Track market-moving stories before they get noisy

The Gold and oil prices rose as the US Dollar weakened despite high US yields, pointing to inflation risk and growing unease over the US fiscal outlook. Brent crude ended the week above $94 a barrel, while the gold price climbed through $4,600 and the US Dollar slipped to a three-month low against the Euro.

Each move has its own explanation, but the broader picture is harder to dismiss.

Expensive oil threatens to keep inflation elevated, gold is attracting buyers as confidence in government debt comes under pressure, and high US yields are no longer providing the Dollar with reliable support.

Goldman Sachs trader Richard Privorotsky described the backdrop as having a “definite stagflation smell.”

That assessment captures the risk facing markets: weaker growth accompanied by persistent inflation, leaving central banks with little room to support the economy.

Oil Prices Keep Inflation Risk Alive The latest oil rally has been driven by physical supply concerns rather than speculative positioning alone.

Middle Eastern exports remain disrupted, while the impasse surrounding Iran and the Strait of Hormuz has prevented a more substantial recovery in regional shipments.

UBS analyst Giovanni Staunovo said: “Lower oil exports from the Middle East are once again tightening the oil market.”

Brent gained more than 6% over the week, increasing the risk of another rise in transport, manufacturing and consumer energy costs.

That would make it harder for the Federal Reserve to lower interest rates, even if economic activity begins to weaken.

Gold Price Rally Highlights the US Dollar’s Problem The Gold price has responded to a different concern.

The US Treasury’s decision to expand purchases of longer-dated government bonds initially lowered yields, but it also raised questions over why intervention was considered necessary.

Gold bullion surged as investors sought protection from rising public debt, inflation and the possibility that policymakers would tolerate a weaker currency to ease financial conditions.

American Gold Exchange analyst Jim Wyckoff described Thursday’s setback as “routine profit-taking pressure” following the previous session’s advance.

The price of Gold subsequently resumed its climb, suggesting that buyers were willing to return quickly after shallow declines.

The US Dollar’s response was especially significant.

Higher Treasury yields would ordinarily increase the appeal of US assets, yet the US Dollar weakened as investors questioned whether bond-market support addressed the underlying fiscal problem.

The Euro to Dollar exchange rate (EUR/USD) gained 0.92% over five sessions, while the AUD/USD rate advanced 1.23%.

This does not point inevitably to a financial crisis, but it does suggest that investors are becoming less comfortable treating US government bonds and the Dollar as the automatic beneficiaries of market stress.

Oil is warning about inflation, gold is reflecting demand for protection and the Dollar is absorbing more of the adjustment.

US PCE inflation data and Federal Reserve Chair Kevin Warsh’s Jackson Hole speech will test that interpretation next week.

A hawkish response could lift yields and the Dollar, while any acceptance of higher inflation or further bond-market support would strengthen the case for gold and other real assets.

Dollar Is Approaching a Much Bigger Technical Test Dollar’s selloff is not just about this week’s Treasury buyback announcement. DXY has broken important support and is moving toward levels that could turn a medium-term decline into a much larger structural breakdown. A decisive break of 95.55 would threaten the multi-decade rising channel and eventually bring 90 area into view. On other side, EUR/USD would likely be challenging 1.20 at roughly same time — a breakout that would carry similarly important long-term implications.

What makes technical setup more significant is that several very different analytical routes are pointing in same direction. Bond managers have focused on financing mechanics. Treasury’s own advisory committee has laid out limits of what buybacks can achieve. Fitch has approached issue through sovereign-credit arithmetic. Ray Dalio has looked at it through debt-cycle experience. Dollar traders are now expressing their own verdict through price.

These approaches do not start from same place, but they converge on one distinction: Treasury can manage where financing pressure appears, while buybacks do not remove underlying borrowing requirement. Initial Dollar reaction on August 19 could be explained by falling Treasury yields after larger buybacks were announced. By end of week, however, greenback remained broadly weaker even after yields recovered part of their initial fall. That raises a much bigger question for coming weeks: is Dollar merely extending a correction, or beginning to price fiscal concerns deeply enough to break DXY through 95.55 and send EUR/USD above 1.20?

What Treasury Actually Did Treasury announced on August 19 that it would increase buybacks in longer-dated nominal debt. Maximum operations in the 10–20 year and 20–30 year sectors were lifted from $2bn to at least $4bn, with larger operations scheduled between September 9 and November 4. Announcement came after 30-year Treasury yield briefly reached 5.34%, its highest since 2007.

Treasury Secretary Scott Bessent went further the following day. He said buybacks could exceed $4bn per issue and described liquidity in 30-year bonds as “very poor.” His stated aim was to improve market functioning and encourage investors to focus on fundamentals rather than headline-driven volatility.

Bond market initially responded exactly as Treasury might have hoped. Long yields fell sharply. But relief faded quickly. Ten-year yield reversed higher during Bessent’s own CNBC appearance and subsequently recovered a meaningful part of Wednesday’s decline.

That does not mean buybacks achieved nothing. They can improve liquidity and reduce pressure in parts of Treasury curve where investors have become reluctant to take duration. What they cannot do by themselves is change how much money US government ultimately needs to borrow.

And that is where first “language” comes in.

Language One: Bond Mechanics — Move the Supply, Don’t Remove It The easiest way to understand UBS’s argument is to compare Treasury buybacks with someone refinancing a mortgage.

Suppose a borrower replaces some long-term debt with shorter-term debt. Monthly financing structure changes. But total debt has not disappeared.

Treasury is doing something similar. It can buy older long-dated bonds from investors, reducing pressure in that corner of market. But it still needs money to fund government deficit and buyback itself. More Treasury bills can therefore be issued at short end.

UBS described this as reshaping debt maturity rather than reducing total Treasury supply markets must ultimately absorb. Unlike Fed quantitative easing, Treasury cannot simply create reserves to buy bonds. Financing pressure is reallocated, not eliminated.

Wellington Management’s Brij Khurana made essentially same point independently: Treasury needs to finance those purchases elsewhere, including through more bills. DBS economist Chang Wei Liang called likely impact of buyback changes “small” and “transient.” JPMorgan, Wells Fargo, Principal Asset Management and Standard Chartered all arrived at variations of same conclusion: Treasury may buy time or improve liquidity, but deficits, inflation risk and financing requirements remain.

That is why this is not really an argument over whether buybacks “work.” They can work perfectly well as a liquidity operation.

The more important question is whether investors begin treating them as a substitute for reducing borrowing needs.

So far, professional bond desks appear reluctant to do that.

Language Two: Treasury’s Own Rulebook Says Much the Same Thing The second language comes from inside Treasury’s own advisory framework.

Treasury Borrowing Advisory Committee has previously drawn a distinction between buybacks as a liquidity tool and issuance as the main tool for managing overall debt profile. In other words, even Treasury’s own advisers do not present buybacks as a way of solving underlying fiscal imbalance.

That distinction matters more because Treasury bills already account for around 22.2% of outstanding Treasury debt in the material supplied, above TBAC’s roughly 20% preferred ceiling. If more long-bond support is financed through additional short-term issuance, market has to consider whether pressure is simply being moved along curve.

There is also an uncomfortable historical echo. Bessent criticized Janet Yellen in 2024 for relying heavily on bills, saying Treasury was putting its “thumb on the scale of markets” to lower financing costs. Now Treasury itself is leaning more actively on debt-management tools as long yields approach politically and economically uncomfortable territory.

That does not automatically mean Treasury is trying to peg yields. But it does raise a broader question: where does ordinary debt management end and active management of financial conditions begin?

RSM chief economist Joseph Brusuelas warned that political pressure could increasingly push monetary and fiscal institutions toward the same objective of suppressing financing costs. That would create a difficult environment for Fed Chair Kevin Warsh, especially because Warsh has previously criticized central-bank bond purchases for keeping borrowing costs artificially low and weakening fiscal discipline.

Jackson Hole next week therefore takes on another dimension. Markets will not only listen for Fed’s inflation and rate outlook. They will also watch how Warsh defines boundary between monetary policy and Treasury’s growing role in bond-market conditions.

Language Three: Fitch Removes the Trading Desk From the Argument Fitch approaches the issue from a very different direction.

It is important not to overstate its message. Fitch affirmed US rating at AA+ with a stable outlook on August 13. It continues to highlight enormous strengths: scale of US economy, high income levels, deep capital markets and Dollar’s dominant reserve-currency role. Dollar still represents roughly 58% of global reserves and plays an overwhelming role in foreign-exchange transactions.

But Fitch’s fiscal projections show why long-term investors are uncomfortable.

General government debt is projected to rise from around 117% of GDP at end-2025 to 123% in 2028 and 128% by 2030 under current policies. Median for other AA-rated sovereigns is only 46.3%.

US general government deficit is projected at 7.4% of GDP in 2026, highest in AA category. Interest costs are also becoming much heavier. Fitch expects interest-to-revenue ratio to reach 12.6% by 2028, compared with 3.5% median for AA peers.

Current numbers reinforce that pressure. Federal debt has moved above $40tn. July deficit reached $432bn. Fiscal-year-to-date deficit is around $1.8tn, while net interest payments reached roughly $963bn over first ten months of fiscal year in the supplied research.

