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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.

ConclusionEUR/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.

United Overseas Bank’s (UOB) Quek Ser Leang highlights that EUR/USD surged to 1.1585, leaving the Euro (EUR) with a firmer tone against the US Dollar (USD). Intraday, the pair could extend gains toward 1.1590, though 1.1610 is seen as strong resistance. Over 1–3 weeks, EUR/USD is expected to trade with an upside bias while holding above 1.1525, with 1.1610 a key hurdle.

Euro retains constructive short term tone"24-HOUR VIEW: While we expected EUR to “trade in a range” last Friday, we pointed out that “the slightly firmer underlying tone suggests it is likely to trade within a higher range of 1.1515/1.1550.” EUR subsequently dipped to 1.1524, but it surged during the NY session, reaching a high of 1.1585. 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. Based on the prevailing momentum, a sustained rise above this level appears unlikely. The major resistance at 1.1610 is unlikely to come under threat."

"1-3 WEEKS VIEW: We revised our EUR view from conditional positive to neutral last Thursday (13 Aug, spot at 1.1525), indicating that EUR “appears to have entered a range-trading phase, between 1.1480 and 1.1580.” On Friday, EUR broke slightly above 1.1580 with a high of 1.1585. EUR closed 0.36% higher at 1.1569. While we would have preferred a more decisive close above 1.1580, 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 would indicate that EUR is likely to continue range-trading."

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

Key highlightsEUR/USD regained traction and climbed toward the 1.1580 resistance.A bullish trend line is forming with support near 1.1535 on the 4-hour chart.EUR/USD technical analysisLooking at the 4-hour chart, the pair tested the 1.1580 resistance. It settled well above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour). On the upside, the pair is now facing a major hurdle at 1.1580.

The next major resistance might be 1.1620. A close above 1.1620 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1685.

Any further gains might open the door for a test of 1.1750. If there is a fresh decline, the pair might find bids near 1.1535. There is also a bullish trend line forming with support at 1.1535. The next major support could be near 1.1500 and the 100 simple moving average (red, 4-hour).

The main support might be 1.1460 and the 200 simple moving average (green, 4-hour). A downside break and close below 1.1460 might send the pair toward 1.1420. Any more losses could open the door for a test of 1.1350.

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The EUR/USD registers gains of over 0.32% as traders face key resistance at the 100-day Simple Moving Average (SMA) at 1.1567, as bulls eye the 1.1600 psychological figure. At the time of writing, the pair trades at 1.1564 after bouncing off daily lows of 1.1526.

EUR/USD Price Forecast: Technical OutlookThe EUR/USD market structure suggests that the downtrend remains intact. The successive lower highs and lower lows have been respected, but since July 30, when the pair reclaimed the 1.1500 area, the risk of a ‘bullish reversal’ has increased.

Although the pair topped around 1.1550-60, the Relative Strength Index (RSI) suggests bullish momentum is building. With that said, the EUR/USD might turn bullish if traders clear key resistance levels.

Upwards, the 200-day SMA at 1.1629 is the next area of interest. Once surpassed, the next cycle high pending is the May 29 high at 1.1685. If those two levels are removed, EUR/USD could be headed toward 1.1700, putting the April 17 high at 1.1849 into play ahead of the 1.1900 area.

On the flip side, if the shared currency drops below 1.1500, a move to the 50-day SMA at 1.1465 is on the cards. The next demand zone would be 1.1400.

EUR/USD Price Chart – Daily

EUR/USD daily chart Euro Price This week The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHFUSD-0.13%-0.36%1.02%-0.54%-0.28%0.07%0.66%EUR0.13%-0.24%1.11%-0.52%-0.22%0.10%0.69%GBP0.36%0.24%1.29%-0.27%0.02%0.34%0.92%JPY-1.02%-1.11%-1.29%-1.24%-0.95%-0.77%-0.15%CAD0.54%0.52%0.27%1.24%0.29%0.47%1.25%AUD0.28%0.22%-0.02%0.95%-0.29%0.32%0.88%NZD-0.07%-0.10%-0.34%0.77%-0.47%-0.32%0.57%CHF-0.66%-0.69%-0.92%0.15%-1.25%-0.88%-0.57% 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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

Scotiabank strategists Shaun Osborne and Eric Theoret report EUR/USD trading in the mid-1.15s with modest gains versus the US Dollar (USD), supported by euro area Gross Domestic Product (GDP) and a return to trade surplus. Recovering yield spreads underpin the Euro (EUR), with their narrow fair value estimate at 1.1641, above spot. Short-term technicals are described as bullish, with support near 1.1500 and resistance around 1.1580 and the 200-day moving average.

Fundamentals and technicals align higher"The EUR is entering Friday’s NA session with a 0.2% gain vs. the USD, pushing into the mid-1.15s while also underperforming most of the G10 currencies in an environment of broad-based USD weakness."

"The second euro area Q2 GDP release was in line with expectations, printing 0.4% Q/Q to deliver a 1.0% Y/Y pace of growth. The trade balance returned to a surplus in June, ending a short-lived deficit that emerged from March to May."

"Yield spreads are offering fundamental support and extending their latest recovery with a push through the mid-July high to reach levels last seen in mid-May. Our narrow fair value estimate based solely on the 2Y Germany-US yield spread has climbed to a fresh high of 1.1641, offering upside relative to spot."

"We see scope for additional sentiment and positioning-related gains, given that the options market continues to fade its premium for protection against EUR weakness while bearish CFTC data highlight vulnerability given the fundamental improvement in spreads."

"Bullish – the RSI is back above 60, suggesting renewed bullish momentum. The recent consolidation range has offered support at 1.1500 and resistance closer to 1.1580. We see broader support at the 50 day MA (1.1466), and additional resistance around the 200 day MA (1.1630). "

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

EUR/USD rallies on Friday, erasing all the losses recorded earlier this week as broad-based weakness in the US Dollar (USD) lifts the Euro (EUR). At the time of writing, the pair trades around 1.1580 near its highest level since June 17.

The US Dollar weakens as the latest batch of US economic data tempers expectations of a near-term Federal Reserve (Fed) interest-rate hike. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 99.50, down 0.47% on the day.

US Retail Sales fell by 0.6% in July, missing expectations for a 0.1% increase and reversing the previous month’s 0.2% gain. Preliminary data from the University of Michigan (UoM) showed that the Consumer Sentiment Index fell to 51.0 in August from 55.2, while the Consumer Expectations Index dropped to 50.6 from 55.4.

The data follows this week’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports, which showed that price pressures eased for a second consecutive month, suggesting that the inflationary impact of the recent energy shock is fading.

According to the CME FedWatch Tool, markets now see around a 70% chance that the Fed will keep interest rates unchanged in September, a sharp shift from earlier expectations of an increase.

However, inflation risks remain tilted to the upside as uncertainty over the reopening of the Strait of Hormuz keeps Oil prices elevated. The Michigan survey’s one-year inflation expectation edged up to 4.3% from 4.2%, while the five-year measure held steady at 3.3%.

