The US dollar experienced a correction at the beginning of the European trading session on Friday (July 18, 2025), after a series of recent data from the United States showcased a relatively strong economy along with accelerating inflation.
This has led traders to speculate that the Federal Reserve may take a more cautious approach to interest rate cuts. According to FedWatch tools, traders now see a 56% probability of a rate cut by the Fed in September, a notable decrease from last week’s 65%.
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Such sentiment should ideally bolster the US dollar, suggesting that the current correction could be attributed to technical factors. Upcoming economic data from the United States tonight could potentially trigger more significant market movements. Here are the data points from Trading Central:
- US building permits data (month-on-month/June) at 19:30 WIB; forecast -1.7% vs previous -2%
- US housing starts data (month-on-month/June) at 19:30 WIB; forecast 2.7% vs previous -9.8%
- US consumer sentiment data (July) at 21:00 WIB; forecast 60.5 vs previous 60.7
GOLD
The dollar’s correction has allowed Gold (XAUUSD) prices to rebound at the start of the European session, reaching a daily high of $3,354.56 per troy ounce. Compared to the closing prices on Thursday, Gold has increased by nearly $16 or 160 pips.
As previously mentioned, market participants currently foresee the Fed taking a more cautious stance regarding interest rate reductions, which should create negative sentiment for Gold. Higher interest rates kept in place longer would maintain high yields on US bonds, making them more attractive compared to Gold, which is a non-yielding asset.
Thus, if tonight’s US economic data comes in stronger than the forecast, Gold could face further downward pressure.
OIL
Oil prices (CLS10) have risen to $68.54 per barrel at the start of the European trading session, reflecting an increase of nearly $1 compared to Thursday’s closing prices.
Oil received a positive sentiment boost after data indicated a significant decrease in oil stocks in the US. Furthermore, the International Energy Agency predicts that global oil supplies will remain tight despite increased production by OPEC+, providing further support.
Both of these sentiments will continue to influence the movement of oil in tonight’s trading session.
EURUSD
EURUSD moved higher at the beginning of the European trading session, reaching a daily high of 1.16457. As stated earlier, the US dollar’s correction appears tied to technical factors, evident in the movement of EURUSD. Yesterday, this currency pair dipped close to a one-month low, but today it is rebounding.
Considering the rise is driven by technical factors, there is potential for EURUSD to experience downward pressure again in tonight’s trading if US economic data exceeds expectations.
GBPUSD
GBPUSD also rose at the start of the European trading session, hitting a daily high of 1.34431. Similar to EURUSD, the increase in this currency pair is due to technical factors as it approaches a two-month high.
Thus, if US economic data tonight comes in better than the forecast, there could be a risk of GBPUSD facing downward pressure.
USDJPY
USDJPY exhibited volatility within the range of 148.290 and 148.881 during the early European trading session. The yen is currently facing negative sentiment following data from Japan showing a slowdown in inflation growth for June. This reduces the Bank of Japan’s (BoJ) urgency to raise interest rates.
The negative sentiment surrounding the yen bodes well for USDJPY, which could strengthen further if the US economic data tonight surpasses forecasts.
Nasdaq
Nasdaq has seen its gains curtailed after reaching an all-time high of 23,309 earlier today. Such elevated levels have naturally led to profit-taking moves.
However, if tonight’s US economic data is stronger than expected, there’s a possibility that Nasdaq may once again break its all-time highs.