Fitch’s point is not that US is facing an imminent funding crisis. Its stable outlook says the opposite.

The more useful conclusion is that America’s exceptional economic scale and Dollar’s reserve status are compensating for fiscal metrics that would look much more problematic in an ordinary AA sovereign.

That makes confidence in Dollar itself part of fiscal equation.

Bessent Has a Counterargument — but It Needs Numbers Bessent is not ignoring fiscal problem. His counterargument is that current trajectory can improve without dramatic austerity.

He said there is a “very good chance” deficit has already peaked. He has also argued that US can “grow our way out” of the $40tn debt figure. A Treasury-OMB effort is examining “several hundred billion dollars” of potential fiscal consolidation.

Those arguments are plausible in principle.

A larger economy makes an existing debt burden easier to service. Faster productivity growth from AI could improve tax revenues. Spending restraint could narrow deficit. Strong tariff revenues could contribute as well.

But markets need evidence rather than promises.

If deficit really has peaked, future budget numbers should show it. If tariff receipts can stay close to 2025 levels after recent legal setbacks, Treasury data should demonstrate it. If US can grow out of debt problem, nominal GDP needs to expand quickly enough relative to debt to stabilize fiscal ratios.

This is one reason buyback announcement moved markets more than Bessent’s reassurance. Buyback was an actual policy action. Fiscal improvement remains a forecast.

Language Four: Dalio and Dimon Ask What Happens If It Isn’t Fixed Ray Dalio’s argument is different again. He is less concerned with whether a $4bn buyback lowers a particular Treasury yield by five or ten basis points. He is asking what happens if debt and debt-service costs keep compounding.

Dalio said US government financial position is at an “inflection point” and warned that debt could eventually become impossible to manage without serious economic pain. He views Treasury intervention as a symptom of that pressure rather than a cure, arguing that government has only limited capacity to keep intervening indefinitely.

His preferred solution combines three measures: cut spending, raise revenue and reduce interest rates. The important part is that he says those three need to happen together so no single adjustment becomes too extreme.

But Dalio also adds an important warning: “it would be very bad if the Federal Reserve unnaturally forced interest rates down.” In other words, lower borrowing costs may be part of a solution, but artificially suppressing them without addressing deficits simply postpones adjustment.

Jamie Dimon has raised a related but different concern. His warning is about what prolonged high debt and expensive money could expose elsewhere in financial system. In April, he said a bond crisis would eventually have to be dealt with, without offering a specific timeframe. More recently, he has highlighted high levels of leverage that may not appear in conventional margin-debt statistics because it sits inside special vehicles and securitized structures.

These are not forecasts that a crisis happens next month or even next year.

They are warnings about second-order risk: when sovereign borrowing costs stay high for long enough, stresses can migrate into places that were not obvious during earlier stages of cycle.

Language Five: Dollar Is Starting to Say the Same Thing The fifth language needs no analyst note.

Dollar Index extended its decline last week and broke decisively below 99.41, the 38.2% retracement of rebound from 95.55 to 101.80. That strengthens view that rebound from 95.55 completed as a three-wave corrective move at 101.80.

Near-term outlook stays bearish while 55-day EMA around 100.04 caps recovery.

Next key level is around 97.94. This is an important technical confluence. It represents 61.8% retracement of the 95.55–101.80 rise, while sitting almost exactly on the 38.2% retracement of much larger advance from 70.68 in 2008 to 114.77 in 2022.

Firm break of 97.94 would put 95.55 back into focus.

Weekly chart strengthens that warning. DXY has fallen below 55-week EMA around 99.71, supporting view that decline from 110.17 remains incomplete. Break through 95.55 would resume that fall and target the 92.76 projection.

But monthly chart is where stakes become much larger.

DXY has again failed to sustain above 55-month EMA around 100.57. If decline eventually breaks through 95.55, Dollar Index would also threaten its multi-decade rising channel from 2008 low.

That would no longer be simply a short-term Dollar correction.

Fall from 114.77 could then be developing into a much larger correction of entire post-2008 bull trend, or potentially something more significant. In either case, 89.29, close to psychological 90 level, would become an important longer-term downside objective.

The distinction is crucial: 95.55 has not broken yet. It is the level that would turn current bearish setup into a much more serious structural signal.

EUR/USD 1.20 Is the Other Side of the Same Test EUR/USD offers traders a mirror image of DXY setup.

Pair has repeatedly struggled around psychological 1.20 area. That region also contains 1.2019, the 38.2% retracement of long decline from 1.6039 to 0.9534.

If DXY breaks decisively through 95.55, EUR/USD would likely be making its corresponding attempt through 1.20.

A clean breakout there would carry substantial medium-to-long-term significance. It would open the way toward 1.3554, the 61.8% retracement of 1.6039–0.9534 decline.

So two charts give traders essentially the same structural test:

DXY below 95.55.

EUR/USD above 1.20.

If both occur together, Dollar story would be moving beyond a reaction to one week’s Treasury headlines.

What Would Prove the Bearish Dollar Thesis Wrong? Convergence is powerful, but it is not proof of an inevitable Dollar crisis.

There are clear developments that would weaken the argument.

Most important would be actual fiscal consolidation. A legislated and independently scored package that materially reduces future deficits would address underlying borrowing requirement rather than maturity structure.

Hard revenue data could also validate Bessent’s optimism. Stronger tariff receipts or other revenue gains would improve fiscal arithmetic.

Growth is another route. If productivity and real activity accelerate enough to improve debt-to-GDP dynamics, “grow our way out” becomes an economic argument rather than a slogan.

Markets themselves will provide confirmation as well.

If DXY starts responding positively again to strong US data, higher yields or hawkish Fed signals and reclaims 100, immediate bearish case would weaken.

But failure to recover 100 on positive catalysts would keep warning alive.

A break of 97.94, followed by 95.55, would turn that warning into something much more serious.

Five Languages, One Question for Dollar No single voice in this debate is decisive.

UBS and Wellington explain mechanics. Treasury’s own advisory framework explains what buybacks were designed to do. Fitch shows fiscal arithmetic. Dalio and Dimon warn about consequences if debt burden keeps compounding. Dollar chart tells us how investors are beginning to position.

These arguments are not identical. They should not be treated as if they are.

But they overlap at one crucial point: buybacks can help Treasury manage market stress without solving reason that stress exists.

That is why DXY’s next move matters so much.

Holding 95.55 would leave current decline within a broader range. Breaking it would threaten a much larger technical structure, while EUR/USD would simultaneously be positioned for another attack on 1.20.

Treasury can rearrange duration. It can improve liquidity. It can buy time.

What markets are now asking is whether Washington can use that time to change fiscal trajectory before Dollar begins pricing a much bigger adjustment.

The US Dollar (USD) collapsed this week, helping EUR/USD reach a fresh three-month high just above the 1.1700 mark, heading into the weekly close a handful of pips below that level but still firmly up.

Unexpected boost to US liquidityThe USD sell-off was triggered by the United States (US) Department of the Treasury, which announced on Wednesday that it will increase the government debt repurchase size by at least double. According to the press release, the current maximum size of $2 billion per operation will be at least $4 billion per operation, and the change will become effective September 9.

The announcement, while aimed at taming long-term bond yields, was also a signal that the Treasury is sensitive to yield volatility. The Treasury made its move after the 30-year bond yield climbed to 5.327% on Tuesday, its highest level since June 2007, immediately falling afterward by roughly 9 basis points.

There are, however, a couple of things that are worth understanding. First, buybacks are just a rearrangement of the maturity schedule, as the Treasury will have to issue fresh bonds to replace those that it plans to buy back. Government debt and fiscal deficits will remain the same.

Second, the decision has an impact on the Federal Reserve’s (Fed) future monetary policy decisions. Given that the US Treasury will have to issue more bills to finance the planned removal, this would likely ease financial conditions, which would increase the odds of a tighter monetary policy.

The future looks cloudy for the USD, with precious metals likely to outpace the Greenback in a risk-averse environment. Neither Treasury buybacks nor higher rates will address the root of the problem, which is the fiscal deficit.

In any case, that means further USD weakness in a risk-averse environment. The Middle East war is in a stalemate, and neither side is willing to budge. Oil prices have already picked up a bullish pace, and it won’t take much longer until energy prices become embedded inflation.

Financial warMeanwhile, the Middle East war adds pressure on financial markets. Tensions between the US and Iran remain in place, with neither willing to give in to the other party´s demands. Fire exchange around the Strait of Hormuz remains paused, as well as talks aimed at ending the conflict.

Market participants are clearly seeing a long-standing conflict ahead, and generally speaking, they are getting used to the idea. However, Oil prices have been picking up lately, reviving inflation-related concerns and also hinting at central banks opting for tighter monetary policies.

US President Donald Trump, however, is unwilling to give up. Trump posted on Truth Social that the next move is choking Tehran's economy by levying major penalties against any country that provides “any type of lifeline” to Iran, calling it an “Economic D-Day.”

His comments were reinforced by US Treasury Secretary Scott Bessent, who noted on Thursday that President Trump's plan to crush Iran’s economy will likely negate the need for major US military operations against the Islamic Republic.