On the Euro side, markets widely expect the European Central Bank (ECB) to raise interest rates in September, which would mark its second hike this year.

Economists at Commerzbank expect the ECB’s September move to bring the deposit rate to 2.5%, noting that at this level “a level would be reached that Governing Council members view as the upper limit of the neutral interest rate—one that neither stimulates nor slows the economy and leads to medium-term inflation.”

Looking further ahead, Commerzbank argues that “toward the end of 2027, the ECB is likely to lower interest rates again,” as “inflation should gradually decline over the course of the coming year and come close to reaching the inflation target.”

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.

Market news from the European morning session - 14 August 2026

Headlines:

Dollar nudges lower on the day amid mixed market moodBitcoin loses key $64,000 level: The important support levels BTC must hold nextBOJ reportedly set for a September rate hike, eyes faster pace of tighteningGerman wholesale prices bounce back in July as energy tax cut lapsesFrench inflation accelerates again in July, core prices move up as wellSwiss economy estimated to post quarterly growth of 1.5% in the second quarterChina new bank loans contract again in July, the second time this yearMarkets:

WTI crude oil up 0.5% to $81.64NZD leads, USD lags on the dayGold up 0.3% to $4,362S&P 500 futures up 0.1%, Nasdaq futures up 0.2%US 10-year yields up 0.3 bps to 4.645%Bitcoin down 0.8% to $62,829There's not all too much in it as we get into the final stretch of the week.

The market mood is fairly mixed, with the dollar sitting lower while oil prices and bond yields are just a touch higher on the day.

There are no fresh developments on the US-Iran conflict, with the Strait of Hormuz still in de facto closure after Iran threatened more ships again - this time being UAE oil vessels.

WTI crude sits higher by 0.5% to $81.64 and looks poised to end the week with gains well over 5%. Meanwhile, bond yields also nudged a little higher early on but is now moving back down a little. 10-year yields in the US are little changed now at 4.645% with the earlier high touching 4.665%.

Even so, the dollar is seen being offered in European morning trade. It was one-way traffic with the greenback losing ground across the board. EUR/USD is up 0.3% to 1.1567 in retesting the 100-day moving average once again. Meanwhile, USD/JPY is down 0.2% to close in on the 159.00 mark on the day.

In other markets, European indices are lightly changed for the most part while US futures are holding a marginal advance on the day. There's not a whole lot in it but Wall Street will be hoping to follow up from the record close in the S&P 500 yesterday.

Besides that, gold is up 0.3% to $4,362 after erasing early losses with the fall back earlier touching a low of $4,311.

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investingLive European session wrap: Dollar falls, gold rebounds amid mixed marketsThree reasons why BOJ rate hikes will not save the yenChina new bank loans contract again in July, the second time this yearEurozone Q2 GDP second estimate +0.4% vs +0.4% q/q prelimDollar nudges lower on the day amid mixed market moodSwiss economy estimated to post quarterly growth of 1.5% in the second quarterFrench inflation accelerates again in July, core prices move up as wellFX option expiries for 14 August 10am New York cutGerman wholesale prices bounce back in July as energy tax cut lapsesBOJ reportedly set for a September rate hike, eyes faster pace of tightening

The Euro (EUR) trades 0.17% higher at around 1.1550 against the US Dollar (USD) during the European trading session on Friday. The major currency pair gains as the Euro rises due to firm expectations that the European Central Bank (ECB) will raise interest rates in the policy meeting in September.

According to a Reuters poll, 57 of 69 economists said that they see the ECB hiking its deposit rates by 25 basis points (bps) to 2.50% in September.

Market experts also seem confident about the ECB tightening its monetary conditions in September to tame hot inflationary pressures.

ECB seen hiking again as other central banks face tougher choices

Analysts at HSBC highlight a growing divergence in the global policy outlook, noting that "although we expect the European Central Bank (ECB) to now deliver another rate rise in September, for other major central banks it is a much tougher balancing act." The bank contrasts the ECB’s readiness to tighten further with a more cautious stance elsewhere, underscoring the challenge facing policymakers outside the Eurozone as they weigh inflation risks against the need to keep policy on hold.

Meanwhile, traders pricing out the possibility of an interest rate hike by the Federal Reserve (Fed) in September is dragging the US Dollar.

Fed hike odds slip as softer inflation data drives dovish repricing

Analysts at Deutsche Bank highlight that the softer inflation backdrop has prompted a notable dovish shift in Fed expectations, with “pricing for a September Fed hike fell to just 35% by the close, down from above 50% on the morning of Wednesday’s CPI release.” They add that the “downside PPI surprise led to an immediate reaction in pricing for the next Fed meeting,” noting that “the probability of a September hike had been at 40% right before the release, but was down to 35% by the close.”

EUR/USD Technical Analysis

EUR/USD trades at around 1.1550, holding the downward-sloping trendline at around 1.1540, but is capped by the 100-day simple moving average (SMA), which is at 1.1567.

The Relative Strength Index (14) around 60 hints at firm bullish momentum, but this improving sentiment is yet to overcome the overhead SMA that continues to act as a ceiling.

On the downside, initial support is seen near the former trend-line break point at 1.1510, where the market previously cleared a descending resistance line, now acting as a structural floor. On the topside, the 100-day SMA at 1.1567 forms the first resistance barrier, and a decisive close above this level would be needed to ease the current bearish bias and open the way to a more sustained recovery. Looking up, the major barricade of the pair would be the round-level at 1.1600.

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

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.

Post-CPI summer trading conditions continue to keep FX volatility subdued, leaving EUR/USD largely anchored. Still, our models are pointing to some short-term undervaluation in the pair, supporting our moderately bullish bias for coming weeks. Gulf headlines remain a marginal factor for FX, more visible in some relative value trades than USD crosses.

USD: Looking for a shift in FedspeakThe post-CPI midsummer environment is understandably weighing on FX vols. We argued yesterday, that this could remain the norm for at least the next couple of weeks. At the same time, we retain a preference for dollar downside, as we still believe market conviction around further tightening by the Federal Reserve is too strong.

For now, Fedspeak offers the clearest potential catalyst for market moves. There is still considerable uncertainty over the message that could emerge from the late-August Jackson Hole Symposium, particularly after a CPI report that leaned dovish without delivering a definitive signal. Yesterday, we heard from Beth Hammack, who voted for a hike and continued to make the case for tightening, but also from Tom Barkin, who raised some doubts about the need for higher rates despite not being considered a dovish voice within the FOMC. Let’s see if more centrist members start to soften their hawkish tone.

Today’s US calendar includes July retail sales, expected at a modest 0.1% month-on-month, and the University of Michigan surveys, which are expected to show little change from August. These second-tier releases would likely need to deliver significant surprises to trigger a meaningful dollar reaction.

