FOREX TODAY: DOLLAR STRUGGLES TO FIND DEMAND AS FOCUS SHIFTS TO KEY HOUSING DATA

Here is what you need to know on Tuesday, July 19:

Following Monday’s poor performance, the dollar continues to weaken against its major rivals on Tuesday with the US Dollar Index pushing lower toward 107.00 in the early European session. Eurostat will release its final revision of June inflation data. Later in the day, Housing Starts and Building Permits data from the US will be watched closely by market participants, especially after the NAHB reported on Monday that the Housing Market Index fell sharply to 55 in July from 67 in June.

Meanwhile, China reported 699 coronavirus cases on Monday, the highest daily tally since May 22, having reported over 1,000 infections over the weekend. The city of Lanzhou ordered a city-wide lockdown from Wednesday and Shanghai widened the mass testing to 12 of the city’s 16 districts. Markets remain relatively cautious early Tuesday with US stock index futures posting small daily gains.

The Reserve Bank of Australia’s (RBA) July meeting minutes showed earlier in the day that policymakers agreed that further increases in interest rate will be needed to return inflation to the target over time. AUD/USD gathered bullish momentum during the Asian session on Tuesday and extended its rally toward 0.6900.

EUR/USD surged above 1.0200 in the early European morning on reports claiming that the European Central Bank (ECB) policymakers were going to discuss whether they should hike the policy rate by 50 basis points on Thursday.

GBP/USD closed in positive territory on Monday and continued to push higher toward 1.2000 in the European session on Tuesday. The data published by the UK’s Office for National Statistics (ONS) revealed that the ILO Unemployment Rate in the UK remained unchanged at 3.8% in May, as expected. Furthermore, the number of people claiming jobless benefits fell by 20K in June when compared to -34.7K booked previously.

USD/JPY registered small daily losses and failed to stage a rebound in the Asian session. The pair stays on the back foot and trades slightly below 138.00.

Gold failed to capitalize on the broad dollar weakness and closed the day virtually unchanged near $1,710 on Monday. XAUUSD continues to move sideways near that level on Tuesday as the benchmark 10-year US Treasury bond yield stays calm below 3%.

Bitcoin gained nearly 8% on Monday but reversed its direction after having met resistance near $23,000. Ethereum climbed to its highest level in more than a month above $1,600 during the Asian session on Tuesday but retreated to the $1,500 area during the European trading hours.