Bessent also had some comments on the Treasury buyback. He declared that the Treasury could increase bond buybacks beyond $4 billion, partly to signal that current yields do not reflect underlying economic fundamentals.

ECB Lagarde worried about Europe growthEuropean Central Bank (ECB) President Christine Lagarde hit the wires on Wednesday and expressed concerns about Europe facing an erosion of the conditions that have historically driven the continent’s growth at the World Economic Forum’s International Business Council in Geneva, Switzerland. Growth rested on three pillars, according to Lagarde: expanding global trade, manufacturing supported by access to cheap energy, and “a stable, rules-based global order, underpinned by a US security umbrella.”

“Today, that global order is under pressure. Geopolitical tensions are bringing critical dependencies and choke points into sharper focus, while Europe faces growing security threats on its doorstep,” Lagarde added. Her speech aimed to warn about Europe's ability to compete in the age of AI, but her comments about the US did not pass unnoticed. War, physical or financial, poses a major risk and no one can ignore it.

Macroeconomic cluesThe macroeconomic calendar had little to offer in the last few days. The Federal Open Market Committee (FOMC) released the Minutes of the July meeting, which brought nothing of substance. Officials remain concerned about inflation, and support rate hikes would be required if price pressures persist. A note of color was added by Chair Kevin Warsh, as he proposed reducing annual meetings from the current eight to six, to allow collecting more data in between meetings. This year’s schedule, however, remains the same.

Other than that, the focus was on the S&P Global and local banks’ Purchasing Managers’ Indexes (PMIs) released on Friday. The August flash estimates showed that Eurozone business activity expanded more than anticipated, as the Manufacturing PMI improved to 52.8 from 51.9 in July, against expectations of 51.8. Services output remained unchanged at 51.7, beating the expected slowdown to 51.5. Finally, the Composite PMI printed at 52.1, better than the expected 51.7 and the previous 52.

US PMIs also showed encouraging results, despite the Manufacturing PMI ticking lower to 53.2 from 53.9 in July. The Services index jumped to 56.8 from 54.6, pushing the Composite PMI to 56 from 54.5 in July, surpassing the expected 54. The figures help the USD recover some modest ground, though it is still sharply down for the week.

In the upcoming days, the macroeconomic calendar will include the German Q2 Gross Domestic Product (GDP) and the US July Personal Consumption Expenditures (PCE) Price Index. The US will also publish the second estimate of its Q2 GDP.

Additionally, investors will keep an eye on this year’s Jackson Hole Economic Policy Symposium, hosted by the Fed Bank of Kansas. This year's theme is “Financial Innovation: Implications for Payments and Policy.” Policymakers from around the globe will discuss the main topic and may provide hints on the future of monetary policy.

Finally, the US Bureau of Labor Statistics (BLS) will release the annual Nonfarm Payrolls (NFP) Benchmark Revisions on Friday, a revision of labor statistics for the twelve months to March.

EUR/USD Technical Outlook:From a technical perspective, EUR/USD is bullish. The pair extends its advance well above the short- and medium-term moving averages, with the shorter one clearly bullish. The 20-day Simple Moving Average (SMA) at 1.1542, the 100-day SMA at 1.1573 and the 200-day SMA at 1.1631 all sit below spot, reinforcing a supportive backdrop as price pushes further into higher ground. The outlook stays constructive, with the 14-day Relative Strength Index (RSI) consolidating at 71 and the 14-period Momentum indicator also holding above its midline, hinting that buyers still dominate in the near term even as conditions look stretched.

On the weekly chart, EUR/USD holds a constructive bullish bias and trades above bullish moving averages. The 20-week SMA stands at 1.1576, while the 100-week SMA is at 1.1326 and the 200-week SMA is at 1.1059, reinforcing a broader underlying support structure. Weekly momentum is building up, as technical indicators head firmly north after crossing their midlines into positive ground.

On the downside, initial support emerges at the 200-day SMA around 1.1631, followed by the 100-day SMA and the 20-week SMA, which converge in the 1.1570 price zone, forming a strong dynamic support area. Further slides could see EUR/USD dropping towards 1.1470 before relevant buying interest reappears. Recent highs around 1.1710 establish the first resistance area ahead of the 1.1800 mark. Additional gains should lead to a test of the April monthly peak at 1.1850.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Risk sentiment FAQs In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.

Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.

The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.

The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.

EUR/USD reverses its earlier gains on Friday as the US Dollar (USD) steadies after retesting the three-month low touched the previous day. At the time of writing, the pair trades around 1.1677, easing from an intraday high of 1.1711, its highest level since May 14.

Traders also digest preliminary S&P Global Purchasing Managers' Index (PMI) data showing that US business activity remained in expansion in August. The Composite PMI rose to a 52-month high of 56.0 from 54.5, while the Services PMI climbed to a 20-month high of 56.8 from 54.6. The Manufacturing PMI eased to a five-month low of 53.2 from 53.9.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 98.82, recovering from an intraday low of 98.56. Despite the intraday pullback, EUR/USD remains on track for a fourth consecutive weekly gain as the broader macroeconomic backdrop leans against the Greenback.

The US Dollar came under heavy selling pressure earlier this week after the US Treasury announced that it would double its liquidity-support buybacks for longer-dated government securities. The move raised fresh concerns about US fiscal credibility and the sustainability of rising government debt.

Fading expectations of a Federal Reserve (Fed) interest-rate hike also keep US Dollar bulls at bay. The CME FedWatch Tool shows a 65% probability that the central bank will leave interest rates unchanged next month following softer US employment and inflation data for July. However, heightened energy-driven inflation risks stemming from the US-Iran stalemate keep the possibility of a rate hike alive.

Meanwhile, the monetary policy outlook favours the Euro (EUR), with markets widely expecting the European Central Bank (ECB) to raise interest rates in September

BNY Mellon’s Geoff Yu highlights comments from ECB Governing Council member Martins Kazaks, who said the central bank remains “well positioned to tighten policy further if needed,” with Euro area inflation “still near 3% and therefore above target.” Kazaks underscored that “September’s decision remains data dependent,” even as markets have largely priced in “another 25bp hike after June’s move.”

ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.

The Euro (EUR) trades 0.21% higher at around 1.1710 against the US Dollar (USD) during the European trading session on Friday, the highest level seen in over three months. The major currency pair climbs higher as the US Dollar (USD) underperforms due to multiple headwinds, notably United States (US) Treasury Department’s decision to double down on its bond-buying operations and receded hawkish Federal Reserve (Fed) bets.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, is down 0.17% to near 98.67. The USD Index attracts slight bids after revisiting the fresh three-month low at 98.56 posted the previous day.

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.20%-0.13%-0.19%-0.35%-0.66%-0.55%-0.16%EUR0.20%0.07%-0.02%-0.18%-0.47%-0.34%0.04%GBP0.13%-0.07%-0.09%-0.24%-0.51%-0.42%-0.02%JPY0.19%0.02%0.09%-0.15%-0.46%-0.37%0.04%CAD0.35%0.18%0.24%0.15%-0.31%-0.19%0.19%AUD0.66%0.47%0.51%0.46%0.31%0.10%0.50%NZD0.55%0.34%0.42%0.37%0.19%-0.10%0.41%CHF0.16%-0.04%0.02%-0.04%-0.19%-0.50%-0.41% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Euro support builds as ING flags benign Dollar declineAnalysts at ING observe that EUR/USD "remains well supported," with the pair benefiting from what they describe as a "benign decline in the Dollar that tends to float all boats." They add that, while "not that anyone is expecting it," any move toward "true US fiscal consolidation" would matter for the currency outlook, as "the combination of tighter fiscal policy and looser monetary policy would be Dollar-negative."

Dollar seen vulnerable as Fed faces pressure to cut rates in 2027Analysts at Commerzbank argue that the Dollar is likely to come under renewed pressure once the war with Iran ends, as they do not expect the Fed to deliver the rate hikes currently priced by markets. Instead, they foresee the Fed "embark on pronounced and ultimately excessive interest rate cuts again in 2027, also because of the political pressure." Commerzbank adds that the Dollar is "vulnerable because it is significantly overvalued based on purchasing power parity," reinforcing their view that the currency will face downside risks over the medium term.

While comments from financial markets suggest that hopes of a prolong Fed’s wait mode to keep the US Dollar under pressure, firm expectations that the European Central Bank (ECB) will raise interest rates in September is strengthening the Euro.

Analysts at DBS highlight that EUR has been the “prime beneficiary of USD weakness,” with EUR/USD having “rallied towards 1.17” as the Dollar remains under pressure. They note that the latest inflation data have reinforced the Euro’s appeal, with the Eurozone’s July CPI “coming in line with expectations,” as both “headline and core inflation matched consensus of 2.9% y/y and 2.5% y/y respectively.”

DBS argues that this inflation backdrop “has entrenched expectations of an ECB rate hike for Sep,” pointing out that “markets [are] pricing in a 26bps hike with over 90% probability.” By contrast, they see the policy outlook across the Atlantic as opaquer: “on the other hand, the Fed’s next rate move is less clear given recent economic data softness, and upcoming mid-term elections in November,” leaving the Dollar on a weaker footing against the Euro.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1703, extending its advance well above the 20-period Exponential Moving Average (EMA) at 1.1561 and reinforcing a bullish near-term bias as price holds above this dynamic support. The Relative Strength Index (14) at 74.8 pushes deeper into overbought territory, suggesting that while buyers remain in control, upside momentum could be prone to pauses or brief corrective pullbacks.