Meanwhile, headline fatigue surrounding the Middle East remains elevated. US-Iran negotiations appear to be at a stalemate, but Brent declined yesterday, providing some support for global bonds. The bar for the dollar to rebuild a strong direct relationship with oil prices remains quite high, and the impact of developments in the Gulf may remain more visible in G10 relative-value trades, where pairs such as NOK/SEK and AUD/NZD continue to track the energy story quite closely.

EUR: Showing some undervaluationOur models suggest EUR/USD’s short-term fair value sits in the 1.160-1.1650 area. That’s primarily on the back of the c.10bp tightening in two-year swap rate spreads, which retain a significantly higher beta than other drivers.

That supports our positive bias on EUR/USD, even though we aren’t convinced a break above 1.160 is on the cards in the coming days unless communication from the Fed starts to surprise on the dovish side. For now, EUR/USD bulls like us may be content with strengthening technical support around 1.1500.

In the eurozone, the second release of 2Q GDP will be released today, with no expectations for meaningful changes to the advance 0.4% quarter-on-quarter print.

JPY: BoJ policy story having little effect so farDespite some sharp moves in Japanese money markets this week, the yen is failing to find any lasting support. Here, the big story is that the Japanese government might be more tolerant of a faster tightening cycle by the Bank of Japan. The prior assumption had been that a government focusing on growth would only allow the BoJ one hike every six months. The suggestion now is that Tokyo has elevated FX as a policy priority and wants to ensure that the first joint intervention with the US to buy the yen since 1998 is a success.

Markets now price close to a 75% chance that the BoJ hikes 25bp in September. That has seen two-year US: Japan swap differentials narrow nearly 40bp since mid-July. That should be weighing on USD/JPY. The fact that it is not may owe to benign conditions that continue to favour the yen-funded carry trade. That said, the risks to funding in yen are squarely increasing, and if we are right with our call for unchanged Fed rates in September, USD/JPY could well be trading back below 158. And to play independent yen strength in the interim, expect a lot more focus on short CHF/JPY positions.

CEE: Central bank signals take centre stageTurkey’s central bank raised its inflation forecast to 28% from 26%, bringing it closer to market expectations and our own forecast. It also signalled that the effective policy stance is likely to normalise as funding shifts from the overnight lending facility back to the repo window. We had expected this move in September, but the case for an earlier shift in August has strengthened. Today, Turkey will publish August inflation expectations, which have risen somewhat since the start of the US-Iran conflict.

Elsewhere, Romania releases 2Q GDP figures today, though yesterday’s press conference by the National Bank of Romania governor was the main focus. While the central bank lifted its year-end inflation forecast to 6.1%, the governor said discussions on rate cuts could begin early next year. This matches our forecast, but the firm signal may still surprise markets.

In the Czech Republic, the Czech National Bank will publish minutes from last week’s meeting, when rates were left unchanged at 3.75%. The minutes may reveal a more dovish discussion than markets expect. The CNB will also release its full inflation report. 

Read the original analysis here

Key Points:Softer U.S. CPI and PPI have strengthened expectations for a less restrictive Federal Reserve policy outlook.EUR/USD is testing major trendline resistance near 1.1569, with a breakout potentially exposing 1.1620 and 1.1674.UK GDP expanded 0.4% quarter-on-quarter, giving the Bank of England more room to focus on persistent inflation risks.DXY continues defending the critical 99.40 trendline support but needs to reclaim 100.36 to strengthen its recovery.GBP/USD remains constructive above its rising trendline, though buyers need to clear 1.3515 to confirm another bullish leg.

In this article:GBP/USD

+0.13%

GBP/USD ForecastEUR/USD

+0.11%

EUR/USD ForecastUS Dollar News: Fed Rate Cut Bets Rise as Euro and Pound Navigate Domestic Risks As of August 14, the U.S. dollar is facing pressure due to changing expectations for the Fed after release of slower inflation data provided further evidence of a case for increased easing. The July report for the Producer Price Index (PPI) indicated that inflation for wholesale goods was unchanged compared to the month prior, and core PPI also increased by 0.2% after the latest CPI report indicated a slower-than-expected rise. The data released further eased the concerns for inflation rising again and suggested that the Fed was likely to begin cutting rates in September.

For the Fed, the labor market is still the most important factor. The recent data for July hiring indicated slower hiring, and more of a need to strike a balance between inflation concerns and an economy likely to be slowing. However, Fed officials reassure the market that the inflation data is still well above the Fed’s target for inflation being set at 2%.

The euro is benefitting from the slower expectations of Fed rate movements, but is also dealing with domestic challenges. The European Central Bank is still maintaining a cautious stance by keeping policy the same as they assess the impact of the disruptions to Middle East energy supply and inflation as well as consumer demand. Recent reports of the activity of the euro zone have shown signs of stabilizing, but still have the potential to grow at a lower level due to slow demand and geopolitical challenges.

Sterling faces considerable pressure as the UK’s second-quarter GDP showed a 0.4% quarterly rise, following stronger early quarter growth. The data published reflects the economy’s resilience, especially as price rises for energy have been high and global uncertainties remain. Still, the Bank of England must continue to balance inflation and the threats caused by the increasing growth of nominal wages and energy price rises.

For currency markets, the most important factor continues to be the difference in interest rates and the expected changes. Easing US inflation has lowered expectations of further rate hikes by the FOMC, and the euro and pound are now being evaluated on whether their respective domestic economies can continue to grow without re-igniting inflation.

U.S. Dollar Index Technical Analysis: DXY Holds 99.40 Support as Bulls Attempt Recovery Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index is hovering around 99.95, as it stabilized above the significant 99.40 support area. The daily chart depicts DXY still as a sell into the 101.60 area; however, bulls defend the rising trendline which has been a key topside recovering support line since the March lows. The index is currently trading sideways between resistance and support, potentially forming a base and accumulating ahead of a new strong trending move.

Price is just above the 100.00 level, with the 50-day EMA at 100.29 and acting as resistance. The 100-day EMA at 99.91 is currently acting as support and along with the current price makes this area of the market very important. RSI at 42 reflects zero momentum and a low level, but is also neutral and showing signs of the potential beginning of a new recovery if buyers show strength.

Breaking above 100.36 would provide a strong outlook for further recovery to the 100.82 and also 101.61 levels. Below the 99.40 support would lead to a sell off at 98.75 and possibly 98.18. The current outlook maintains a bullish recovery strategy, but is cautious as long as the rising trendline is intact.

GBP/USD Technical Analysis: Cable Tests 1.3515 Resistance While Trendline Supports Buyers

GBP/USD Price Chart – Source: Tradingview GBP/USD is at 1.3487 after a highly bullish response to the 1.3270 lows. An ascending trendline is currently following the upward structure, with price having trouble breaching the 1.3515 resistance area, which has led to sideways movement in this area.

The 50-day EMA is at 1.3477 and the 100-day EMA is at 1.3446, which puts this pair slightly in favor of bulls. RSI is at 48 and shows that this pair may be losing some of its bullish momentum.

