Forex Today: US Dollar steadies following Monday's upsurge

Here is what you need to know on Tuesday, November 22:

The US Dollar seems to have lost its strength early Tuesday after having registered impressive gains against its major rivals on Monday. The US Dollar Index stays quiet slightly above 107.50 and the benchmark 10-year US Treasury bond yield continues to move sideways at around 3.8%. Meanwhile, US stock index futures trade virtually unchanged on the day, pointing to a neutral market mood. Later in the day, the European Commission will release the November Consumer Confidence data for the Eurozone and the US economic docket will feature Richmond Fed Manufacturing Index. Investors will continue to pay close attention to comments from central bankers.

The US dollar benefited from the risk-averse market environment on Monday as markets reacted to concerning coronavirus news from China. Investors grow increasingly worried about a global economic downturn with China refraining from further easing Covid restrictions. On Monday, China reported more than 28,000 new local cases and the city of Beijing announced that it will be shutting down parks and museums from Tuesday. Although the latest developments show that the situation is getting worse, safe-haven flows are yet to dominate the action.

Meanwhile, crude oil prices came under heavy bearish pressure during the American trading hours on Monday after a Wall Street Journal report claimed that Saudi Arabia was planning to raise OPEC+ production. The barrel of West Texas Intermediate (WTI) dropped to a fresh 2022-low of $75.25 on this headline. Saudi Energy Minister Abdulaziz bin Salman Al-Saud, however, denied this claim and noted that they were not discussing a potential increase in output. In turn, crude oil prices recovered sharply and the WTI was last seen trading flat on the day slightly above $80. 

EUR/USD lost nearly 100 pips on Monday before going into a consolidation phase at around 1.0250 early Tuesday. Comments from European Central Bank (ECB) officials highlight a difference of opinion regarding the next rate move. ECB policymaker Mario Centeno said late Monday that there were many conditions for the next rate hike to be less than 75 basis points (bps). On the other hand, ECB Governing Council member Robert Holzmann noted that he would support a 75 bps rate increase at the next meeting in case the situation remains the same. 

GBP/USD dipped below 1.1800 on Monday but staged a rebound later in the day to close above that level. The pair trades in a tight channel below 1.1850 in the European morning. 

USD/JPY gathered bullish momentum and advanced to the 142.00 area on Monday on the back of broad-based US Dollar (USD) strength. The pair stays in a consolidation phase near that level early Tuesday.

Gold price dropped to a 10-day low near $1,730 on Monday but it managed to limit its losses with the US T-bond yields failing to gain traction. XAU/USD trades modestly higher on the day above $1,740 in the European trading hours.

Bitcoin lost over 3% on Monday and touched its lowest level in two years below $15,500. BTC/USD was last seen trading in a tight channel near $15,700. Ethereum is already down nearly 5% since the beginning of the week and trades within a touching distance of the multi-month low it set at $1,070 earlier in the month.