On the downside, immediate support emerges at the recent pivot around 1.1703, followed by the 20-period EMA near 1.1561, which should act as a structural floor on a deeper retracement. Looking up, EUR/USD could extend its upside towards the May high near 1.1800.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

US Dollar FAQs The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

ING’s Chris Turner says EUR/USD remains well supported by broad Dollar softness. Expected mild eurozone growth in the August PMIs and elevated inflation expectations keep the case for another European Central Bank (ECB) hike alive. EUR/USD is seen consolidating in the 1.1670-1.1710 range before potentially edging higher, although high natural gas prices remain a risk.

Euro supported by soft Dollar story"EUR/USD remains well supported, and, as above, we favour the kind of benign decline in the dollar that tends to float all boats. Not that anyone is expecting it, but should some true US fiscal consolidation emerge, the combination of tighter fiscal policy and looser monetary policy would be dollar-negative."

"Fiscal consolidation seems unlikely though, with Washington wanting to spread its pro-growth mindset to the entire G20 when finance ministers and central bank governors meet later this month."

"Today's eurozone data calendar focuses on the August PMIs. For the eurozone as a whole, these are expected to indicate a continued mild expansion and one which supports another European Central Bank hike in September. "

"There will also be focus on the ECB's Consumer Expectations Survey, where three-year inflation expectations reached 3.0% in March and are expected to remain elevated at 2.8%."

"EUR/USD can consolidate in a tight 1.1670-1.1710 range today, before potentially edging higher."

"With emerging market currencies performing well, we prefer a continued gentle rise in EUR/USD. High natural gas prices remain a concern, but since the eurozone economy seems to be coping with these better now, EUR/USD can focus on the soft dollar story."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

EUR/USD remains stronger for the third consecutive day, trading around 1.1680 during the Asian hours on Friday. The Euro (EUR) gains ground against the US Dollar (USD), bolstered by strong economic fundamentals across the region. Markets are closely watching the upcoming HCOB Purchasing Managers' Index (PMI) data from Germany and the broader Eurozone for further directional cues.

Adding to this strength, soaring European natural gas prices, driven by supply shortages in the Middle East, are keeping inflationary risks elevated. These ongoing price pressures will likely compel the European Central Bank to continue raising interest rates throughout the year.

The central bank's hawkish stance is further supported by robust German economic figures, highlighted by July producer prices rising 3.0% year-on-year. Exceeding market expectations of 2.7%, this marked the fastest annual increase since April 2023. Coupled with a sharp 1.1% monthly rebound, the data underscores persistent inflationary momentum across the Eurozone.

However, upside potential for the EUR/USD pair may remain capped as the Greenback finds renewed strength. Despite attempts by the US Treasury to restrain elevated yields through a long-end bond buyback program, US Treasury yields have resumed their upward trajectory, offering underlying support to the Dollar.

Fed’s Musalem flags upside inflation risks, keeps Dollar bulls alert despite neutral stanceFed’s Musalem delivers a speech broadly in line with the established baseline, with the FXS Speechtracker score at 7/10 matching the historical average but masking a notably hawkish tilt on inflation risks. Musalem underscores that monetary policy is “neutral or accommodative” and financial conditions are “pretty accommodative,” yet stresses that underlying inflation at 2.5%-3% is “too high,” warns that a Super El Niño could be the next supply shock, and argues that hiking rates now could avert more aggressive action later, a combination that leans hawkish for the Dollar and front-end yields. The emphasis on Fed credibility, policy independence from fiscal authorities, and the need to get inflation back to 2% reinforces a bias toward tighter policy if inflation fails to decelerate, even as Musalem refuses to prejudge the September FOMC outcome.

The FXS Fed Sentiment Index slipped by 0.34 points to 132.42, indicating a modest pullback in perceived hawkishness relative to recent communications while remaining firmly above the 100 neutral line. This configuration signals that, despite the slight softening captured by the FXS Fed Sentiment Index, the overall stance is still clearly hawkish in aggregate, consistent with the 7/10 FXS Speechtracker score and supportive of Dollar resilience on persistent inflation concerns.

Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

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Published: Aug 20, 2026, 16:47 GMT+00:00

$1.16738

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Key Points:GBP/USD moved higher as rally continued. USD/CAD pulled back as traders reacted to the rally in the oil markets. USD/JPY rebounded towards 159.00 as traders focused on rising Treasury yields.

EUR/USD

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EUR/USD ForecastGBP/USD

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GBP/USD ForecastUSD/CAD

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USD/CAD ForecastUSD/JPY

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USD/JPY Forecast

U.S. Dollar Gains Ground As Traders Buy The Dip

DXY 200826 4h Chart U.S. Dollar Index attempts to rebound after the strong sell-off, which was triggered by Treasury’s decision to boost buybacks of long-dated bonds.

Today, U.S. Treasury Secretary Scott Bessent indicated that Treasury could increase buybacks to more than $4 billion per issue.

Traders also focused on the Initial Jobless Claims report. The report indicated that 206,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 210,000.

U.S. Dollar Index failed to settle below the support level at 98.60 – 98.75 and is moving towards the 99.00 level. In case U.S. Dollar Index climbs above 99.00, it will head towards the nearest resistance at 99.25 – 99.40. A move above 99.40 will push U.S. Dollar Index towards the 50 MA at 99.58.

EUR/USD Is Mostly Flat Amid Profit-Taking EUR/USD 200826 4h Chart EUR/USD is mostly flat as traders take some profits off the table and react to Germany’s PPI report. The report indicated that PPI increased by +3% year-over-year, compared to analyst forecast of +2.7%.

From the technical point of view, EUR/USD attempts to settle above the resistance level at 1.1685 – 1.1700. If EUR/USD moves above the 1.1700 level, it will head towards the next resistance at 1.1775 – 1.1790.

GBP/USD Tests Resistance At 1.3635 – 1.3650 GBP/USD 200826 4h Chart GBP/USD tested new highs as rally continued. Traders bet that Treasury’s bond buybacks will put additional pressure on the American currency.

Currently, GBP/USD is trying to settle above the resistance level at 1.3635 – 1.3650. In case this attempt is successful, GBP/USD will move towards the next resistance, which is located in the 1.3720 – 1.3735 range.

USD/CAD Tests New Lows

USD/CAD 200826 4h Chart USD/CAD remains under pressure as traders focus on rising oil prices. Other commodity-related currencies are mixed in today’s trading session.

In Canada, traders focus on the New Housing Price Index report. The report showed that new housing prices decreased by -0.1% month-over-month in July, compared to analsyt forecast of 0%.

The nearest support level for USD/CAD is located in the 1.3735 – 1.3750. A successful test of this level will push USD/CAD towards the support level at 1.3635 – 1.3650.

On the upside, a move above the 1.3800 level will open the way to the test of the resistance level at 1.3825 – 1.3840. RSI has recently moved out of the oversold territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

USD/JPY Gains Ground As Treasury Yields Rise USD/JPY 200826 4h Chart USD/JPY rebounds as traders focus on rising Treasury yields. The yield of 2-year Treasuries climbed towards the 4.20% level, while the yield of 10-year Treasrueis settled above 4.70%. Treasury yields are moving higher despite Bessent’s efforts to push them lower as bond traders remain worried about long-term rate outlook.

If USD/JPY climbs above the 50 MA at 159.18, it will move towards the nearest resistance level at 159.50 – 160.00. A move above 160.00 will push USD/JPY towards the 162.00 level. It remains to be seen whether BoJ is ready to intervene in case USD/JPY climbs above the psychologically important 160.00 level.

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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.

Latest news and analysis

EUR/USD trims part of its earlier gains on Thursday as the US Dollar (USD) stabilises following the previous day’s sharp selloff. At the time of writing, the pair trades around 1.1686 after touching an intraday high of 1.1710, its highest level since May 14.

The Greenback finds support as US Treasury yields rebound following Wednesday’s steep pullback, which was triggered by the US Treasury Department’s announcement of larger liquidity-support buybacks for longer-dated government securities.

DBS Group Research strategist Chang Wei Liang acknowledges the recent bout of Dollar weakness but cautions against extrapolating further downside from the latest US Treasury move. He argues that, “given that the additional buybacks are very small and there is also no change in monetary policy, the USD is more likely to consolidate today rather than track lower,” suggesting the currency may pause rather than extend its recent slide.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 98.76, recovering from an intraday low of 98.56.

Meanwhile, the latest US labour market data provide additional support to the Greenback. Initial Jobless Claims fell to 206K in the week ending August 15, below market expectations of 210K and the upwardly revised previous reading of 212K.

On the monetary policy front, the Federal Reserve (Fed) and European Central Bank (ECB) are expected to take different paths at their meetings next month. The Fed is widely expected to keep interest rates unchanged, while the ECB is seen raising rates for the second time this year.

These differing policy expectations come amid heightened energy-driven inflation risks as the US-Iran stalemate keeps shipping through the Strait of Hormuz restricted.

