a daily basis.

EUR/USD reversed its direction and retreated below 1.0750  after having touched its strongest level since late April at 1.0788 on Monday. HICP inflation in the euro area is expected to rise to 7.7% on a yearly basis in April. The Core HICP is forecast to remain unchanged at 3.5% in the same period.

GBP/USD closed the previous five trading in positive territory but lost its traction. At the time of press, the pair was down 0.5% on the day, trading slightly below 1.2600. The Bank of England will publish the Consumer Credit Change for April later in the day.

USD/CAD fell sharply as rising crude oil prices helped the commodity-sensitive loonie gather strength on Monday. The pair is struggling to gain traction and trades at fresh multi-week lows below 1.2700.

Gold continues to move sideways in a relatively narrow channel at around $1,850 early Tuesday. Rising US Treasury bond yields make it difficult for XAU/USD to build on last week's gains.

USD/JPY recovered to 128.00 supported by rising US yields. The data from Japan showed earlier in the day that the Consumer Confidence Index improved to 34.1 in May from 33 but this print had little to no impact on the pair's action.

Bitcoin broke above its two-week-old trading channel and climbed above $31,000 before going into a consolidation phase. Ethereum gained more than 10% on Monday but lost its bullish momentum near $2,000.