Forex Today: Dollar rebounds alongside yields ahead of Powell speech

Here is what you need to know on Friday, June 17:

Following Thursday's heavy selloff, the greenback is holding its ground against its rivals early Friday. The benchmark 10-year US Treasury bond yield, which lost nearly 3% on Thursday, is now up more than 1% on the day and the US Dollar Index edges higher toward 104.50. Eurostat will release the Harmonised Indices of Consumer Prices (HICP) inflation figures for the euro area and the US economic docket will feature May Industrial Production data. More importantly, FOMC Chairman Jerome Powell is scheduled to deliver a speech at 12:45 GMT.

In the European morning, US stock index futures are up between 0.7% and 0.9%, pointing to an improving market mood. The S&P 500 Index touched its weakest level since December 2020 at 3,639 and ended up losing more than 3% on a daily basis. 

The Bank of Japan (BOJ) announced on Friday that it left its monetary policy settings unchanged. In its policy statement, the BOJ reiterated that it will be paying close attention to developments in forex markets and their impact on Japan's economic activity. The bank's policy inaction triggered a JPY selloff and USD/JPY erased a large portion of the heavy losses it suffered in the previous two days. As of writing, the pair was trading near 134.00, rising more than 1% on a daily basis.

EUR/USD gained more than 100 pips on Thursday and touched its highest level in nearly a week at 1.0602 before going into a consolidation phase. The pair was last seen trading slightly above 1.0500. The annual HICP in the euro area is expected to arrive at 8.1% in May, matching the flash estimate.

Following the impressive rally that was fueled by the Bank of England's (BOE) hawkish policy outlook on Thursday, GBP/USD turned south early Friday and dropped below 1.2300.

Gold managed to build on Wednesday's gains and climbed above $1,850 on Thursday. With the US T-bond yields edging higher early Friday, however, XAU/USD lost its traction and started to retreat toward $1,840.

USD/CHF fell nearly 300 pips on Thursday after the Swiss National Bank (SNB) unexpectedly announced that it hiked its policy rate by 50 basis points to -0.25%. The pair was last seen consolidating its losses at around 0.9700. 

Bitcoin fell nearly 10% on Thursday and came within a touching distance of the key $20,000 level. BTC/USD stays relatively quiet on Friday and seems to be having a difficult time recovering its losses. Ethereum is down more than 20% so far this week and trades near $1,100 in the European morning.