Forex Today: US Dollar remains fragile ahead of mid-tier US data

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

The US Dollar (USD) continued to weaken against its rivals mid-week, with the USD Index dropping to its lowest level in five months below 101.00. Early Thursday, the USD stays on the back foot as investors await weekly Initial Jobless Claims and Goods Trade Balance data for November.

The benchmark 10-year US Treasury bond yield turned south and lost more than 2% in the American session on Wednesday, causing the USD to come under selling pressure. In the European morning, the 10-year yield holds steady near 3.8%. Meanwhile, US stock index futures trade marginally higher on the day after Wall Street's main indexes registered small gains.

In the early Asian session, the data from Japan revealed that Retail Trade increased by 5.3% on a yearly basis in November. This reading followed the 4.1% growth recorded in October and surpassed the market expectation for an expansion of 5%. Other data showed that Industrial production contracted by 0.9% on a monthly basis in November. In an interview with Japanese public broadcaster NHK on Wednesday, Bank of Japan (BoJ) Governor Kazuo Ueda said that the possibility of ending negative rates next year is "not zero." Following a bullish start to the day, USD/JPY pushed lower and closed deep in negative territory on Wednesday. The pair continued to stretch lower early Thursday and slumped to a multi-month low below 141.00. 

EUR/USD gathered bullish momentum and climbed to its highest level since late July above 1.1100.

GBP/USD took advantage of the broad-based USD weakness and rose above 1.2800 for the first time in nearly five months.

USD/CAD dropped to the 1.3170 area but recovered toward 1.3200 and settled there. Crude Oil prices declined on Wednesday, with the barrel of West Texas Intermediate (WTI) losing 2%, making it difficult for the commodity-sensitive Canadian Dollar to outperform the USD. 

After moving sideways slightly below $2,070 in the first half of the day on Wednesday, Gold regained its traction and rose above $2,080, closing the fifth consecutive day in positive territory. XAU/USD continues to stretch higher and was last seen trading at around $2,085.