Forex Today: US Dollar pulls away from multi-month highs to start critical data week

Here is what you need to know on Monday, August 28:

The US Dollar struggles to find demand at the beginning of the new week. After posting gains for the sixth straight week, the US Dollar Index stays in negative territory in the European morning. The Federal Reserve Bank of Dallas' Texas Manufacturing Outlook Survey will be featured in the US economic docket. Later in the week, investors will pay close attention to high-impact data releases, including inflation figures from major economies and employment data from the US.

While speaking at the Jackson Hole Economic Symposium on Friday, Fed Chairman Jerome Powell repeated that they are prepared to raise rates further if appropriate and said that they proceed carefully when deciding to hike again or hold steady. Although these comments helped the USD Index climb to its highest level in nearly three months at 104.45 late Friday, the positive shift seen in risk mood forced it to start retreating. Early Monday, US stock index futures trade in positive territory, making it difficult for the USD to build on the previous week's gains. 

China's Finance Ministry announced early Monday that they halved the stamp duty to 0.1% on stocks trading in an attempt to "invigorate the capital market and boost investor confidence." Earlier in the Asian session, the data from Australia showed that Retail Sales rose 0.5% on a monthly basis in July, slightly better than the market expectation for an increase of 0.3%. Supported by the improving risk mood and upbeat data, AUD/USD gained traction and was last seen trading in positive territory above 0.6400.

Following a volatile American session on Friday, EUR/USD settled at around 1.0800 for the week. Early Monday, the pair benefits from the renewed USD weakness and trades modestly higher on the day. Late Friday, European Central Bank President Christine Lagarde said setting interest rates at sufficiently restrictive levels for as long as necessary will help them achieve a timely return of inflation to the 2% medium-term target. Later in the day, Bundesbank President Joachim Nagel is scheduled to deliver a speech.

Bank of Japan (BoJ) Governor Governor Kazuo Ueda reiterated over the weekend they will stick to the current monetary easing framework, given the underlying inflation is still "a bit below" the BoJ's target. USD/JPY started the new week in a calm manner and was last seen posting small daily gains near 146.50. 

GBP/USD spent the Asian session in a tight channel at around 1.2600 on Monday before starting edge lower in the European morning.

Gold price snapped a four-week losing streak after managing to reclaim $1,900. With the benchmark 10-year US Treasury bond yield moving sideways near 4.25% on Monday, XAU/USD holds steady slightly above $1,910.

Bitcoin continues to move up and down in a narrow ban at around $26,000 and Ethereum edges lower toward $1,600 in the European morning.