Forex Today: US Dollar on the back foot ahead of FOMC Minutes, Fedspeak

Here is what you need to know on Wednesday, February 21:

The US Dollar (USD) struggled to find demand on Tuesday, with the USD Index posting its lowest daily close in two weeks near 104.00. The currency is finding it difficult to stage a rebound early Wednesday as market focus shifts to FOMC Minutes. Several Federal Reserve (Fed) policymakers will be delivering speeches later in the day and the European Commission will release the preliminary Consumer Confidence data for February.

The benchmark 10-year US Treasury bond yield edged lower following a three-day weekend and put additional weight on the USD's shoulders. Meanwhile, Wall Street's main indexes closed in negative territory. In the European morning, the 10-year US yield stays below 4.3% and US stock index futures trade marginally lower.

Despite the broad-based USD weakness, USD/CAD registered gains and closed above 1.3500 on Wednesday as soft inflation data from Canada made it difficult for the Canadian Dollar to stay resilient against its rivals. On a yearly basis, the Consumer Price Index (CPI) rose 2.4% in January, down from 3.4% in December and below the market expectation of 3.3%.

During the Asian trading hours, the data from Australia showed that the Wage Price Index rose 0.9% on a quarterly basis in the fourth quarter to match analysts' estimate. After closing the fifth consecutive day in the green, AUD/USD continued to stretch higher on Wednesday and was last seen trading above 0.6550.

Japan's Imports declined by 9.6% on a yearly basis in January, Japan's Ministry of Finance reported early Wednesday. USD/JPY showed no immediate reaction to this data and extended its sideways grind at around 150.00 in the Asian session.

GBP/USD climbed above 1.2650 during the European trading hours on Tuesday but erased a portion of its gains later in the day. The pair was last seen moving up and down in a tight channel at around 1.2620.

EUR/USD benefited from the USD weakness and advanced above 1.0800 on Tuesday. The pair holds steady above this level in the early European morning on Wednesday.

Gold capitalized on retreating yields and continued to push higher on Tuesday. XAU/USD holds its ground mid-week and trades modestly higher on the day at around $2,030.