San Francisco Fed President Mary Daly said on Thursday that “rising bond yields don’t give a signal for policy” and that Fed policy “is in a good place.” She added that “short-term yields show markets understand the Fed’s reaction function,” while stressing that the central bank “really has to focus on achieving its inflation target.”

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHFUSD-0.08%-0.25%0.29%-0.26%0.08%-0.36%0.13%EUR0.08%-0.17%0.39%-0.18%0.15%-0.29%0.21%GBP0.25%0.17%0.56%-0.02%0.32%-0.11%0.37%JPY-0.29%-0.39%-0.56%-0.56%-0.22%-0.67%-0.18%CAD0.26%0.18%0.02%0.56%0.35%-0.09%0.39%AUD-0.08%-0.15%-0.32%0.22%-0.35%-0.43%0.05%NZD0.36%0.29%0.11%0.67%0.09%0.43%0.51%CHF-0.13%-0.21%-0.37%0.18%-0.39%-0.05%-0.51% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Chang Wei Liang at DBS Group Research highlights that EUR/USD has rallied toward 1.17, with the Euro the main beneficiary of Dollar softness. July Eurozone CPI matched expectations for both headline and core, reinforcing market conviction in a European Central Bank rate hike in September, with around 26 basis points priced and a very high implied probability.

Eurozone inflation supports ecb pricing"EUR/USD rallied towards 1.17, with EUR being the prime beneficiary of USD weakness."

"Eurozone’s July CPI came in line with expectations yesterday, with both headline and core inflation matched consensus of 2.9% y/y and 2.5% y/y respectively."

"This has entrenched expectations of an ECB rate hike for Sep, with markets pricing in a 26bps hike with over 90% probability."

"On the other hand, the Fed’s next rate move is less clear given recent economic data softness, and upcoming mid-term elections in November."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The Euro (EUR) extends gains against an ailing US Dollar (USD) on Thursday, as the US Treasury’s plan to boost buybacks of long-term Government Bonds sent the Greenback tumbling across the board. The EUR/USD pair trades right above 1.1700 at the time of writing after surging about 1.13% from Wednesday’s lows. 

The US Treasury Department announced on Wednesday its decision to double the size of liquidity support buyback operations for longer-dated securities, to at least 4 billion per operation, from the current maximum size of $2 billion from September 9 on.

This plan is aimed at easing yields on long-term Government Bonds, under pressure this week, after data from the Treasury Department revealed that national debt rose above $40 trillion, prompting investors to demand higher compensation for holding US debt.

Analysts at MUFG affirm that the buy-back announcement, combined with the recent FIMA report comment to Japan following intervention, risks proving “counter-productive” for the US Dollar. In their view, it could lead to “reduced appetite for either holding US assets (UST bond sales) or reduced appetite for exposure to the US dollar (dollar selling) or both.”

MUFG cautions that “even if the Treasury buy-back plan does contain yields, the US dollar now remains more vulnerable to the downside on the fact that yields are potentially lower.”

The Treasury's announcement shadowed the release of the minutes of the Federal Reserve's (Fed) latest monetary policy meeting, which showed a hawkishly leaning tone. The central bank's policymakers highlighted the need for higher rate hikes unless inflationary pressures abate, but failed to stem the US Treasury-inflicted Dollar sell-off.

Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

The Euro paused below 1.1700 as the US Dollar steadied, but softer Fed rate expectations kept EUR/USD close to its strongest August levels. The Euro consolidated near 1.17 on Thursday as traders balanced a tentative US Dollar recovery against a sharp reduction in expectations for further Federal Reserve tightening.

The Euro to Dollar (EUR/USD) exchange rate traded around 1.1694, up 0.18% on the day and 1.39% higher over five sessions.

Latest — Exchange Rates:

Euro to Dollar (EUR/USD): 1.169565 (+0.19%)

Pound to Dollar (GBP/USD): 1.363274 (+0.24%)

Dollar to Yen (USD/JPY): 158.51579 (+0.16%)

The pair has gained around 2.43% over the past month and was pressing its latest August high around 1.1695.

Fed Outlook Keeps US Dollar Upside Contained The US Dollar has struggled since the US Treasury expanded long-dated bond buybacks, a move that pulled yields lower and eased pressure in the government-debt market.

Federal Reserve minutes were more hawkish, with several officials willing to consider another increase if inflation remained persistent.

Even so, current pricing implies roughly a 69% probability that rates will be left unchanged in September, compared with around a 31% chance of a hike.

ING strategists Chris Turner and Francesco Pesole remain sceptical that the Fed will tighten again in 2026, saying: “we think the Fed will try to get away with not hiking this year.”

The bank expects EUR/USD around 1.17 in three months, 1.18 in six months and 1.20 over 12 months.

For the Euro, 1.1700 is the immediate barrier.

A clean break would expose higher August levels, while a retreat below 1.1600 would suggest the Dollar's stabilisation is developing into a broader recovery.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Gold Eases After 4% Rally as Treasury Yields Stabilise
Gold is easing slightly after rallying 4% in the previous session to a two-month high, following a U.S. Treasury announcement aimed at supporting long-duration bonds that weakened the dollar and pulled Treasury yields lower.

The U.S. Treasury announced yesterday that it would double the size of its buyback operations for long-dated bonds, targeting maturities between 10 and 30 years.

The announcement came after a major bond sell-off at the start of the week, which saw the 30-year Treasury yield rise to a 19-year high amid concerns over inflation and the U.S. fiscal outlook. Total U.S. government debt also topped $40 trillion for the first time.

At the same time, foreign investors are scaling back their purchases of U.S. Treasuries, adding another concern for the bond market.

The Treasury announcement helped pull the U.S. dollar down to a three-month low, where it remains today.

For gold, the combination of rising concerns over U.S. debt and weaker confidence in the Treasury market is potentially bullish. If investors become increasingly concerned about the U.S. fiscal outlook, gold could benefit as an alternative store of value.

However, inflation remains a risk.

The minutes of the Federal Reserve's July meeting showed that policymakers had become more hawkish compared with the June meeting. Since then, however, inflation data has been relatively subdued and the labour market has weakened, suggesting that a rate hike is unlikely to be imminent.

The market is now pricing in a 69% probability that the Fed will leave rates unchanged in September, up considerably from 45% two weeks ago.

Whether gold can hold these levels will depend partly on where Treasury yields go from here and what Federal Reserve Chair Kevin Warsh says at next week's Jackson Hole Symposium.

If U.S. yields rebound and the dollar recovers, gold could come under pressure again. But if yields remain contained and concerns over the U.S. fiscal outlook continue to build, the backdrop remains supportive for gold.

Gold Forecast – Technical Analysis

Gold extended its breakout from the triangle pattern to a 10-week high of 4,525 before easing back towards 4,490 at the time of writing.

The price remains above its key EMAs and the RSI is above 50, keeping buyers hopeful of further gains.

Buyers will look to break above 4,525 to bring 4,765, the May high, into focus, followed by 4,890, the April peak, and then 5,000, the psychological level.

On the downside, support comes from the cluster of EMAs, with 4,325 providing immediate support. Below here, the 100 and 200 EMAs around 4,300 and the 50 EMA around 4,260 come into focus.

A break below 4,260 would open the door to 4,200, the round number, followed by 4,100, the March low.

EUR/USD Jumps Towards 1.17 as Dollar Falls to Three-Month Low
EUR/USD has rallied to its highest level since May after the U.S. Treasury stepped in to support the bond market, pulling the U.S. dollar down to a three-month low against its major peers.

The surprise announcement that the Treasury would significantly increase its bond buyback operations hit the dollar, as Treasury yields fell back from their recent highs.

The U.S. Dollar Index, which tracks the greenback against six major currencies, fell to an 11-week low near 98.70.

The weaker dollar has been the main catalyst behind the latest move higher in EUR/USD.

The euro also has some support of its own. The ECB is expected to raise interest rates at its September meeting, contrasting with the Federal Reserve, which is increasingly expected to leave rates unchanged following subdued U.S. inflation data and a weaker-than-expected non-farm payroll report.

That is despite the latest Fed minutes showing that policymakers remain concerned about inflation.

Markets are pricing in around 45 basis points of additional ECB tightening this year, with the final hike expected in September as inflation remains above the ECB's 2% target.

Oil prices above $90 a barrel strengthen the case for higher European inflation, although expensive energy also creates a problem for the Eurozone economy by putting pressure on consumers and businesses.

The bigger point, however, is that this remains largely a dollar story. That makes the latest jump in EUR/USD potentially fragile. If Treasury yields rebound or U.S. data starts to support higher Fed rate expectations again, the dollar could recover and put the recent euro gains under pressure.

EUR/USD Forecast – Technical Analysis

EUR/USD has extended its recovery from the 1.1350 July low, breaking out of the falling trend channel and moving above both the 50 and 200 EMAs.

The pair has reached 1.17, while the RSI has just moved into overbought territory. This raises the possibility of some consolidation after the recent move higher.

Buyers will look to break above 1.17 to bring 1.18 into focus, a level last seen in early May.

Above here, attention turns towards 1.1850, the April high.

On the downside, support can be seen around 1.16, the round number.

A break below here would bring the moving averages into focus, with the 200 EMA around 1.1560 and the 50 EMA providing the next layer of support ahead of 1.15.

