Forex Today: US Dollar rebounds to start the week as risk rally fades

Here is what you need to know on Monday, November 14:

Following the strong risk rally witnessed in the second half of the previous week, markets seem to have turned cautious to begin the new week as investors assess the latest developments. The US Dollar Index stages a rebound after losing nearly 4% last week and US stock index futures trade in negative territory. Eurostat will publish September Industrial Production data and the US economic docket will not feature any high-impact macroeconomic data releases. Nevertheless, investors will pay close attention to comments from US Federal Reserve officials, including Vice Chair Lael Brainard and NY Fed President John Williams.

Commenting on the reaction to the soft October Consumer Price Index (CPI) data, Federal Reserve Governor Christopher Waller argued that markets were "way out in front" and added rates will not fall until there is "clear, strong" evidence inflation is falling. Meanwhile, San Francisco Fed President Mary Daly advised that markets should stop thinking about the pace of rate hikes and start thinking about the level. 

On November 12, the number of daily coronavirus in China rose to nearly 15,000 from 11,950 on November 11. Explaining the changes that they have made to coronavirus restrictions, China's top health officials noted that they were not "relaxing rules" but instead refining them. "It is necessary to maintain strategic focus, and scientifically and accurately do the work of epidemic prevention and control," China's National Health Commission (NHC) said in a statement on Sunday.

EUR/USD gained more than 100 pips on Friday and registered its highest weekly close since the last week of June above 1.0300. The pair seems to have gone into a consolidation phase and was last seen trading in negative territory slightly above 1.0300.

GBPUSD reached its highest level since August 26 at 1.1855 late Friday and posted impressive weekly gains. The pair is staging a downward correction and was last down 0.7% on the day at around 1.1750. 

USDJPY closed the fourth straight week in negative territory and dropped below 140.00 for the first time in 10 weeks on Friday. "Abnormally one-sided, sharp yen weakening appears to have paused, thanks partly to the government’s FX intervention," Bank of Japan (BoJ) Governor Haruhiko Kuroda said on Monday and noted that the wasn't expecting the US Dollar's "solo strength" to last indefinitely. USDJPY is currently trading in a tight range near 139.50.

Gold capitalized on risk flows and the broad-based US Dollar weakness last week and gained over 5%. XAUUSD stays on the back foot early Monday and trades at around $1,760.

Bitcoin extended its slide over the weekend and finished the week with a 22% loss at $16,300 as investors reacted to the latest developments surrounding the collapse of the FTX. Similarly, Ethereum lost more than 20% last week but seems to have steadied near $1,200, at least for now.

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