Forex Today: US Dollar tumbles as markets get ready for key data

Early on Wednesday, New Zealand will release Building Permits data, and later Australia will do the same. The crucial report of the Asian session will be the Australian Monthly Consumer Price Index for July. Later, Japan will release consumer confidence data. Additionally, Germany's preliminary inflation figures and the US ADP Employment Report are also due.

Here is what you need to know on Wednesday, August 30:

The US Dollar Index experienced its most significant decline in over a month. The US JOLTS Job Openings and CB Consumer Confidence data came in below expectations, leading to a sharp drop in US Treasury yields. The 10-year yield fell from 4.20% to 4.11%, reaching its lowest level in two weeks. The DXY index broke below 104.00, falling below 103.50.

The correction of the US Dollar appears likely to continue, but upcoming US data will be crucial in determining its direction. On Wednesday, the ADP private employment report and another estimate of Q2 GDP growth will be released. Consumer inflation data will be released on Thursday, followed by Nonfarm Payrolls on Friday. These numbers could further impact the US Dollar if they continue to soften expectations of monetary policy tightening. 

Another factor that weakened the greenback was increased risk appetite, as commodity prices rose and stocks on Wall Street surged. The Dow Jones gained 0.85%, and the Nasdaq rallied 1.74%. Crude oil prices gained more than 1.5%. 

EUR/USD rebounded from below 1.0800 and approached the 20-day Simple Moving Average (SMA). On Wednesday, Spain and Germany will release their preliminary August Consumer Price Index (CPI) figures, which will be critical for expectations regarding the actions of the European Central Bank at the September meeting.

The weaker US Dollar pushed GBP/USD towards the 1.2650 resistance area. EUR/GBP continued to rise, surpassing 0.8600 to reach its highest level in two weeks. On Wednesday, the UK will report lending data.

USD/JPY reversed sharply from its highest level since November, falling below 146.00 after nearing 147.40. Japan will report Consumer Confidence data on Wednesday.

The New Zealand Dollar outperformed among G10 currencies on Tuesday. NZD/USD rose from 0.5900 to 0.5972. The pair faces a crucial barrier at 0.5990, which is a horizontal level and the 20-day SMA.

AUD/USD is trading above the 20-day SMA after a sharp rise from 0.6415 to 0.6480. On Wednesday, Australia's July Monthly Consumer Price Index (CPI) is due, and it is expected to decline to 5.2%.

Australian Inflation Preview: Surprises in Monthly Consumer Price Index to rock the Aussie

USD/CAD retraced from monthly highs at 1.3640 to 1.3555, reaching its lowest close in five days. The correction is expected to continue, but it will depend on US data not surprising the market.

Gold jumped, boosted by lower Treasury yields, reaching $1,937, the highest level since August 8. Silver finally broke above $24.40 and surged to $24.75. Cryptocurrencies also enjoyed a rally, with Bitcoin soaring 6.75% to $27,725.