Forex Today: Dollar stays on the back foot as sentiment improves

Eren Sengezer FXStreet

Here is what you need to know on Monday, July 18:

Markets remain risk-positive at the beginning of the week and the greenback is having a tough time finding demand. The US Dollar Index (DXY), which lost 0.6% on Friday, stays on the back foot in the early European session with US stock index futures rising nearly 1%. The European economic docket will not feature any high-tier data releases on Monday. Later in the session, the NAHB Housing Market Index from the US will be looked upon for fresh impetus.

On Friday, the data published by the University of Michigan showed that the Consumer Confidence Index edged higher to 51.5 in July's flash estimate from 49.9. More importantly, the long-run inflation expectation component of the survey declined to 2.8% from 3.1% in June's final print. After this data, the probability of a 100 basis points rate hike in July dropped below 30% from nearly 90% earlier in the week.

Commenting on the rate outlook, Atlanta Fed President Raphael Bostic said that moving "too dramatically" could undermine positive aspects of the economy. Meanwhile, the Wall Street Journal reported that over the weekend Fed policymakers were preparing to raise the policy rate by 75 basis points at the upcoming meeting.

EUR/USD closed the third straight week in negative territory but managed to erase a portion of its weekly losses during Friday's rebound. As of writing, the pair was edging higher toward 1.0150.

Earlier in the day, the data from New Zealand revealed that the Consumer Price Index jumped to 7.3% on a yearly basis in the second quarter from 6.9% in the first quarter. This print came in higher than the market expectation of 7.1%. NZD/USD pair gained traction after this data and started to rise toward 0.6200.

GBP/USD managed to build on Friday's recovery gains early Friday and was last seen trading at its highest level in five days near 1.1950.

Gold suffered heavy losses and registered its lowest weekly close in nearly a year. Supported by the broad-based dollar weakness early Monday, gold gathered recovery momentum and climbed to the $1,720 area.

Bitcoin capitalizes on risk flows early Monday and trades near the upper limit of its one-month-old range near $22,000. Ethereum is already up more than 8% on a daily basis on Monday and continues to push higher toward $1,500.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD looks sidelined around 1.1850

EUR/USD remains on the back foot, extending its bearish tone and sliding towards the 1.1850 area to print fresh daily lows on Monday. The move lower comes as the US Dollar gathers modest traction, with thin liquidity and subdued volatility amplifying price swings amid the US market holiday.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.