Forex Today: Markets remain cautious as focus shifts to FOMC Minutes

Here is what you need to know on Wednesday, May 24:

Investors cling to a cautious approach mid-week amid a lack of progress in US debt-ceiling negotiations between Republicans and White House. US stock index futures trade modestly lower in the European morning and the US Dollar Index consolidates Tuesday's gains. IFO sentiment survey from Germany will be featured in the European economic docket. In the late American session, the US Federal Reserve (Fed) will release the minutes of May policy meeting.

FOMC Minutes Preview: The complicated task of searching for clues.

During the Asian trading hours on Wednesday, the Reserve Bank of New Zealand (RBNZ) announced that it raised its policy rate by 25 basis points to 5.5% as expected. The policy statement revealed that the RBNZ expects to hold the rate unchanged at 5.5% by September. In the post-policy meeting press conference, "we are getting on top of inflation," RBNZ Governor Adrian Orr said and noted that the labour market was becoming less pressured. NZD/USD fell sharply and was last seen trading at its lowest level in nearly a month at 0.6150, losing more than 1.5% on a daily basis. 

The UK's Office for National Statistics reported early Wednesday that the Consumer Price Index rose 8.7% on a yearly basis in April. This reading followed the 10.1% increase recorded in March but surpassed the market expectation of 8.2%. The Core CPI, which excludes volatile food and energy prices, increased 6.8%, compared to analysts' estimate of 6.2%. Finally, the Retail Price Index rose 11.4%, down from 13.5% in March. Following the stronger-than-expected inflation figures, GBP/USD gained traction and climbed above 1.2450.

EUR/USD touched its lowest level in two months at 1.0760 on Tuesday and spent the Asian session in a very tight range on Wednesday. The pair tries to stage a rebound early Wednesday but stays well below 1.0800. European Central Bank President Lagarde will be delivering a speech at 1745 GMT.

Following Monday's upsurge, USD/JPY fluctuated in a narrow range on Tuesday and closed the day flat. The pair remains indecisive early Wednesday and moves up and down at around 138.50.

Gold price fell toward $1,950 on Tuesday but managed to stage a rebound in the late American session amid retreating US Treasury bond yields. XAU/USD consolidates its losses near $1,970 in the European morning.

Bitcoin registered modest gains for the second straight day on Tuesday but came under renewed bearish pressure early Wednesday. BTC/USD was last seen losing nearly 2% on the day at $26,700. Ethereum rose toward $1,900 on Tuesday but lost its traction before testing that level. ETH/USD stays on the back foot and declined toward $1,800 in the European morning.