Forex Today: Markets remain cautious in quiet calendar day

Here is what you need to know on FridaMonday, September 12:

The market action stays subdued to start the week as investors refrain from making large bets. The US Dollar Index, which lost 0.6% on Friday, stays on the backfoot in the European morning after having opened with a bearish gap. US stock index futures trade virtually unchanged and the 10-year US Treasury bond yield posts small daily gains near 3.3%. There won't be any high-impact macroeconomic data releases featured in the economic calendar on Monday. Comments from European Central Bank (ECB) officials and the 10-year US Treasury note auction later in the day will be watched closely by market participants.

Ahead of the weekend, several FOMC policymakers reiterated that they consider it appropriate to continue removing policy accommodation. "I support another significant hike in two weeks," Federal Reserve Governor Christopher Waller said on Friday but the greenback failed to end the week on a firm footing. Nevertheless, the CME Group FedWatch Tool shows that markets are pricing in a 90% probability of a 75 basis points (bps) rate hike.

EUR/USD snapped a three-week losing streak on Friday and preserved its bullish momentum early Monday. The pair trades with strong daily gains above 1.0100. The latest comments from officials revived expectations for one more 75 bps hike in October. Additionally, several news outlets reported that the bank is planning to start discussing quantitative tightening in October, allowing the shared currency to continue to gather strength.

GBP/USD broke above 1.1600 and continued to push higher toward 1.1650 early Monday.  The data from the UK revealed that the Gross Domestic Product expanded by 0.2% on a monthly basis in July. This reading came in weaker than the market expectation for a growth of 0.5%. Other data showed that Industrial Production contracted by 0.3% and the Manufacturing Production increased by only 0.1% in the same period. Despite the disappointing data, the pair clings to its daily gains amid the broad-based selling pressure surrounding the dollar.

Following Friday's deep downward correction, USD/JPY is edging higher early Monday and was last seen trading above 143.00. Japanese Deputy Chief Cabinet Secretary Seiji Kihara urged the government to take the necessary steps to counter the excessive depreciation in the JPY but this comment failed to help the currency stay resilient against the greenback.

Gold ended up closing the previous week with small gains. With US yields staying moving up and down in tight ranges on Monday, XAU/USD is having a difficult time finding direction as it fluctuates near $1,720.

Bitcoin continued to edge higher over the weekend and climbed above $22,000 on Monday before retreating to the $21,800 area. Ethereum touched its highest level in three weeks near $1,800 but lost its bullish momentum. ETH/USD closed in negative territory on Sunday and was last seen losing nearly 2% on the day at $1,735.