Forex Today: Dollar gains traction as mood sours ahead of PMI data

Eren Sengezer FXStreet

Here is what you need to know on Friday, July 22:

Although the euro gathered strength following the European Central Bank's (ECB) decision to hike its key rates by 50 basis points, it lost its bullish momentum early Friday amid the negative shift witnessed in risk sentiment. The US Dollar Index edges higher toward 107.00 in the European session and US stock index futures are down between 0.3% and 0.8%. S&P Global will release the flash Manufacturing and Services PMI surveys for Germany, the euro area, the UK and the US on Friday. The Canadian economic docket will feature May Retail Sales data.

In addition to the double-dose rate increase, the ECB unveiled its new anti-fragmentation tool called the Transmission Protection Instrument (TPI). The bank also abandoned forward guidance by noting that every meeting will be live and that they will assess the data when making a decision. ECB President Christine Lagarde refrained from sharing key details regarding the TPI during the press conference. Meanwhile, Italian President Sergio Mattarella has dissolved the Italian parliament, triggering a snap election on September 25.

After having advanced toward 1.0300, EUR/USD erased a portion of its daily gains and closed in positive territory near 1.0250 on Thursday. The pair trades near 1.0200 early Friday.

GBP/USD closed virtually unchanged near 1.2000 on Thursday but started to push lower toward 1.1950 on Friday. The data published by the UK's Office for National Statistics showed earlier in the day that Retail Sales declined by 0.1% on a monthly basis in June. In 12 months to June, sales were down 5.8%, compared to the market expectation for a contraction of 5.3%.

Pressured by the sharp decline witnessed in US Treasury bond yields, USD/JPY fell to its lowest level in over a week near 137.00 but managed to reverse its course ahead of the weekend. With the benchmark 10-year US Treasury bond yield holding in positive territory following Thursday's 5% drop, the pair rises toward 138.00. The Japanese Finance Minister, Shunichi Suzuki, said on Friday that hiking rates could knock the economy's recovery, signalling support for the Bank of Japan's stance to keep monetary stimulus despite a global tightening trend amid rising inflation.

Gold finally capitalized on falling yields on Thursday and rose toward $1,720. XAUUSD stays relatively quiet near that level on Friday and clings to modest weekly gains.

Bitcoin continues to move sideways near $23,000 after having closed the previous two days virtually unchanged. Ethereum pushes higher toward $1,600 early Friday following Thursday's 3.5% gain.

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 softens below 1.1800 on Fed hawkish remarks

The EUR/USD pair edges lower to around 1.1775 during the early Asian session on Wednesday, pressured by a renewed US Dollar demand. Traders await the US President Donald Trump's State of the Union address later on Wednesday for clarity on fiscal policies.

GBP/USD regains 1.3500 and above

GBP/USD extends its advance for the third day in a row on Tuesday, this time retesting the area beyond the 1.3500 hurdle. Cable’s uptick comes despite decent gains in the Greenback and the dovish message from the BoE’s Bailey at the UK Parliament.

Gold consolidates below $5,150 as traders await Trump's State of the Union address

Gold steadies below the $5,150 level following the previous day's pullback from the monthly peak as traders opt to wait on the sidelines ahead of Trump's State of the Union address. In the meantime, trade-related uncertainties and geopolitical risks seem to act as a tailwind for the safe-haven bullion. However, the Fed's less hawkish outlook underpins the US Dollar, which, along with a positive risk tone, caps the upside for the non-yielding yellow metal.

Hyperliquid registers mild gains following CoinShares' ETP launch

Hyperliquid registered a 3% gain on Tuesday after CoinShares announced the launch of its Physical Hyperliquid Staking exchange-traded product, offering investors exposure to the token's price and staking yields.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.