$1.36090

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Key Points:Expanded U.S. Treasury buybacks have pushed longer-term yields lower, removing an important source of support for the dollar.Fed minutes maintained concerns about inflation, leaving monetary policy uncertainty elevated despite the latest dollar weakness.Expectations for another ECB rate increase continue supporting the euro as markets assess persistent inflation pressures.

In this article:GBP/USD

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GBP/USD ForecastEUR/USD

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EUR/USD ForecastUS Dollar News: Treasury Buybacks Weaken Dollar as ECB and BoE Stay Cautious The U.S. dollar began August 20 with added pressure as bond market stress eased after the Treasury Department unexpectedly doubled longer-dated government bond buybacks, and the 30-year yield fell from its 19-year high of 5.337% to 5.211%. The Department Secretary Scott Bessent said buybacks of 10- to 30-year securities would rise from $2 billion to at least $4 billion per operation. The dollar also softened amid Fed minutes with continued concern for inflation and expectations for further tightening, though many of the policymakers had described recent price pressures as easing.

The softer U.S. dollar backdrop has driven the euro higher. For the European Central Bank, expectations are firmer. A Reuters survey showed the majority of respondents expected the ECB to lift its deposit rate to 2.50% next, after inflation in July hit 2.9%. ECB policymaker Olli Rehn said, however, at his Wednesday meeting that wage growth is still low, and there aren’t yet any clear signs of second-round inflation. This suggests policy makers will keep the more relaxed approach to honing policy in contrast to an aggressive rate hiking cycle.

Sterling’s fundamentals are more mixed. UK inflation rose to a four-month high of 2.9% in July, matching expectations but coming in a touch higher than the Bank of England’s estimate of 2.8%. Energy prices were the biggest cause after the capped prices increased by 13% and inflation for core goods and services remained at 2.6% and inflation for services fell to 3.4%. Private sector wage growth slowed to 2.8%. Additionally, there was a large decrease in job openings.

For central FX on August 20, we expect broad-based weakness in the U.S. dollar due to falling longer term yields and the ECB remaining on track for one more rate hike and the BoE’s challenges of higher inflation in energy and weakening employment.

U.S. Dollar Index Technical Analysis: DXY Breaks Rising Trendline as $98.41 Comes Into Focus Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index (DXY) is trading at $98.89 on the daily chart after a significant breakout below a bullish rising trendline and the support at $99.38. Price is also trading below the 50-day EMA at $100.11 and the 100-day EMA at $99.85, showing bullish short-term structure. The latest breakdown has created a bearish view of the DXY for the foreseeable future. The current trend has been broken and a small doji candlestick has formed, attempting a small correction.

RSI is currently around 32 showing that DXY is getting close to being oversold and that downside momentum is stretching. For now, resistance is at $99.38 and $100.06 and $100.66. As for support, we are looking at $98.41 and $97.84.

DXY is technically bearish for me as long as it is below $99.38. A move back towards the broken trend line is possible, but the structure would only improve significantly above $100.06. If we continue to move lower from $98.41, we could even see $97.84.

GBP/USD Price Chart – Source: Tradingview GBP/USD is trading at $1.3601 on the 2-hour chart. After a nice bullish breakout, price has moved well clear of the $1.3530-$1.3540 consolidation zone. Price is currently above the 50 EMA ($1.3556) and the 100 EMA ($1.3529), above both of which the bullish trend runs. The latest candles have formed a consolidation zone just below resistance at $1.3630.

At this moment, RSI is at 67 indicating strong bullish pressure that is starting to push the indicator into overbought territory. Resistance is expected at $1.3605, $1.3630, $1.3651, and $1.3673. Support is expected at $1.3590, $1.3577, $1.3564, and $1.3541.

I believe the short term view remains bullish as long as price is holding at/above $1.3577 to $1.3590. A strong clear break of $1.3630 has the potential to drive price to $1.3651, $1.3673, and beyond with ease. A break of $1.3564 will create a bearish outlook.

EUR/USD Technical Analysis: Euro Tests $1.1684 Resistance as Momentum Turns Overbought EUR/USD Price Chart – Source: Tradingview EUR/USD is trading at $1.1672 on the 4-hour chart after a significant breakout from the $1.1570 zone. Price sits well above the 50-EMA at $1.1579 and the 100-EMA at $1.1543 and continues to indicate a bullish short-term structure. The pair is consolidating along the top of the channel and is now approaching the $1.1684 resistance level, where the last few candlesticks have shown indecision after an aggressive rally.

RSI is at 78, overbought territory, and may offer a short-term consolidation or a correction pullback. Immediate resistance is at $1.1684 and is followed by $1.1706 and $1.1725. Price action will find support at $1.1657 and then at $1.1641, $1.1627 and finally at $1.1614.

EUR/USD will continue to be bullish as long as price action is consolidating above $1.1657. A break above $1.1684 will give a bullish view towards $1.1706 – $1.1725 while a break below $1.1641 will offer a bearish view towards $1.1614.

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Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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Editors’ Picks

The US Treasury's liquidity-support buyback announcement triggered a sharp fall in long-term Treasury yields and the Dollar Index, boosting the rally in major currencies. DXY could test 98.50–98.00 before rebounding; EURUSD may rise to 1.17, GBPUSD to 1.37, and EURJPY to 186. USDCNY has plunged to 6.7207 and remains bearish towards 6.70, while EURINR trades above 111 and looks bullish towards 112.50 in line with our expectations. USDINR could fall from 95.75 on Dollar weakness, but higher crude prices may limit the downside.

The US Treasury Yields have come down sharply. The Treasury Department announcing that it will double its repurchase has dragged the yields. But on the charts, nothing much has changed. The broader bullish view is still intact. The 10Yr is coming down within its range. The 30Yr has support to limit the downside. The German Yields sustain higher and keep intact the broader bullish view. They have room to rise more. The 10Yr GoI remains stable. While it sustains above the immediate support, there are good chances to see some more rise. Thereafter the broader downtrend can resume.

Global equities remain mixed, with Dow and DAX continuing to face downside pressure towards 53000 and 26000 respectively. Nifty is holding above the key 24000 support and can bounce towards 24300-24350 in the coming weeks. Nikkei remains weak after testing 65170 and can decline further towards 64500-64000. Shanghai is hovering near 3900, with a sustained break below this level opening the way towards 3850-3800 and weakening the earlier bullish view towards 4000.

Brent and WTI likely to remain range-bound within $80-$95 and $75-$90 respectively until a breakout provides further direction. Gold has broken above $4500 and can rise towards $4600-$4650 while holding above $4200. Silver remains bullish and can advance towards $70-$75. Copper has bounced from the $6.35-$6.30 support zone and can rise towards $6.65-$6.75. Natural Gas remains positive and can move above $2.80 in the coming sessions.

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Danske Research Team notes that EUR/USD has extended its rebound towards 1.1600 as European yields remain elevated while US Treasury yields stabilize after the recent spike. The team argues markets are pricing too many ECB rate hikes, suggesting scope for European rates to move lower, while upcoming FOMC Minutes remain the key catalyst for further direction.

EUR/USD recovers as yields stabilize and ECB bets shift"It was an ugly cocktail for European assets yesterday with equities moving lower, European yields rising as the curve bear-flattened and commodities tracking higher. While risk sentiment remains sour in Asia, US yields have steadied in overnight trading and the 10Y UST yield has dropped from an intraday high of 4.75% yesterday to 4.69%. In our Yield Outlook released yesterday, we conclude that markets expect too many ECB hikes and see room for European rates to move lower."

"In Germany, the ZEW economic sentiment surprised to the upside in August, with expectations rising to 34.2 (cons.: 30.0, prior: 26.3), while the assessment of the current situation improved to -61.1 (cons.: -69.3, prior: -77.6). The current situation is now almost back at the levels seen before the war in Iran, although expectations remain somewhat lower."

"The data follows a string of upside growth surprises in the euro area. Growth is also increasingly supported by fiscal stimulus."

"In the euro area, final July HICP inflation is due and is expected to confirm the flash estimate at 2.9% y/y for headline inflation and 2.5% y/y for core inflation."

"In the US, the minutes from the FOMC's July meeting are released this evening. Markets are looking for a more detailed sense of the committee's thinking beyond Kevin Warsh's limited forward guidance. Three participants voted in favour of a hike, and since then, several others have flagged willingness to support a hike if warranted by incoming data."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The EUR/USD pair trades in positive territory near 1.1585 during the early European trading hours on Wednesday. The Euro (EUR) edges higher against the US Dollar (USD) as the German ZEW survey beat forecasts. The European Central Bank (ECB) President Christine Lagarde’s is set to speak later on Wednesday. 

Data on Tuesday showed that the German ZEW Survey - Economic Sentiment came in at 34.2 in August, versus 26.3 prior, better than the estimates of 30.00. The ZEW Survey - Current Situation improves to -61.1 in August, compared to -77.6 in July, stronger than the -68.8 expected.

Financial markets are now pricing in a continuation of the ECB hiking cycle. The ECB Watch Tool indicates a 90% to 94% probability of a 25 basis points (bps) hike to 2.50% at the next policy meeting scheduled for September 9. 

