Forex Today: Optimism proved ephemeral

What you need to take care of on Tuesday, July 19:

The dollar spent most of the first day of the week on the back foot, losing ground against most of its major rivals. However, it bounced back in the US afternoon, as Wall Street was unable to retain its early gains and turned red.

The greenback began easing on Friday as US encouraging data temporarily cooled recession-related concerns. A scarce macroeconomic calendar on Monday kept it on the downside ahead of central banks' decision. The US Federal Reserve entered its blackout period ahead of next week's meeting, while the European Central Bank will announce its monetary policy next Thursday.

The energy crisis in Europe could be a game changer in EUR/USD, which recovered up to 1.0200. The Russian Gazprom company has declared force majeure on supplies and said it could not guarantee gas supplies to Europe because of "extraordinary" circumstances. The International Energy Agency has warned the EU must reduce gas consumption ahead of the winter. The pair currently trades at around 1.0150.

A softer dollar helped GBP/USD to reach 1.2039, but the pair retreated towards the current 1.1960 area amid a worsening mood at the end of the day.

Commodity-linked currencies hold on to most of their early gains, with AUD/USD trading at 0.6815 and USD/CAD at 1.2965. Finally, safe-haven JPY and CHF posted modest gains against the USD.

Gold aimed to recover some ground, but ended the day at around $1,708 a troy ounce and is at risk of falling further. Crude oil prices, on the other hand, retain most of their early gains, with WTI now trading at $98.80 a barrel.

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