Forex Today: Markets turn cautious as focus shifts to key US data

Here is what you need to know on Thursday, May 26:

Markets seem to have turned cautious early Thursday ahead of key data releases from the US. The US Dollar Index fluctuates in a relatively tight range above 102.00 following Wednesday's rebound and US stock index futures are down between 0.3% and 0.7% in the early European session. The US Bureau of Economic Analysis will release its second estimate of the first-quarter GDP growth later in the session and the US Department of Labor will publish the weekly Initial Jobless Claims data. The Pending Home Sales change for April will be featured in the US economic docket as well. 

The Federal Reserve's May policy meeting minutes reaffirmed that the Fed remains on track to hike its policy rate by 50 basis points in June and July. The publication further revealed that many participants judged that inflation risks were skewed to the upside and showed that a number of policymakers thought it would be appropriate to consider sales of mortgage-backed securities. 

Meanwhile, the city of Beijing reported 45 new coronavirus cases on Wednesday, down slightly from 47 reported on Tuesday. On a positive note, ports in Shanghai are reportedly operating at 95% capacity. The Shanghai Composite Index closed the second straight day in positive territory, gaining more than 1% during that period.

NZD/USD lost its traction after jumping to a fresh three-week high above 0.6500 on Wednesday. Reserve Bank of New Zealand Governor Adrian Orr acknowledged on Thursday that they can't rule out a recession.

USD/CAD is moving sideways above 1.2800 early Thursday. Later in the session, Statistics Canada is expected to report a 1.4% increase in Retail Sales in March following February's increase of 0.1%. 

EUR/USD stays relatively quiet below 1.0700 early Thursday. ECB Governing Council member Klaas Knot said on Wednesday that inflation expectations were well-anchored at the upper limit and a 50 basis points rate hike in July was on the table. These comments, however, failed to help the shared currency regather its strength. There won't be any high-impact macroeconomic data releases featured in the European economic docket on Thursday.

GBP/USD registered small gains on Wednesday as buyers continued to defend the 1.2500 level. The pair, however, stays on the back foot and trades near 1.2550 on Thursday amid risk aversion.

USD/JPY moves up and down in a narrow channel above 127.00. Japanese Prime Minister Fumio Kishida said earlier in the day that the Bank of Japan should make effort to achieve the 2% inflation target "stably and sustainably."

Gold snapped a five-day winning streak on Wednesday and extended its slide early Thursday. XAU/USD was last seen trading below $1,850. The benchmark 10-year US Treasury bond yield is down nearly 1% on the day, helping the pair limit its losses for the time being.

Bitcoin continues to have a difficult time making a decisive move in either direction and stays below the key $30,000 handle. Ethereum edges lower in the European morning and was last seen testing $1,900.