Forex Today: US Dollar consolidates gains, eyes on US April inflation data

Here is what you need to know on Wednesday, May 10:

The US Dollar Index, which tracks the US Dollar's (USD) performance against a basket of six major currencies, seems to have gone into a consolidation phase after having closed the first two days of the week in positive territory. Although markets stay relatively quiet early Wednesday, April Consumer Price Index (CPI) data from the US should ramp up volatility in the second half of the day.

US April CPI Preview: How will inflation data influence Fed rate outlook?

Wall Street's main indexes closed in negative territory on Tuesday amid a lack of progress in debt ceiling negotiations. US stock index futures trade modestly higher in the European morning on Wednesday and the benchmark 10-year US Treasury bond yield fluctuates slightly above 3.5%. 

CPI Data Expectations: Analyzing US inflation

EUR/USD extended its downward correction on Tuesday and closed well below 1.1000. With hawkish comments from European Central Bank (ECB) governors helping the Euro hold its ground, the pair edges higher early Wednesday but remains below 1.1000. The data from Germany showed earlier in the day that the annual CPI rose 7.2% in April, matching the flash estimate and the market expectation.

GBP/USD's losses remained limited despite risk aversion on Tuesday as markets refrain from betting Pound Sterling weakness ahead of the Bank of England's policy announcements on Thursday. The pair continues to fluctuate above 1.2600 early Wednesday.

Bank of England Preview: Bailey to break Pound's rally with reluctance to raise rates further.

USD/JPY registered small gains on Tuesday and trades above 135.00 in the European morning. The data from Japan revealed that the Leading Economic Index declined to 97.5 in March from 98 in February. Meanwhile, Bank of Japan (BoJ) Governor Kazuo Ueda said on Wednesday that the BoJ’s ETF buying was helping underpin consumption and capex by preventing volatile market moves from hurting public confidence.

Following a quiet European session, Gold price edged higher in the second half of the day on Tuesday and closed in positive territory, supported by safe-haven flows. XAU/USD stays relatively calm on Wednesday and moves up and down in a tight channel at around $2,030.

Bitcoin struggled to find direction on Tuesday and closed the day virtually unchanged above $27,500. BTC/USD stays under modest bearish pressure in the European morning. Ethereum registered small losses on Tuesday and continues to trade within a touching distance of $1,800 early Wednesday.