Forex Today: Dollar bulls refuse to give up

What you need to take care of on Wednesday, May 4:

Financial markets were in a better mood on Tuesday, with global indexes managing to post gains, resulting in less demand for the safe-haven dollar.

However, spiraling inflation, tensions in Europe amid the Russian war on Ukraine and a rising number of coronavirus contagions, not only in China, anticipate a long road ahead towards economic stability and kept investors in cautious mode.

At the same time, central banks have started draining markets from easy money meant to provide support in the early stages of the pandemic. The Reserve Bank of Australia hiked the cash rate by 25 bps early on Tuesday. The US Federal Reserve and the Bank of England will announce their decisions in the upcoming days, and both could pull the trigger by 50 bps.

The yield on the 10-year US Treasury note peaked at 3% on Monday, while the German note yielded over 1% for the first time since 2015, both easing on Tuesday and putting some pressure on the greenback.

Global indexes edged higher, although Wall Street trimmed most of its gains ahead of the close, giving the dollar a chance to recover some ground.

The American dollar is still the strongest, as Tuesday's losses were modest, and the currency holds on to most of its yearly gains. EUR/USD hovers around 1.0510 early in the Asian session, while GBP/USD cannot sustain gains beyond the 1.2500 figure. Commodity-linked currencies posted modest gains against their American rival, with AUD/USD now trading around0.7090 and the USD/CAD pair around 1.2840.

Gold ticked higher, now trading at around $1,866 a troy ounce. Crude oil prices eased, with WTI changing hand at $102.75 a barrel.

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