Forex Today: US Dollar holds ground, focus shifts to Trump-Xi summit

Here is what you need to know on Wednesday, May 13:

The US Dollar (USD) continues to edge higher early Wednesday after having outperformed its rivals on Tuesday. In the European session, investors will pay close attention to the revision of the first-quarter Gross Domestic Product (GDP) for the Eurozone. Later in the day, the US economic calendar will feature Producer Price Index (PPI) data for April. More importantly, market participants will keep a close eye on headlines coming out of United States (US) President Donald Trump's summit with Chinese President Xi Jinping.

The US Bureau of Labor Statistics reported on Tuesday that annual inflation, as measured by the change in the Consumer Price Index (CPI), climbed to 3.8% in April, surpassing the market expectation of 3.7% and marking the highest print since May 2023. In this period, the core CPI, which excludes volatile food and energy prices, rose 2.8%, compared to the 2.6% increase reported in March and analysts' estimate of 2.7%.

The benchmark 10-year US Treasury bond yield rose to its highest level since late March above 4.46% after the inflation data on Tuesday, and the USD Index gained about 0.4% on the day. In the meantime, Wall Street's main indexes registered large losses. Early Wednesday, the USD Index holds steady at around 98.40, while US stock index futures trade mixed.

Gold (XAU/USD) fluctuated in a wide range on Tuesday as it recovered above $4,700 late in the American session to close the day with small losses after dropping below $4,640 during the European trading hours. XAU/USD stays relatively quiet midweek and moves sidewas slightly above $4,700.

EUR/USD stays on the back foot and trades in negative territory below 1.1730 after losing about 0.4% on Tuesday. European Central Bank (ECB) Governing Council member François Villeroy de Galhau said on Wednesday that they don't have enough information on core inflation yet but added that the ECB must be ready to intervene to address second round effects.

In addition to the broad USD strength, the selling pressure surrounding the British Pound caused GBP/USD decline sharply on Tuesday. UK Prime Minister Keir Starmer is facing growing calls for his resignation after four ministers have resigned from the government and more than 80 lawmakers reportedly called for him to either quit or set a timetable for his departure.

USD/JPY stays in a consolidation phase above 157.50 after posting moderate gains on Tuesday.