Forex Today: Choppy action continues ahead of US housing data

Here is what you need to know on Wednesday, December 28:

Action in financial markets remains choppy on Wednesday as trading conditions remain thin ahead of the New Year holiday. The US Dollar Index stays quiet slightly above 104.00 and US stock index futures trade flat following Wall Street's main indexes' mixed tone on Tuesday. The benchmark 10-year US Treasury bond yield, which gained more than 2%, holds steady above 3.8%. Later in the session, November Pending Home Sales and the Federal Reserve Bank of Richmond's Manufacturing Index for December from the US will be looked upon for fresh impetus. 

China's decision to further ease COVID restrictions helped the market mood improve on Tuesday but investors seem to have turned cautious with the latest reports suggesting that the Chinese healthcare system is overwhelmed amid soaring cases. Earlier in the day, Reuters reported that some US officials were considering imposing new restrictions on travellers from China.

EUR/USD continues to move sideways at around 1.0650 after having closed flat on Tuesday. The European economic docket will not feature any data releases on Wednesday.

GBP/USD declined toward 1.2000 on Tuesday but managed to erase a small portion of its daily losses. The pair trades virtually unchanged slightly above 1.2020 in the early European morning.

The Bank of Japan's Summary of opinions for the December policy meeting revealed that the bank is committed to maintaining the easy monetary policy. Meanwhile, Japan’s former Top Currency Diplomat and a potential contender to replace Bank of Japan (BoJ) Governor Haruhiko Kuroda, Takehiko Nakao, said on Wednesday that widening the yield curve control bank would help them smoothly transition the policy. USD/JPY edged higher during the Asian trading hours and was last seen trading in positive territory near 134.00.

Gold price climbed above $1,830 for the first time in June on Tuesday but retraced a large portion of its daily rally amid rising US Treasury bond yields. XAU/USD trades in negative territory slightly below $1,810 early Wednesday.

Bitcoin lost more than 1% on Tuesday and continued to edge lower toward $16,600 early Wednesday. Ethereum closed in negative territory on Tuesday and declined below $1,200 on Wednesday, where it's down more than 1% on the day.