Analysts at MUFG note that the recent shift in US Dollar sentiment, driven by last week’s data releases that have “helped ease Fed rate hike expectations,” has yet to trigger any meaningful liquidation of long Dollar positions. They point out that “DXY remains supported above the 200-day moving average level of 99.185,” underscoring that the softer policy outlook has not translated into “any great sell-off” in the Dollar index.

In the daily chart, EUR/USD holds a bullish near‑term bias as spot remains above the 100‑day moving average (MA) and the Bollinger middle band, suggesting a constructive underlying trend after recovering from the lower band support around 1.1364. Momentum is supportive, with the Relative Strength Index (14) at 63.8, hinting that buyers retain control but are approaching overbought territory rather than entering it decisively.

On the topside, initial resistance is defined by the August 17 high of 1.1614. The next hurdle is seen at the Bollinger upper band near 1.1650, where upside attempts could start to stall. 

On the downside, immediate support is seen at the 100‑day MA at 1.1570, followed by the Bollinger middle band at 1.1505. A deeper pullbacks would look to the recent floor at the Bollinger lower band around 1.1365 to preserve the broader upturn.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Chris Turner at ING describes EUR/USD as contained after a rally stalled just above 1.16, with investors cautious due to high natural gas prices and upcoming FOMC minutes. He expects a 1.1520–1.1580 range near term, while higher energy supports ECB hike expectations. ING maintains forecasts for EUR/USD at 1.17 by end-September and 1.18 by year-end.

Euro capped by energy and Fed risk"Yesterday's EUR/USD rally stalled shortly above 1.16, and investors will be reluctant to push it much higher given energy price developments and ahead of the FOMC minutes tomorrow night."

"Despite recent positive economic surprises in the eurozone, the fact that natural gas prices are close to their highs for the year merits some caution."

"Higher energy prices are firming up expectations of a 25bp hike from the European Central Bank in September and keeping views alive of another 25bp hike by early next year."

"We could see EUR/USD trade out a 1.1520-1.1580 range today. And a reminder that we have a forecast for 1.17 by the end of September on the view that the Fed does not hike and 1.18 for year-end."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that EUR/USD briefly broke above major resistance at 1.1610 to 1.1614 before fading, leaving the Euro in a near-term consolidation between 1.1560 and 1.1600. The 1–3 week outlook remains positive, but the pair must break and hold above 1.1615 to open 1.1655, with strong support anchored at 1.1525.

Euro consolidates after failed breakout"24-HOUR VIEW: EUR rose sharply to a high of 1.1585 last Friday. Yesterday, we indicated that “the rapid rise appears to be running ahead of itself, but as long as 1.1545 (minor support is at 1.1555) is not breached, EUR could rise to 1.1590.” We added, “based on the prevailing momentum, a sustained rise above this level appears unlikely, and the major resistance at 1.1610 is unlikely to come under threat.” While EUR held above 1.1545 (low was 1.1558), it broke above 1.1610, reaching a high of 1.1614. However, EUR was unable to hold on to its gains, as it retreated to close little changed at 1.1579 (+0.09%). EUR appears to have entered a consolidation phase. Today, we expect EUR to trade between 1.1560 and 1.1600."

"1-3 WEEKS VIEW: We revised our EUR view from neutral to positive yesterday (17 Aug, spot at 1.1570). We highlighted the following: “The price action suggests that EUR is likely to trade with an upside bias from here. Currently, it is unclear whether EUR has sufficient momentum to reach the major resistance at 1.1610. On the downside, a break below 1.1525 (‘strong support’ level) would indicate that EUR is likely to continue range-trading.” We did not expect EUR to rise sharply and briefly to 1.1614. While the upside bias remains intact, given that there is no significant increase in upward momentum, EUR must break and hold above 1.1615 before a move to 1.1655 can be expected. On the downside, the ‘strong support’ remains unchanged at 1.1525."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

EUR/USD trims earlier gains on Monday as the US Dollar (USD) shows signs of stabilization after opening the week under selling pressure. At the time of writing, the pair trades around 1.1580 after touching an intraday high of 1.1614, its highest level since June 17.

The Greenback is caught between fading expectations of an imminent Federal Reserve (Fed) rate hike and tensions in the Middle East, which keep some defensive demand alive and limit the downside.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 99.57 after touching 99.30, its weakest level since June 5.

Traders no longer expect the Fed to raise interest rates at its September meeting. According to the CME FedWatch tool, markets now assign around a 70% probability that the central bank will keep rates unchanged next month.

The shift follows recent US economic data pointing to weaker labour demand, softer consumer spending and easing inflationary pressure. In contrast, the European Central Bank (ECB) is widely expected to raise interest rates for the second time this year in September as policymakers seek to bring inflation back toward the 2% target.

On the geopolitical front, the 60-day memorandum of understanding signed by the United States and Iran in June expired on Monday without a permanent agreement, while shipping through the Strait remains heavily restricted.

Against this backdrop, energy-driven inflation risks remain alive. This supports expectations of an ECB rate hike in September while preventing markets from fully ruling out a Fed hike later this year.

Looking ahead, the final Eurozone Harmonized Index of Consumer Prices (HICP) data for July are due on Wednesday. Core HICP inflation is expected to be confirmed at 2.5% YoY.

In the US, traders will examine the Minutes of the July Federal Open Market Committee (FOMC) meeting, also due on Wednesday, for fresh clues about the Fed’s policy path.

ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.

By

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Published: Aug 17, 2026, 16:18 GMT+00:00

Key Points:EUR/USD tested multi-week highs as traders remained bullish. USD/CAD moved away from session lows as traders reacted to inflation data from Canada. USD/JPY remained stuck below the key resistance level as traders focused on Japan's GDP Growth Rate report.

EUR/USD

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EUR/USD ForecastGBP/USD

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GBP/USD ForecastUSD/CAD

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USD/CAD ForecastUSD/JPY

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USD/JPY Forecast

U.S. Dollar Tested New Lows

DXY 170826 4h Chart U.S. Dollar Index is losing some ground as traders reduce bets on hawkish Fed. Traders also focus on the NAHB Housing Market Index report for August. The report indicated that NAHB Housing Market Index increased from 34 in July to 35 in August, compared to analyst forecast of 33.

Currently, U.S. Dollar Index is trying to settle below the support level at 99.25 – 99.40. In case U.S. Dollar Index manages to settle below the 99.25 level, it will head towards the next support, which is located in the 98.60 – 98.75 range.

EUR/USD Tests Resistance At 1.1600 – 1.1615

EUR/USD 170826 4h Chart EUR/USD gained ground as traders focused on general weakness of the American currency. Treasury yields were mixed. The yield of 2-year Treasuries pulled back below the 4.17% level, while the yield of 10-year Treasuries settled above 4.70%.

The nearest resistance level for EUR/USD is located in the 1.1600 – 1.1615 range. in case EUR/USD manages to settle above the 1.1615 level, it will head towards the next resistance at 1.1685 – 1.1700. RSI has recently moved back into moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

GBP/USD Tests Multi-Week Highs GBP/USD 170826 4h Chart GBP/USD moved higher as traders remained bullish at the start of the week. Traders bet that Fed will leave the federal funds rate unchanged at the next meeting in September.

From the technical point of view, GBP/USD continues its attempts to settle above the resistance level at 1.3550 – 1.3565. If GBP/USD climbs above the 1.3565 level, it will head towards the next resistance, which is located in the 1.3635 – 1.3650 range.

USD/CAD Moves Away From Session Lows As Traders Focus On Canada’s Inflation Data USD/CAD 170826 4h Chart USD/CAD attempts to rebound from multi-week lows as traders react to inflation data from Canada. Inflation Rate increased from 2.8% in June to 3% in July, compared to analyst forecast of 2.9%. Core Inflation Rate grew from 2.1% to 2.3%, compared to analyst consensus of 2.2%.

If USD/CAD settles back above the 1.3880 level, it will head towards the nearest resistance at 1.3920 – 1.3935. On the support side, a successful test of the support at 1.3825 – 1.3840 will open the way to the test of the next support level at 1.3735 – 1.3750.

USD/JPY Is Mostly Flat As Japan’s GDP Growth Rate Misses Estimates

USD/JPY 170826 4h Chart USD/JPY remains stuck below the key resistance level at 159.50 – 160.00 as traders react to Japan’s GDP Growth Rate report. The report showed that GDP Growth Rate was +0.3% in the second quarter, compared to analyst forecast of +0.5%.

Traders are focused on Fed policy outlook and are worried about potential interventions from the BoJ. The Japanese yen is fundamentally weak due to the difference in interest rates, but recent interventions have made traders cautious.

If USD/JPY climbs above the 160.00 level, it will move towards the next resistance level at 161.50 – 162.00. A move above the 162.00 level will push USD/JPY towards the 164.00 level.

On the support side, a move below the 50 MA at 158.79 will open the way to the test of the nearest support level at 157.50 – 158.00.

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$1.15955

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In the short-term forex markets, we have seen a bit of US dollar soften a touch. At this point, the markets continue to see volatility.

In this article:EUR/USD

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EUR/USD ForecastUSD/CAD

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USD/CAD ForecastGBP/USD

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GBP/USD Forecast In the short-term forex markets, the euro has risen a bit in early trading on Monday. It is starting to pull back just a touch, but it looks supported to me.