Breaching 1.3515 would show an upward movement with targets of 1.3545 and 1.3586. 1.3437 and 1.3400 offer support. The overall structure is bullish as long as price remains above the trendline. For bulls to resume their momentum, 1.3515 is an important level to take out.

EUR/USD Technical Analysis: Euro Faces Trendline Resistance Near 1.1570 EUR/USD Price Chart – Source: Tradingview The EUR/USD currency cross currently trades around 1.1530. It has recovered from the 1.1350 July lows, but it’s facing a downward trendline and a resistance zone from the early year highs. The daily chart shows an attempt at recovery, but buyers will need a clear break above the trendline and the 1.1569 level to continue the trend higher.

The cross currently is trading above the 1.1499 50 day moving average and the 1.1541 100 day moving average. This indicates short term momentum is positive, but vague. Further, RSI is at 57, positive but not overbought.

A close above 1.1569 should confirm the breakout and may allow for a move toward 1.1620 and 1.1674. In the opposite direction, the first support is at 1.1500 and falls at 1.1455 and 1.1357. The cross is currently at a pivotal point, and the next move is likely based on if buyers break the long-term downtrend line or if sellers hold the current resistance.

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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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The EUR/USD pair gains ground to near 1.1535 during the early Asian session on Friday. The US Dollar (USD) softens against the Euro (EUR) following a softer-than-expected US inflation report. The US July Retail Sales data will take center stage later on Friday. 

Wholesale costs for goods and services in the United States (US) were flat in July, according to the Bureau of Labor Statistics on Thursday. This figure followed a revised 0.1% decline in June and cooled by more than the expected 0.2%. This report added to evidence that inflationary pressure is gradually easing after Wednesday's Consumer Price Index (CPI) data, weighing on the Greenback. 

Excluding food and energy, the core Producer Price Index (PPI) rose 0.2%, below the market consensus of a 0.3% gain. On an annual basis, the headline PPI climbed 4.7% YoY in July, while the core PPI rose 4.2% YoY during the same period. 

Markets are now pricing a 34.8% probability ‌of a US rate hike at the September meeting, down from 40% immediately after the PPI data, according to the CME FedWatch Tool.  

Across the pond, the European Central Bank (ECB) is expected to raise interest rates by 25 basis points (bps) at its September monetary policy meeting. ECB President Christine Lagarde warned last month that renewed Middle East hostilities and the resultant rebound in oil prices pose upside risk to the Eurozone inflation outlook.

Dollar caught between fading Fed hike bets and Hormuz-related safe haven supportStrategists at Rabobank highlight the conflicting forces currently shaping the USD outlook. They argue that “if Fed rate hike speculation continues to be pared back, in line with RaboResearch’s view, the USD will be exposed to potential downside pressures.” However, they also stress that “the uncertainties regarding the re-opening of the Strait of Hormuz remain a USD supportive factor,” noting that at the start of the Iran war “the market was positioned short of USDs,” leaving the Dollar particularly sensitive to shifts in geopolitical risk and safe haven demand.

(This story was corrected on August 14 at 00:55 GMT to say, in the first bullet point, that “EUR/USD gains ground to around 1.1535 in Friday’s early Asian session, not European session.) 

Technical Analysis: EUR/USD maintains a negative outlook in the near termIn the daily chart, EUR/USD keeps a mildly bearish tone as it holds beneath the 100-day moving average (MA) and the upper Bollinger Band. Price remains supported by the middle Bollinger Band and a 20-day simple moving average, while the Relative Strength Index (14) at 58.3 shows improving but not overbought momentum, hinting at a corrective bounce that is still capped by overhead trend levels.

On the topside, initial resistance is seen at the 100-day MA at 1.1565, followed by the upper Bollinger Band at 1.1620, a break above which would be needed to ease the current downside bias. On the downside, immediate support emerges at the middle Bollinger Band near 1.1480, with a deeper floor aligning at the lower Bollinger Band around 1.1340, where selling pressure could pause if bears extend control.

(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.

Key Points:EUR/USD moved higher as traders focused on U.S. economic reports. USD/CAD declined towards the support at 1.3920 - 1.3935 despite the pullback in precious metals markets. USD/JPY remained stuck near the 159.50 level.

In this article:EUR/USD

+0.01%

EUR/USD ForecastGBP/USD

-0.11%

GBP/USD ForecastUSD/CAD

-0.07%

USD/CAD ForecastUSD/JPY

+0.09%

USD/JPY Forecast

U.S. Dollar Is Losing Ground As Traders Focus On Producer Prices Data

DXY 130826 4h Chart U.S. Dollar Index continues its attempts to settle above the resistance level at 99.85 – 100.00 as traders focus on Producer Prices report.

The report indicated that PPI was unchanged on a month-over-month basis in July, compared to analyst forecast of +0.2%. Core PPI increased by +0.2%, compared to analyst forecast os +0.3%.

Today, traders also had a chance to take a look at the Initial Jobless Claims report. The report showed that 209,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 202,000.

In case U.S. Dollar Index manages to settle above the 100.00 level, it will head towards the next resistance level, which is located in the 100.50 – 100.65 range.

EUR/USD Moved Higher As Euro Area Industrial Production Beat Estimates EUR/USD 130826 4h Chart EUR/USD gained some ground as traders focused on the Euro Area Industrial Production report. The report showed that Industrial Production was unchanged in June, compared to analyst consensus of -0.1%.

The nearest support level for EUR/USD is located in the 1.1510 – 1.1525 range. In case EUR/USD manages to settle below the 1.1510 level, it will head towards the next support at 1.1435 – 1.1450.

GBP/USD Moved Lower Despite Strong GDP Data GBP/USD 130826 4h Chart GBP/USD pulled back despite the better-than-expected GDP Growth Rate report from the UK. The report indicated that UK GDP Growth Rate was +1.2% in the second quarter, compared to anlayst forecast of +1.1%.

Traders also focused on the Industrial Production and Manufacturing Production reports. Industrial Production declined by -0.2% month-over-month in june, compared to anlayst forecast of +0.1%. Manufacturing Production decreased by -0.5%, while anlaysts expected that it would decline by -0.2%.

A successful test of the support level at 1.3465 – 1.3480 will open the way to the test of the next support at 1.3335 – 1.3350. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

USD/CAD Remained Stuck Near Support At 1.3920 – 1.3935 USD/CAD 130826 4h Chart USD/CAD moved away from session highs despite the pullback in precious metals markets. Gold declined towards the $4350 level, while silver settled back below $65.00. Other commodity-related currencies moved lower in today’s trading session.

Currently, USD/CAD is trying to settle back below the support level at 1.3920 – 1.3935. In case USD/CAD manages to settle below the 1.3920 level, it will head towards the next support level at 1.3825 – 1.3840.

USD/JPY Settled Near The 159.50 Level USD/JPY 130826 4h Chart USD/JPY remains stuck below the key resistance level at 159.50 – 160.00 as traders ignored the pullback in Treasury yields. The yield of 2-year Treasuries declined below the 4.15% level, while the yield of 10-year Treasuries settled below 4.65%.

