Forex Today: US Dollar struggles to find support as focus shifts to PMI data

Here is what you need to know on Thursday, August 22:

Following a recovery attempt seen in the first half of the day on Wednesday, the US Dollar Index turned south in the American session and closed the fourth consecutive day in negative territory. During the European trading hours on Thursday, preliminary August HCOB Manufacturing and Services PMI data from Germany and the Euro area, alongside the S&P Global/CIPS PMI figures, will be scrutinized by market participants. Later in the day, weekly Initial Jobless Claims, Existing Home Sales and S&P Global PMI data will be featured in the US economic docket.

The US Bureau of Labor Statistics announced on Wednesday that the preliminary estimate of the benchmark revision indicates an adjustment to March 2024 total Nonfarm employment of -818,000 (-0.5%). Later in the day, the minutes of the Federal Reserve's (Fed) July 30-31 policy meeting showed that a vast majority of policymakers believed that if incoming data continued to meet expectations, it would likely be appropriate to ease policy at the next meeting. The USD Index was last seen moving in a tight channel slightly above 101.20, already down more than 1% since the beginning of the week. Meanwhile, US stock index futures trade marginally lower on the day and the benchmark 10-year US Treasury bond yield stays near the lower limit of its weekly range at around 3.8%.

During the Asian trading hours, the data from Australia showed that the Judo Bank Composite PMI improved to 51.4 in August's flash estimate from 49.9 in July. This reading failed to trigger a noticeable reaction in AUD/USD, which continues to move sideways at around 0.6750.

EUR/USD climbed above 1.1170 on Wednesday and touched its highest level since July 2023 before going into a consolidation phase early Thursday. At the time of press, the pair was virtually unchanged on the day at 1.1150.

GBP/USD preserved its bullish momentum on Wednesday and advanced beyond 1.3100 for the first time in over a year. The pair stays slightly below this level in the European morning on Thursday.

USD/JPY failed to benefit from the selling pressure surrounding the USD and closed the day flat on Thursday. The pair extends its sideways grind at around 145.50 to begin the European session.

Gold corrected from the record-high it set at $2,531 on Tuesday but managed to stabilize above $2,500 late Wednesday. XAU/USD stays relatively quiet and trades at around $2,510 early Thursday.