LONDON (ShareCast) - The dollar gave up some of its gains against the euro Monday as traders took profit on the greenback’s recent rally and after the release of gloomy US housing market data and more woes in the financial sector.

The sector came under renewed pressure on concern about the health of mortgage financiers Fannie Mae and Freddie Mac. Financial weekly Barron predicts they’ll struggle to raise enough cash and will have to be saved by the government.

Otherwise traders are looking ahead to Tuesday’s batch of economic data from the Eurozone and the US. Among the pickings is German economic sentiment data. It is is expected to be weak and may fuel speculation that the European Central Bank will slash interest rates to spur economic growth. More US housing data is due and reports on producer price inflation but neither are expected to have a big impact on the market.

Elsewhere the yen will be in focus ahead of the Bank of Japan's policy decision announcement Tuesday. The BoJ is widely expected to keep interest rates at 0.5% but is expected to change the language used in its accompanying report to reflect the fact the Japanese economy is stagnating.

Sterling remained under pressure with the latest report on the housing market adding to the bleak picture. Expectations that the Bank of England will cut rates soon are increasing.

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