Forex Today: PMI data to kick start the Fed week

Here is what you need to know on Monday, January 24:

Wall Street's main indexes suffered heavy losses on Friday and the benchmark 10-year US Treasury bond yield fell sharply ahead of the weekend, making it difficult for the dollar to outperform its rivals. Ahead of IHS Markit's preliminary January Manufacturing and Services PMI surveys for Germany, the euro area, the UK and the US, the greenback is holding its ground with the US Dollar Index posting modest gains above 95.70. The Federal Reserve Bank of Chicago's National Activity Index and the Federal Reserve Bank of Dallas' Manufacturing Business SUrvey will also be featured in the US economic docket.

At the start of the week, the market mood seems to be improving. During the Asian trading hours, the People's Bank of China announced that it lowered the rate on the 14-day reverse report by 10 basis points. Reflecting the risk-positive environment, the US stocks futures indexes are up between 0.65% and 0.85% in the early European morning. Last week, the S&P 500 fell 5.8% and registered its largest one-week drop since the beginning of the coronavirus pandemic.

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Following the sharp decline witnessed on Tuesday, EUR/USD moved up and down in a relatively tight range for the rest of the week and extends its sideways grind on Monday. The pair was last seen posting small daily losses below 1.1330. While speaking at the Davos World Economic Forum on Friday, European Central Bank President Christine Lagarde noted that they are not seeing signs of wages being bid up and noted that the euro area is not likely to face the same inflation as the US.

GBP/USD broke below the 1.3600 support area on Friday and snapped a four-week winning streak. The pair stays on the back foot slightly below 1.3550 to start the new week. Several news outlets report that civil servant Sue Gray is expected to release the findings on the "Partygate" investigations later in the week.

USD/JPY rose toward 114.00 during the Asian trading hours on Monday but seems to be having a tough time gathering momentum. In case the 10-year US T-bond yield gains traction, the pair could look to extend its rebound in the short term.

Gold stays in consolidation mode around $1,840 after rallying to its highest level in two months near $1,850 on Thursday.

Bitcoin plunged to its weakest level since July at $34,000 late Friday and failed to make a meaningful recovery over the weekend. BTC was last seen losing more than 3% on a daily basis at $35,000. Ethereum lost nearly 25% last week and continues to edge lower while trading below $2,500.