Analysts expect that BoJ will raise rates at the next meeting in September, but these expectations do not provide support to the Japanese currency.

If USD/JPY moves above the 160.00 level, it will gain additional upside momentum and head towards the resistance level at 161.50 – 162.00. The key question is whether BoJ is ready to intervene again 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

Rabobank's Senior FX Strategist Jane Foley discusses EUR/USD dynamics in light of shifting Fed rate hike expectations and Oil-related safe haven flows into the Dollar. Foley expects choppy range trading in EUR/USD with a modest medium-term upward bias, highlighting Eurozone vulnerability as an energy importer. Rabobank's updated forecasts see EUR/USD around 1.15 in one month and 1.15–1.16 over 3–6 months.

Range-bound pair with mild upside bias"While oil and the DXY dollar index largely moved in the same direction from late January and into the spring, this appeared to break down in June. In our view, this was likely linked to a run up in market speculation regarding the prospects of Fed rate hikes in late spring, which appeared to take over from safe haven demand as the primary source of USD support in this period. Fed rate hike speculation has recently suffered a setback on the back of recent US data releases."

"Even though the July US CPI inflation data was in line with expectations, the market slightly pared back its expectations for a Fed rate hike. In line with this the DXY dollar index weakened a little on the news, although it subsequently shifted back towards the top end of its dull August range. The release of softer than expected US payrolls data last week likely provided a filter through which many investors judged yesterday’s US CPI inflation release, since a softer labour market will reduce the risk of second round price effects."

"If Fed rate hike speculation continues to be pared back, in line with RaboResearch’s view, the USD will be exposed to potential downside pressures. That said, the uncertainties regarding the re-opening of the Strait of Hormuz remain a USD supportive factor. At the start of the Iran war, the market was positioned short of USDs."

"By contrast, in these circumstances we would expect the market to remain wary of rebuilding long EUR positions. This view stems from the expectation that the Eurozone is more vulnerable to growth and inflation headwinds derived from its stance as an energy importer. Thus, while we see scope for some downside potential for the USD coming from a reduction in Fed rate hike expectations, we expect these to be contained by safe haven demand, until further clarity regarding the Strait of Hormuz emerges. Consequently, we expect choppy range trading to dominate EUR/USD through the rest of the year."

"We continue to favour choppy range trading in EUR/USD in the months ahead with a modest medium term upward bias. We have pushed up our 1-month forecast to EUR/USD1.15 from 1.14 and expect the 1.15-1.16 range to dominate on a 3-to-6-month view."

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

ING’s Francesco Pesole keeps a constructive stance on EUR/USD after recent US data, based on a view that the Federal Reserve is unlikely to deliver further tightening. He targets 1.160 in coming weeks, 1.17 in autumn and 1.18 by year‑end, while warning that the lack of clear catalysts and Gulf risks could keep EUR/USD confined to tight ranges and low volatility.

Upside targets but tight trading ranges"We retain a preference for EUR/USD upside following the latest US data. That view is rooted in our Fed assessment outlined above, though it must be balanced against the risk that renewed escalation in the Gulf could provide fresh support to the dollar."

"Our target for the coming weeks remains 1.1600, followed by 1.1700 in autumn and 1.1800 by year-end. The absence of a clear catalyst, however, may keep EUR/USD range-bound for longer, while vols test recent lows."

"We will be watching closely for another test of 1.1500. Our bias is that buyers would re-emerge there, potentially nudging the dominant trading range higher to 1.1500-1.1600."

(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 highlight that EUR/USD briefly spiked to 1.1562 on the US CPI release before reversing to 1.1524. They now see further pullback risks contained within 1.1510–1.1545 intraday and judge that upward momentum has faded, with the pair likely to range-trade between 1.1480 and 1.1580 over the coming 1–3 weeks.

Euro-Dollar momentum fades into consolidation"24-HOUR VIEW: After EUR traded in a quiet manner two days ago and closed largely unchanged at 1.1540, we highlighted the following yesterday: “The price action provides no fresh clues, and we continue to expect EUR to trade between 1.1530 and 1.1560. That said, should EUR break above 1.1560, it could trigger a quick rise toward 1.1580.” The subsequent price movements did not unfold as expected. EUR spiked to a high of 1.1562 during the NY session and then pulled back sharply to close slightly lower at 1.1524 (-0.14%). Further pullback is not ruled out, but given that downward momentum has not increased significantly, any decline is likely to be contained within a 1.1510/1.1545 range."

"1-3 WEEKS VIEW: Two days ago (11 Aug, spot at 1.1545), we highlighted that “the hurdle for further gains has risen,” and EUR “must close above 1.1580 before a move to 1.1600 and beyond can be expected." Yesterday, EUR rose briefly to 1.1562 and then pulled back to a low of 1.1519. Although our ‘strong support’ level at 1.1515 has not been breached yet, upward momentum has largely faded. EUR appears to have entered a range-trading phase. For the time being, we expect EUR to trade within a 1.1480/1.1580 range."

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

TL;DR: EUR/USD has nearly everything bulls could ask for — a weaker Dollar, fading Fed hike bets, and rising ECB hike odds — yet the pair hasn’t broken out, because Euro itself isn’t confirming the move broadly across its other crosses.

The Dollar Has Given EUR/USD Every Reason to Rise EUR/USD has been handed almost everything bulls could reasonably ask for over the past week. July payrolls unexpectedly contracted, forcing markets to scale back Fed tightening bets. July CPI then showed core inflation returning to 2.5%, back at its pre-Iran-war level. September Fed hold probability has consequently risen from around 45% a week ago to roughly 60%. The Dollar has given EUR/USD plenty of room to move higher.

The Euro Side Should Be Helping Too Renewed oil surge has pushed the expected probability of a September ECB hike above 90%, up from around 70% a month earlier. The obvious counterargument is that the ECB may be making a policy mistake by tightening into weak growth, eventually turning higher rates into a negative for the Euro. Yet the latest activity data don’t provide much support for that conclusion — the Eurozone PMI Composite strengthened for a second straight month in July, with Germany also showing improvement. For now at least, the economy doesn’t look weak enough to explain the Euro’s reluctance to rally.

So What’s Actually Holding EUR/USD Back? There may not be one hidden macro catalyst. The more telling explanation is simpler: Dollar weakness is doing its part, but the Euro itself isn’t attracting enough broad demand to confirm the move. EUR/USD can rise because the Dollar falls, but a durable breakout becomes much easier when the Euro is also strengthening across crosses. So far, that confirmation is missing.

That puts EUR/GBP, EUR/AUD, and EUR/CAD under the spotlight. Declines in those crosses would suggest Euro weakness is broadening beneath the surface and could eventually drag EUR/USD lower even if Fed expectations remain relatively Dollar-negative. Conversely, stabilization or recovery across Euro crosses would make EUR/USD’s current hesitation easier to dismiss as consolidation before another push higher. The question is therefore becoming less about whether the Dollar has weakened enough, and more about whether the Euro can finally take advantage.

