Forex Today: Dollar consolidates Monday's rally, markets await November PMI data

Here is what you need to know on Tuesday, November 23:

The dollar continued to outperform its major rivals at the start of the week, boosted by the rising US Treasury bond yields following US President Joe Biden's decision to nominate Jerome Powell for a second term as Fed chair. The US Dollar Index, which touched a 16-month high of 96.60 earlier in the day, is consolidating its gains around mid-96s. Investors await the preliminary November Markit Manufacturing and Services PMI surveys from the euro area, Germany, the UK and the US.

The S&P 500 closed in the negative territory on Monday but the Dow Jones Industrial Average managed to post modest daily gains with rate-sensitive financial stocks capitalizing on rising yields. Reflecting the market pricing of the hawkish Fed policy outlook, the benchmark 10-year US Treasury bond yield rose 5% on Monday and seems to have settled above 1.6% early Tuesday. US stocks futures are edging lower in the European morning, suggesting that the market mood could turn cautious in the second half of the day.

EUR/USD pair came under renewed bearish pressure in the second half of the day and slumped to its weakest level in more than a year at 1.1226. The pair is currently moving sideways below 1.1250. European Central Bank (ECB) Governing Council member Martins Kazaks said on Monday that the policy can look through inflation as long as it remains transitory. German Health Minister Jens Spahn said on Tuesday that they cannot rule any measures out to battle the fourth COVID wave, including a lockdown.

GBP/USD fell below 1.3400 amid broad-based dollar strength and seems to be struggling to stage a recovery. The UK won't reportedly trigger Article 16 before Christmas, suggesting that they are expecting negotiations to continue in the next few weeks.

USD/JPY is trading at fresh multi-year highs above 115.00 as the US T-bond yields continue to drive the pair's action. 

Gold suffered heavy losses and fell more than 2% on a daily basis on Monday. XAU/USD is currently trading a little above $1,800.

USD/CAD is trading above 1.2700 for the first time since late September. According to Bloomberg, the US is preparing to announce a release of crude oil reserves from the US Strategic Petroleum Reserve (SPR) alongside several other countries as soon as Tuesday. The barrel of West Texas Intermediate (WTI) is down nearly 1% early Tuesday below $76 following Monday's technical correction.

Cryptocurrencies: Bitcoin is moving sideways above $55,000 after losing more than 4% on Monday. Ethereum holds above $4,000 following a two-day drop.