Forex Today: US Dollar looks vulnerable, RBA expected to raise rates

The key event during the Asian session will be the Reserve Bank of Australia meeting, with a rate hike expected. China will release important trade data. Later in the day, Eurostat will release the Producer Price Index.

Here is what you need to know on Tuesday, November 7:

The US Dollar Index reached a bottom at 104.86, the lowest level since September 21, and then rebounded, rising above 105.00. It closed in positive territory but remains under pressure following last week's Federal Reserve (Fed) meeting and US employment data.

A rebound in Treasury yields supported the Dollar, with the 10-year yield rising to 4.66% and the 2-year climbing from 4.85% to 4.93%. The Dollar's rebound appears to be corrective thus far, and fundamental factors still provide crucial support to the currency

EUR/USD retreated from monthly highs after failing to hold above 1.0750 and dropped to 1.0720. Eurostat will release the Producer Price Index (PPI) on Tuesday, with the annual rate expected at -12.5%.

GBP/USD reached the 200-day Simple Moving Average (SMA) at 1.2439 and turned to the downside, falling to 1.2350. The bias is still tilted to the upside, but there is further potential for correction. The following support level emerges around 1.2300.

The Japanese Yen weakened following Bank of Japan Governor Kazuo Ueda's somewhat dovish comments and the rebound in global government bond yields. USD/JPY rose after three days of losses, approaching the 150.00 area.

AUD/USD encountered resistance around the 0.6520 area and turned to the downside, falling below 0.6500. The Reserve Bank of Australia (RBA) will announce its decision on Tuesday, with many analysts expecting a 25 basis points rate hike.

USD/CAD fell to 1.3626 and rebounded, rising to the 1.3700 area. The pair posted daily gains after falling during three trading days, losing 250 pips. It remains under the 20-day SMA, with risks tilted to the downside.

Gold lost momentum amid higher US Treasury yields and fell below $1,980. XAG/USD (Silver) was unable to break above the crucial resistance area at $23.30 and dropped to $23.00.