ActionForex’s Technical View on EUR/USD The technical picture captures that uncertainty neatly. The base case remains that the broader decline from 1.2081 completed a three-wave correction at 1.1323, after support emerged around the 38.2% retracement of 1.0176 to 1.2081, at 1.1353. Bullish divergence in the daily MACD reinforces that interpretation.

But EUR/USD still has to break the 1.1621 cluster resistance — the 38.2% retracement of 1.2081 to 1.1323, at 1.1613 — decisively. A sustained move through that zone would provide the confirmation price action has so far lacked, strengthening the case that the rebound from 1.1323 is developing into something larger.

Until then, failure matters. Rejection from 1.1613/21, followed by a break of 1.1481, would flip the interpretation, suggesting the rebound from 1.1323 was only corrective and that the larger decline from 1.2081 is ready to resume through 1.1323.

EUR/USD still has a bullish setup, but not yet a bullish confirmation. The Dollar has opened the door; now the Euro has to walk through it.

Key Takeaways September Fed hold odds have risen from 45% to 60% in a week, driven by contracting payrolls and core CPI returning to its pre-war 2.5% level. September ECB hike odds have risen above 90% on renewed oil strength, with Eurozone PMI data showing no evidence of growth weak enough to undercut that case. EUR/USD’s stalled breakout likely reflects a lack of confirmation from Euro crosses (EUR/GBP, EUR/AUD, EUR/CAD) rather than any single hidden catalyst. A decisive break above the 1.1613-1.1621 resistance cluster would confirm the rebound from 1.1323 is developing into a larger move higher. Rejection at 1.1613/21 followed by a break of 1.1481 would instead suggest the rebound was only corrective, reopening the broader decline from 1.2081 toward 1.1323.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

EUR/USD halts its three-day losing streak, trading around 1.1530 during the Asian hours on Thursday. The currency pair gains ground as the US Dollar (USD) faces challenges following the release of July's Consumer Price Index (CPI) report. Inflation in the United States moderated across a broad range of goods and services, which significantly cooled expectations for an aggressive Federal Reserve rate hike in September.

According to data released by the Bureau of Labor Statistics, the headline CPI increased 3.4% year-over-year in July, down from 3.5% previously. Similarly, core CPI, which excludes volatile food and energy costs, rose 2.5% year-over-year compared to 2.6% in June. Both readings matched market expectations.

US inflation in line with expectations as energy and food pressures easeAccording to TD Securities, July US consumer price inflation "matched expectations," with the headline CPI rising "0.1% m/m (0.074% before rounding; TD: 0.15%, consensus: 0.1%)." The strategists note that the modest increase was "partly explained by still retreating energy prices (gasoline -3% m/m) and slowing food inflation," underscoring the role of softer fuel and food costs in keeping overall price pressures contained.

In light of the new inflation data, market expectations for future Fed policy shifts have adjusted. According to the CME FedWatch tool, interest-rate swaps are now pricing in roughly a 40.1% chance of a rate hike in September. Odds for an October move fell to about 60% from 75% the previous day, with the next potential rate increase not fully priced in until December.

However, upside momentum for the risk-sensitive EUR/USD pair may remain constrained by escalating geopolitical tensions between the US and Iran. A senior Iranian official noted that Washington and Tehran remain at loggerheads over a permanent end to conflicts in the Gulf, reporting zero progress in reviving the interim deal or establishing an implementation timeline.

Meanwhile, the macroeconomic picture in the Eurozone continues to support the European Central Bank's (ECB) hawkish stance. Market-based inflation expectations for the Euro Area over the next year sit around 2.4%, remaining above the ECB’s official 2% target, while actual Eurozone inflation edged up to 2.9% in July. Coupled with a resilient economic outlook, highlighted by a 0.4% expansion in Q2, the strongest pace since early 2025, analysts have grown increasingly optimistic about the region's growth. Although near-term growth may moderate before regaining momentum, investors fully expect the ECB to deliver another 25-basis-point rate hike in September.

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.

EUR/USD price action turned volatile on Wednesday as the pair struggled to hold early gains following the latest US Consumer Price Index (CPI) report, a key driver for Federal Reserve interest rate expectations and US dollar direction. The euro briefly surged on signs of cooling US inflation but quickly lost momentum as traders reassessed the broader policy outlook.

The currency pair initially climbed as high as $1.1563 immediately after the inflation release before reversing lower, highlighting the market’s indecision. At the time of writing, EUR/USD is trading around $1.1525, with the closely watched $1.1500 psychological level once again coming into focus as a key short-term support zone.

While US inflation data showed further moderation, typically a bearish signal for the US dollar, the reaction was muted. The CPI figures largely met expectations rather than delivering a significant downside surprise, limiting the scope for a sustained dollar selloff and keeping EUR/USD trapped within a tight intraday range.

US CPI Falls to 3.4% as Fed Rate Hike Expectations Ease US consumer prices increased 0.1% month-on-month in July, following a 0.4% decline in June. On an annual basis, headline inflation eased to 3.4% from 3.5%. Core CPI, which excludes volatile food and energy prices, increased 0.2% during the month and slowed to 2.5% year-on-year.

Both readings were broadly consistent with market expectations. Nevertheless, the continued moderation in inflation strengthened the argument for the Federal Reserve to leave interest rates unchanged at its September meeting.

Interest-rate markets subsequently reduced the probability of a September rate increase to around 40%, compared with significantly higher expectations earlier this month. The combination of softer inflation and July’s weak employment report has made the case for an immediate rate increase considerably harder to justify. That should theoretically be negative for the US dollar and supportive of EUR/USD. Wednesday’s price action, however, shows that traders are not ready to abandon the greenback.

US Dollar Recovers as Oil and Middle East Risks Complicate Fed Outlook The US Dollar Index initially dropped to approximately 99.61 following the CPI release but subsequently recovered toward the psychologically important 100.00 level. One reason is that the inflation outlook remains vulnerable to developments in energy markets.

Oil prices have remained volatile amid continuing tensions in the Middle East and uncertainty surrounding shipping through the Strait of Hormuz. A sustained increase in crude prices could feed back into US inflation, complicating the Federal Reserve’s path even as underlying price pressures moderate. The geopolitical backdrop has also maintained some safe-haven demand for the dollar.

As a result, traders appear reluctant to price out additional Fed tightening entirely. While a September move now looks less likely, markets still see the possibility of another increase later in the year if inflation proves persistent. For EUR/USD, this has created a tug-of-war between improving rate differentials for the euro and lingering demand for the US dollar.

EUR/USD Price Forecast: $1.1500 Becomes Critical Support The one-hour EUR/USD chart shows a clear deterioration in short-term momentum following the rejection from the $1.1560 area. EUR/USD is currently trading around $1.1525, below the Bollinger Band 20-period moving average near $1.1536. The pair has also moved toward the lower Bollinger Band, currently around $1.1517, highlighting the increase in short-term selling pressure.

