Forex Today: US Dollar consolidates gains ahead of key data

Here is what you need to know on Tuesday, December 5:

The US Dollar (USD) capitalized on safe haven flows and rising US Treasury bond yields to outperform its major rivals to start the week. After gaining nearly 0.5% on Monday, the USD Index stabilized above 103.50 early Tuesday, with investors shifting focus to JOLTS Job Openings data for October and the ISM's Services PMI survey for November.

Wall Street's main indexes opened deep in negative territory and continued to stretch lower on the first trading day of the week as participants moved away from risky assets on growing fears over the Israel-Hamas crisis turning into a widespread conflict in the Middle East. At the time of press, US stock index futures were down between 0.2% and 0.4%, showing no signs of an improvement in risk mood. Speaking on the situation in Gaza, "every time we think things cannot get any more apocalyptic in Gaza, they do,” said Martin Griffiths, the top UN emergency relief official, in a statement Monday, per CNN. "People are being ordered to move again, with little to survive on, forced to make one impossible choice after another."

Following the December policy meeting, the Reserve Bank of Australia (RBA) announced that it left the policy rate unchanged at 4.35% as expected. "Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks," the RBA repeated in the policy statement. AUD/USD came under bearish pressure and declined below 0.6600.

EUR/USD fell toward 1.0800 and touched its lowest level in over two weeks on Monday. Although the pair rebounded to the 1.0850 area toward the end of the American session, it struggled to preserve its recovery momentum and was last seen fluctuating slightly below that level.

GBP/USD lost more than 50 pips on Monday and stabilized below 1.2650 early Tuesday. The UK economic docket will not feature any high-tier macroeconomic data releases.

USD/JPY registered small gains on Monday but found it difficult to settle above 147.00 during the Asian trading hours on Tuesday. The data from Japan showed earlier in the day that the Tokyo Consumer Price Index rose 2.6% on a yearly basis in November, at a softer pace than the 3.3% increase recorded in October.

Gold made a sharp downward correction after hitting a new all-time high near $2,150 on Monday and closed deep in negative territory. XAU/USD was last seen consolidating its losses below $2,050.