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.

AUD/USD holds steady near 0.7200 amid escalating US-Iran tensions

AUD/USD consolidates just below its highest level since mid-May, touched on Friday, and hovers around 0.7200 at the start of a new week amid mixed cues. Hawkish RBA expectations continue to act as a tailwind for the Aussie. Meanwhile, the upbeat US NFP report lifted Fed rate hike bets, which, along with escalating US-Iran tensions, underpins the safe-haven US Dollar and caps the currency pair.

USD/JPY collapses to seven-month lows near 154.00

USD/JPY extends its decline on Monday, sliding to the area of seven-month lows near the 154.00 neighbourhood, all amid an increasingly hawkish repricing of the BoJ’s policy outlook and repatriation chatter.

Gold bounces off lows, back above $4,400

Gold builds on Friday’s losses, although it manages to regain some composure and reclaim the $4,400 mark per troy ounce on Monday. The yellow metal’s decline follows the move lower in the Greenback and steady caution ahead of key US data releases toward the end of the week.

Bittensor: TAO eyes $300 amid launch on Raydium, parody meme coin, ChatGPT-6 Astra release

Bittensor is trading in the green on Monday, continuing a steady upward trend over the last five days, with a 25% gain. Social chatter surrounding Bittensor is increasing amid a similarly named meme coin launched on Solana and the release of ChatGPT-6 Astra. The technical outlook for TAO is bullish as momentum strengthens and buyers target the $300 breakout.

Strong US jobs, Middle East tensions and key inflation data ahead

Good morning all, hope you enjoyed your weekend. Markets are starting the week after Friday’s stronger-than-expected US jobs report, which increased expectations that the Fed could raise rates at its September meeting. However, US markets are closed today for the Labor Day holiday, so liquidity should be lower and we may see slower price action.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.