The MACD provides another warning for euro bulls. The MACD line has moved below its signal line and the histogram has turned increasingly negative, suggesting bearish momentum is building following Wednesday’s failed breakout.

The first level to watch is therefore $1.1500. This psychological level has repeatedly attracted buyers and remains important to the broader recovery structure. A decisive break below $1.1500 could strengthen the bearish correction and expose the $1.1465-$1.1470 area.

On the upside, EUR/USD first needs to reclaim $1.1535-$1.1540 to ease immediate selling pressure. Above there, the $1.1555-$1.1565 zone represents the more significant resistance area. A sustained break above $1.1565 would put $1.1600 back into focus.

EUR/USD Outlook: Can the Euro Hold Above $1.15? The near-term EUR/USD outlook remains finely balanced following the US CPI report. Cooling inflation and weaker US employment data have reduced the probability of a September Fed rate hike, removing an important source of support for the dollar. However, Wednesday’s reversal shows that softer CPI alone may not be sufficient to push EUR/USD decisively higher.

Attention now turns to upcoming US economic releases, including producer prices and retail sales. Stronger data, particularly another sign of persistent inflation, could revive Fed tightening expectations and put $1.1500 under renewed pressure.

Conversely, further evidence that inflation and economic activity are cooling could push Treasury yields and the dollar lower, giving EUR/USD another opportunity to challenge $1.1565 and potentially $1.1600. For now, $1.1500 is the key dividing line. Holding above it keeps the euro’s broader recovery intact, while a convincing breakdown would shift the short-term EUR/USD price forecast increasingly in favour of sellers.

Why is EUR/USD falling after the US CPI report?

EUR/USD initially rose after US inflation eased but reversed as the dollar recovered. The CPI figures were broadly in line with expectations, while elevated energy prices and geopolitical uncertainty continue to create upside inflation risks.

Will the Federal Reserve raise interest rates in September?

Expectations for a September Fed rate hike fell after July CPI showed headline inflation easing to 3.4% and core inflation declining to 2.5%. Markets currently favour the Fed keeping rates unchanged, although another increase later in 2026 remains possible if inflation pressures intensify.

What are the main EUR/USD resistance levels?

Immediate resistance sits around $1.1535-$1.1540, followed by the stronger $1.1555-$1.1565 area. A breakout could open the door toward $1.1600.

Key Points:EUR/USD pulled back as traders reacted to U.S. CPI report. USD/CAD failed to settle below the support level at 1.3920 - 1.3935.USD/JPY gained some ground as traders ignored the pullback in Treasury yields.

In this article:EUR/USD

-0.15%

EUR/USD ForecastGBP/USD

-0.09%

GBP/USD ForecastUSD/CAD

+0.13%

USD/CAD ForecastUSD/JPY

+0.07%

USD/JPY Forecast

U.S. Dollar Moves Higher As Inflation Rate Drops To 3.4%

DXY 120826 4h Chart U.S. Dollar Index gains some ground as traders focus on CPI report. The report indicated that Inflation Rate declined from 3.5% in June to 3.4% in July, in line with analyst estimates. Core Inflation Rate decreased from 2.6% to 2.5%. Core Inflation Rate has also met analyst expectations.

Currently, U.S. Dollar Index is trying to settle above the resistance level at 99.85 – 100.00. In case U.S. Dollar Index manages to settle above the 100.00 level, it will head towards the next resistance, which is located in the 100.50 – 100.65 range.

EUR/USD Retreats After U.S. CPI Report

EUR/USD 120826 4h Chart EUR/USD pulled back as traders focused on U.S. inflation data. Traders also monitored the dynamics of the oil markets. Oil prices were swinging between gains and losses amid geopolitical uncertainty and did not have a material impact on forex market dynamics.

The nearest support level for EUR/USD is located in the 1.1510 – 1.1525 range. in case EUR/USD declines below the 1.1510 level, it will head towards the next support at 1.1435 – 1.1450. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

GBP/USD Pulls Back From Weekly Highs GBP/USD 120826 4h Chart GBP/USD moved away from session highs as traders reacted to U.S. CPI report. It looks that some traders hoped that U.S. inflation numbers would be lower than analyst estimates.

In case GBP/USD manages to settle below the 1.3500 level, it will head towards the support level at 1.3465 – 1.3480. A move below the 1.3465 level will push GBP/USD towards the next support, which is located in the 1.3335 – 1.3350 range.

On the upside, GBP/USD needs to settle above the resistance at 1.3550 – 1.3565 to have a chance to gain upside momentum in the near term.

USD/CAD Rebounds From Multi-Week Lows USD/CAD 120826 4h Chart USD/CAD attempts to rebound despite rising precious metals markets. Gold settled above the $4400 level, while silver made an attempt to settle above $66.00. Other commodity-related currencies were mixed in today’s trading session.

If USD/CAD settles above the 1.3950 level, it will head towards the 50 MA at 1.3995. A move above the 50 MA will push USD/CAD towards the resistance level at 1.4010 – 1.4025.

On the support side, USD/CAD needs to settle back below the 1.3920 level to gain downside momentum in the near term. In this case, USD/CAD will head towards the support at 1.3825 – 1.3840.

USD/JPY Moves Back Towards The 159.50 Level USD/JPY 120826 4h Chart USD/JPY gains some ground despite the pullback in Treasury yields. The yield of 2-year Treasuries declined below the 4.19% level, while the yield of 10-year Treasuries settled below 4.68%.

The nearest resistance level for USD/JPY is located in the 159.50 – 160.00 range. A successful test of this level will open the way to the test of the next resistance at 161.50 – 162.00. It remains to be seen whether BoJ is ready to defend the Japanese yen in case USD/JPY attempts to settle above the 162.00 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.

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Summary:

The in-line US CPI data leaves no new catalysts for gold and the EUR/USD, leaving the previous fundamental influences intact. Current Setup The latest US CPI report did not deliver a major surprise for financial markets, with both the headline and core inflation prints meeting expectations. The consensus forecasts for the July US CPI had been for headline CPI to come in at 3.4% YoY (prior 3.5%), while the core CPI was expected at 2.5% year-on-year (prior 2.6%).

The in-line report means that there is no material need to change the current Federal Reserve policy narrative. Fed policymaker Beth Hammack had indicated on Monday that raising rates once would do nothing for the US economy, adding that any benefits from a hawkish tilt has to come from multiple rate hikes. With the US CPI not doing much to alter expectations, investors now have to focus on next month’s employment and inflation data, as well as the upcoming business activity indicators.

For both gold and the EUR/USD, the in-line prints mean that there is no material catalyst to cause a decisive USD repricing.

Gold: CPI removes the immediate inflation shock

Gold is up by 1.52% on the day, maintaining the week’s trajectory pre-CPI. With no pressure on US bond yields, gold will keep trading within the context of the geopolitical de-escalation narrative as the greenback keeps reeling from last week’s dismal NFP data.  

