Forex Today: Markets remain mixed ahead of FOMC Minutes

Here is what you need to know on Wednesday, February 22:

Choppy market action continues mid-week as investors await the next significant catalyst. IFO sentiment survey from Germany will be featured in the European docket on Wednesday. In the late American session, the US Federal Reserve will publish the minutes of its first policy meeting of the year. Market participants will also keep a close eye on comments from central bank officials.

Safe-haven flows dominated financial markets amid escalating geopolitical tensions on Tuesday and Wall Street's main indexes suffered heavy losses. In turn, the US Dollar managed to hold its ground against its major rivals and the US Dollar Index snapped a two-day losing streak to close above 104.00. Meanwhile, the data from the US revealed that S&P Global Services PMI recovered sharply to 50.5 in early February from 46.8 in January. Supported by the upbeat data, the benchmark 10-year US Treasury bond yield extended its rally and touched its highest level since early November at 3.96% on Tuesday before retreating toward 3.9% early Wednesday.

FOMC Minutes Preview: Did policymakers discuss returning to bigger rate hikes?

During the Asian trading hours, the Reserve Bank of New Zealand (RBNZ) announced that it raised its policy rate by 50 basis points to 4.75% as expected. In its policy statement, the RBNZ noted that 50 and 75 bps hikes were discussed during the meeting but unveiled that the terminal rate projection for June 2023 got revised lower to 5.14% from 5.41%. Commenting on the outlook, RBNZ Governor Adrian Orr said that they were still predicting a recession over a 9-12 month period. Following Tuesday's sharp decline, NZD/USD gained traction following the RBNZ event and was last seen trading modestly higher on the day at 0.6230.

The data from Australia revealed on Wednesday that Wage Price Index edged higher to 3.3% on a yearly basis in the fourth quarter from 3.1%. With this print falling short of the market expectation of 3.5%, AUD/USD turned south in the Asian session. At the time of press, the pair was trading in negative territory below 0.6850.

USD/JPY closed the third straight trading day in positive territory on Tuesday before going into a consolidation phase below 135.00. Bank of Japan (BoJ) board member Naoki Tamura reiterated that it would be appropriate to maintain monetary easing but added that a policy review will be required at some point in the future.

GBP/USD registered impressive gains on the back of upbeat UK PMI surveys on Wednesday. The pair stays relatively quiet on Wednesday but continues to trade above 1.2100. 

EUR/USD edge lower and closed in negative territory at around 1.0650 on Tuesday. The pair is having a difficult time regaining its traction in the European morning.

Gold price stayed under modest bearish pressure on Tuesday amid rising US Treasury bond yields and closed below $1,840. XAU/USD moves up and down in a very narrow channel early Wednesday.

Bitcoin staged a downward correction on Tuesday and extended its slide toward $24,000 early Wednesday. Ethereum lost more than 2% on Tuesday and returned below $1,700. As of writing, ETH/USD was already down 1% on the day at $1,640.