Now, I’m not massively bullish this market, but I recognize that we are starting to see some softness in the U.S. dollar. I’ll be watching right around 1.1550 for signs of support to take advantage of, as we’ve had a nice bottoming pattern from a longer-term consolidation area.

I recognize that right around 1.1650 there could be some resistance, so short-term bounce play might be what I’m looking to do here, all things being equal.

USD/CAD The U.S. dollar has fallen against the Canadian dollar. I am particularly interested in the 1.39 level on any bounce for signs of exhaustion, assuming that the U.S. dollar continues to lose strength.

There are reports out there in the media right now about a potential ceasefire between the United States and Iran. We’ll see what influence that has on the market. There was an initial jolt of risk appetite coming back into the market that seems to have been abated.

GBP/USD The British pound against the U.S. dollar is another one I’m watching. On the hourly chart, we’re forming a rising wedge. A pullback toward the 1.3525 area might be interesting for value. It is also the measured move of that pattern if it does break.

The British pound has been one of the better performers against the dollar for a while, so when I find myself in a situation where I’d rather buy the dollar, I actually avoid this pair. But selling the dollar, it has performed fairly well in comparison to some of its contemporaries.

We did just recently break a swing high at the 1.3550 level, so that would be a retest, something worth watching. We’ll see. If I get that opportunity to buy it a little cheaper, I might just do so.

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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.

Latest news and analysis

EUR/USD begins the week around 1.1588, reaching its highest level in eight weeks. The euro has been supported by dollar weakness following fresh US economic data, which revived doubts about the stability of the US economy and reduced expectations of imminent Federal Reserve tightening.

The University of Michigan’s preliminary consumer sentiment index fell to 51.0 in August, down from 54.2 in July and below the 55.2 forecast. The current conditions index declined to 51.8 from 54.8, while the expectations component dropped to 50.6 from 55.4. At the same time, short-term inflation expectations ticked up to 4.3% from 4.2%, while five-year expectations held steady at 3.3%.

Estimates of US economic growth have also become less confident. The Atlanta Fed’s GDPNow model lowered its Q3 GDP growth forecast to 4.3% from 5.8%, while the New York Fed’s Nowcast estimates growth at approximately 2.1%. This widens the tension between continued economic activity and deteriorating consumer expectations.

For the dollar, the outlook remains mixed. Weak consumer indicators and lower growth forecasts weigh on the US currency, but elevated short-term inflation expectations prevent markets from completely abandoning the prospect of a hawkish Fed policy stance.

As a result, the baseline for EUR/USD remains moderately positive, but further direction will depend on new signals regarding the US economy and the Federal Reserve’s policy stance.

Technical Analysis

On the H4 chart of EUR/USD, the market continues to develop its consolidation range. The consolidation range around the 1.1561 level has practically formed. An upside breakout would suggest a corrective wave developing to 1.1594, followed by a decline to 1.1500. A direct downside breakout would open potential for a downward wave to 1.1400, with the prospect of the trend continuing to 1.1260. Technically, this scenario is confirmed by the MACD indicator-its signal line is above the zero level but pointing strictly downwards, reflecting continued bearish momentum with the potential for the downward trend to persist.

On the H1 chart, the market has completed the next growth wave to the 1.1555 level. A consolidation range is currently forming around this level. A range expansion up to 1.1594 is expected, followed by a decline to 1.1500, with the prospect of continuing the wave to 1.1400. Technically, this scenario is confirmed by the Stochastic oscillator-its signal line is above the 80 level and pointing strictly downwards to 20.

Conclusion
EUR/USD has climbed to an eight-week high, supported by a weaker dollar following disappointing US consumer sentiment data and downward revisions to growth forecasts. The University of Michigan survey showed a sharp decline in confidence, while the Atlanta and New York Fed growth estimates have been trimmed. However, rising short-term inflation expectations keep the prospect of Fed tightening alive, limiting the dollar’s downside. Technically, the pair may see a further push towards 1.1594 before a potential pullback to 1.1500, with the broader trend dependent on upcoming US economic data and Fed signals. The bearish structure remains intact, suggesting that any upside may be temporary.

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Key Points:Softer U.S. economic data have reduced expectations for another Fed rate increase, putting renewed pressure on the dollar.Markets are watching the Fed's July meeting minutes for clues on how policymakers assess slowing growth and inflation risks.Expectations for tighter ECB policy are supporting the euro as markets assess inflation, growth and upcoming activity data.DXY has broken its rising trendline and is testing the critical 99.38–99.42 support zone, leaving the technical bias vulnerable.EUR/USD remains bullish above 1.1580, while GBP/USD is approaching its next major resistance around 1.3587.

In this article:GBP/USD

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GBP/USD ForecastEUR/USD

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EUR/USD ForecastUS Dollar News: Fed Hike Bets Fade as Euro and Pound Gain Support The U.S. dollar begins the day on Wednesday, August 17, under pressure after a slow release of economic data reduced the likelihood of another rate hike from the Federal Reserve. U.S. retail sales slipped in July for the first time in nine months and cited worsening consumer sentiment in addition to last week’s trends in the CPI and PPI. The odds of a September rate hike have dropped to 30% from 50%. It is now expected that rates will hold at current levels, as the markets’ prediction is at a 70% chance of no change. There are now expectations that the Fed’s July meeting documents will be released to see if the economic slowdown is of concern.

The euro’s outlook is looking more favorable with the expectation that the European Central Bank will be the first to hike in September. A Reuters poll conducted August 10-13, showed 57 of 69 economists showed the expectation for a 25-basis point increase to 2.50%. The eurozone’s inflation data increased to 2.9% in July, citing persistent inflationary pressures due to the conflict in the Middle East. Economists also increased their outlook for growth from 2026 to 0.8%. The outlook for the flash PMIs and confidence indices for later this week will determine if growth has improved.

Sterling still has a relatively strong domestic base following the quickening of UK second-quarter GDP growth by 0.4% and by 0.3% in June. For the first half of the year, Reuters noted UK growth was the fastest among G7 economies. Even with the data, markets envisage about one bank rate increase for the UK this year making data releases for inflation and the labour market due this week very important.

From a currency point of view, the focus for August 17 is shrinking policy divergence. Slower U.S. data means the Fed is less likely to hike while the ECB and BoE both have tightening possibilities This means the EUR/USD, USD/JPY, and GBP/USD pairs shall be in focus for currency traders.

U.S. Dollar Index Technical Analysis: DXY Breaks Rising Trendline as $99.42 Support Comes Under Pressure Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index is currently testing $99.41 on the daily chart after dropping to below the rising trendline showing the broad recovery after the spring lows. Price is also under the $100.23 50-day EMA and the $99.90 100-day EMA, and continues to put pressure on the structure. The latest bearish candle has pushed $DXY into the $99.38-$99.42 support zone, making this region critical for the next move.

RSI is at 36, showing weak momentum and is approaching oversold territory. Immediate resistance is at $100.06, then $100.82 and $101.62. Breaking below $99.38 would take out $98.76 and $98.18.

I still believe the dollar is vulnerable until the broken trendline is cleared along with the EMA cluster. A move back above $100.06 would improve the outlook, and a break below $99.38 would negatively impact the dollar.

GBP/USD Technical Analysis: Pound Extends Bullish Run Toward $1.3587 GBP/USD Price Chart – Source: Tradingview GBP/USD is trading around $1.3558 on the 2-hour chart and is moving higher in a clear trend of higher highs and higher lows. Price is above the 50-EMA at $1.3514 and the 100-EMA at $1.3493, and rising trendline to further support the overall positive trend. Recent bullish candlesticks show steady buying, but are not impulsive, as price is moving much closer to important resistance.

RSI is at 67 which is an strong increase and shows the pair moving in the bearish direction towards overbought territory. At the moment the resistance is projected at $1.3587, then $1.3627 and then at $1.3670. For the GBP/USD, from a bullish perspective, you are likely to find support at $1.3539, then $1.3475 and $1.3434.

Where I stand, GBP/USD is especially bullish as long as it holds above $1.3510 and $1.3539. A break above $1.3587 would likely ignite a run toward $1.3627. If the bulls lose the trendline, it could weaken the bullish structure.

EUR/USD Technical Analysis: Euro Breaks Higher as Momentum Reaches Overbought Territory EUR/USD Price Chart – Source: Tradingview EUR/USD is currently at $1.1598 on the 4-hour chart. It has broken above the recent consolidation zone and $1.1580. Price is above the 50-EMA at $1.1539 and the 100-EMA at $1.1512 and therefore, is showing that short-term momentum is in the hands of buyers. EUR/USD is also above the trend line that has been supporting the recovery from the recent lows, which were made in July.

RSI is at the overbought region at 72, and therefore, could potentially mean a pullback or consolidation will happen in the short-term. Resistance is located at $1.1622, $1.1655, and $1.1686. Support is at $1.1580, $1.1545, and $1.1515.

In my opinion, the structure is bullish as long as EUR/USD stays above the $1.1580 level. If there is a clean break of the $1.1622 level, the move could end at $1.1655. If there is a break of the $1.1545 level, the latest breakout will not be valid.

About the Author

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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