Forex Today: US Dollar consolidates losses as focus shifts to Powell's testimony

Here is what you need to know on Tuesday, March 7:

The US Dollar holds its ground early Tuesday as markets eagerly await for FOMC Chairman Jerome Powell to testify before the Senate Banking Committee at 1500 GMT. The US Dollar Index moves sideways above 104.00 following a two-day slide and the 10-year US Treasury bond yield fluctuates in a narrow band below 4%. The US economic docket will also feature IBD/TIPP Economic Optimism Index for March and Consumer Credit Change for January.

Markets stayed indecisive on Monday and Wall Street's main indexes closed the virtually unchanged after having opened decisively higher. Early Tuesday, US stock index futures post small daily gains, reflecting participants' willingness to remain on the sidelines.

During the Asian trading hours, the Reserve Bank of Australia (RBA) announced that it hiked the policy rate, the Official Cash Rate (OCR), by 25 basis points (bps) to 3.60% from 3.35%. Although this decision came in line with the market expectation, AUD/USD fell sharply with the initial reaction. In its policy statement, the RBA reiterated that further tightening of the policy will be needed but noted that the monthly Consumer Price Index (CPI) indicator suggests that inflation has peaked in Australia. AUD/USD stays on the backfoot early Tuesday and trades near 0.6700.

Meanwhile, the data from China revealed that the trade surplus widened to $116.8 billion in February from $78 billion in January, surpassing analysts' estimate of $81.8 billion by a wide margin. 

EUR/USD climbed to its highest level in nearly two weeks at 1.0700 on Monday amid renewed US Dollar weakness but retreated modestly. The pair was last seen trading near 1.0680. Germany's Destatis reported early Tuesday that Factory Orders in Germany increased by 1% in January, compared to the market expectation for a decline of 1%, but this data failed to trigger a reaction in the Euro.

GBP/USD continues to move up and down in a tight channel above 1.2000 for the second straight day on Tuesday. 

USD/JPY ended the first day of the week virtually unchanged despite having edged lower during the European trading hours. The pair hold steady at around 136.00 in the European morning.

Despite the US Dollar's poor performance, Gold price struggled to build on the previous week's gains as the 10-year US T-bond yield managed to stay afloat above 3.9%. Following Monday's downward correction, XAU/USD fluctuates below $1,850 early Tuesday. 

Following a quiet weekend, Bitcoin extended its sideways grind on Monday. BTC/USD continues to have a hard time gathering directional momentum and trading near $22,400 early Tuesday. Similarly, Ethereum is moving sideways for the fourth straight day on Tuesday, trading below $1,600.