Forex Today: Dollar selloff continues as markets remain risk-positive

Here is what you need to know on Monday, May 23:

After having registered weekly losses for the first time since early March last week, the US Dollar Index stays on the back foot early Monday with the greenback struggling to find demand in the risk-positive market atmosphere. IFO sentiment data from Germany will be watched closely by market participants during the European session. Later in the day, the Federal Reserve Bank of Chicago will release its National Activity Index for April. Meanwhile, the annual meeting of the World Economic Forum gets underway in Davos, Switzerland.

With risk flows dominating the markets, the US stock index futures are up between 1% and 1.6% in the European morning. The benchmark 10-year US Treasury bond yield is up nearly 2% on the day above 2.8%. While speaking in Tokyo on Monday, US President Joe Biden reiterated that they were considering reducing tariffs on China and added that a recession in the US was "not inevitable."

Over the weekend, Reuters reported that Shanghai's central Jingan district, a key commercial area of the Chinese financial hub, will require all supermarkets and shops to shut and residents to stay home to carry out mass testing until Tuesday. Additionally, the city of Beijing reported 99 new coronavirus cases on Sunday, up from 61 on Saturday, reviving concerns over officials imposing tighter restrictions. Nevertheless, these developments don't seem to be having a significant impact on risk perception so far on the day.

EUR/USD regained its traction during the Asian trading hours and climbed above 1.0600 in the early European session. European Central Bank President Christine Lagarde said that a rate hike in July was likely but reportedly downplayed the idea of a 50 basis points rate increase amid uncertainty surrounding the economic outlook.

GBP/USD is trading at its highest level in more than two weeks above 1.2550. The data from the UK showed earlier in the day that the Rightmove House Price Index rose by 2.1% on a monthly basis in May. 

Despite the broad-based selling pressure surrounding the dollar, USD/JPY trades in a relatively tight range below 128.00 supported by rising US Treasury bond yields.

Gold continues to edge higher and trades slightly above $1,850 after having closed slightly above the 200-day SMA on Friday. 

AUD/USD is up already more than 1% on Monday and was last seen trading near 0.7120. Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent said earlier in the day that they will let the assets they had purchased mature slowly and that they were not planning to sell their holdings. Nevertheless, the pair managed to preserve its bullish momentum despite these remarks.

Bitcoin staged a rebound over the weekend and closed the week slightly above $30,000. BTC/USD was last seen clinging to small daily gains at around $30,500 Ethereum reclaimed the critical $2,000 level on Sunday and seems to have gone into a consolidation phase near $2,050 early Monday.