Gold remains highly sensitive to:

US real yields Fed expectations US dollar direction Geopolitical risk Gold: Technical Outlook The bias on gold remains cautiously bullish. The CPI data leaves the yellow metal’s direction subject to US bond yields, geopolitics, and USD sentiment.

4452 remains the next upside target, and if this barrier is breached, a move towards the 4509 high of 4 June 2026 cannot be ruled out.

Fig 1: Gold chart (4-hr) showing key price levels post-CPI (snapshot: 12 August 2026) This upside move is only invalidated of the 4382 support is breached via profit-taking or a retracement. In this case, we will see support levels at 4314 (10 August low) and 4213 (22 June 2026 high) forming the next downside targets.

EUR/USD: no fresh catalyst after limited CPI surprise The pair traded around 1.15 just before the release of the CPI data, as traders sought for evidence that US inflation was cooling enough to warrant a more dovish Fed. The in-line result means there was no major catalyst either to the upside or downside, as there was nothing on which to make any changes to the Fed outlook.

US CPI → Fed expectations → Treasury yields → USD → EUR/USD

That leaves the EUR/USD more sensitive to the following drivers:

Treasury-yield direction Fed/ECB communication Eurozone economic data ECB expectations Broader US Dollar sentiment The bias for EUR/USD remains constructive on the back of dollar weakness from last week’s dismal NFP, as well as a lack of safe-haven appeal as the Middle East geopolitical situation remains in de-escalation.

If the core inflation print came in much higher than expected, the markets would have repriced Fed expectations towards a more restrictive, hawkish end of the spectrum. This would have been deemed USD-positive.

But this was not the case.

Consequently, the Euro remains on course to consolidate its recent gains versus the greenback. But the lack of a downside surprise also means that the Euro would have to look elsewhere for a bullish catalyst. In the near term, the most likely source would be geopolitics and US bond yields.

EUR/USD Technical Outlook The ascending trendline remains the dynamic support for recent price action. A bounce from here will have to test and break past the 1.1577 (7 August high) and 1.1621 (15 June high) resistance levels to continue the uptrend towards the 1.1671 resistance formed by the 29 May 2026 high.

Fig 2: EUR/USD (4-hr chart) showing key price levels post-CPI (snapshot: 12 August 2026) On the flip side, a breakdown of the trendline makes the 1.1506 support (8 June/11 June lows) available as the next downside target. If this barrier is breached, the next downside target lies at 1.1462 the 3/14 July highs).

At the time of writing, the EUR/USD was struggling to find a clear direction. Hardly a surprise, truth be told, ahead of such an important data release. Investors are weighing a renewed surge in crude oil prices in recent days against the prospect of another important US inflation reading. While market volatility remains subdued, the combination of higher energy prices and elevated bond yields is becoming increasingly difficult to ignore. For the EUR/USD forecast to improve, energy prices will need to fall and rapidly so. This looks unlikely. The upcoming CPI report could provide some short term volatility, but it remains to be seen how much of a change there will be in the September rate cut odds, currently a coin toss.

Crude oil drives sentiment Looking at equity markets, investors remain remarkably unmoved by recent gains in oil. For me, the concern is that oil prices could continue rising if there is no meaningful progress between the US and Iran. That could reignite stagflation concerns and lead to unwanted policy tightening. The Strait of Hormuz remains effectively closed. And the longer it remains closed the higher oil prices are likely to go. While reports of progress in discussions involving Oman and Iran have been welcomed, Iran has also indicated that the strait will remain shut until its conditions are met by the US.

For the EUR/USD forecast, this is a tricky backdrop. The eurozone is heavily dependent on imported energy, meaning a sustained rise in oil and gas prices could worsen the region’s inflation outlook while weighing on economic growth. That creates a potential headwind for the euro.

Meanwhile, US crude inventories provide another reason for caution. Stockpiles have fallen to their lowest level in more than four decades, adding to concerns that supply shortages could amplify the impact of the geopolitical disruption. We will have some fresh inventories data due later today. Let’s see if there any more drawdowns.

CPI likely to move the dollar only temporarily US CPI remains the main scheduled event for markets today. The previous report surprised significantly to the downside, with headline inflation slowing to 3.5% from 4.2%.

Economists are expecting a more modest improvement this time. Headline CPI is forecast to rise 0.1% month-on-month, leaving annual inflation at 3.4%, while core CPI is expected to increase 0.2%, keeping the annual rate at 2.5%, down from 2.6% previously.

A softer-than-expected reading could reinforce expectations for a less hawkish Fed and put renewed pressure on the dollar. But if the inflation data is in line or stronger than expected, then the dollar can remain supported.

The dollar’s reaction to CPI may fade fast in any event, especially if the data does not deviate too much from expectations. A lot will depend on what happens to oil prices. If crude continues climbing, markets may start rebuilding expectations for tighter US monetary policy, even if the inflation data itself is relatively benign.

Bond yields are flashing a warning The other part of the equation is the bond market. Treasury yields have remained elevated as oil prices have risen, reflecting concerns that the energy shock could eventually feed into broader inflation.

So far, equity investors appear largely unconcerned. But if crude moves substantially higher from here, the combination of rising inflation expectations and higher yields could become increasingly uncomfortable for risk assets.

That would also create an additional headwind for the euro, particularly given the relatively lower interest-rate environment in the eurozone and the region’s exposure to imported energy.

EUR/USD levels to watch At the time of writing, the EUR/USD was trading just below 1.1550. The directional picture still looks uncertain. Volatility has remained remarkably low, partly reflecting the summer trading environment and partly the market’s wait-and-see approach ahead of CPI.

Source: TradingView.com Technically, the pair recently broke above a bearish trend line, but buyers have so far failed to generate meaningful follow-through. That is a sign of weakness.

Resistance begins around 1.1575, with the recent high at 1.1622 also important. The 200-day moving average is converging around that area, making a break above it a potentially significant bullish signal to watch out for in the coming days.

On the downside, initial support is located around 1.1500–1.1520. A break below that zone would expose 1.1470 and then 1.1410, with the recent lows around 1.1350 becoming the next major downside reference.

EUR/USD forecast summary For now, EUR/USD remains caught between a potentially softer US inflation backdrop and an increasingly uncomfortable energy story.

If CPI comes in cooler and oil prices stabilise, the euro could regain momentum. But if crude continues higher, bond yields follow, and US inflation proves sticky, the risks could quickly turn more negative.

Another key question is whether the EUR/USD can continue looking through higher energy prices — or whether the bond market eventually forces investors to reassess the risks they have so far largely ignored. All told, the EUR/USD forecast remains tilted slightly lower.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

Chris Turner at ING notes EUR/USD remains lacklustre despite better Eurozone data and upside surprises, as high European natural gas prices and Gulf tensions weigh on the Euro. He argues that a soft US CPI print could allow EUR/USD to challenge last week’s 1.1580 high, though further gains may be limited by upcoming data and the Jackson Hole symposium before the Fed’s mid-September decision.

Energy costs cap Euro upside"EUR/USD continues to trade in a lacklustre fashion. Better hard activity data and eurozone economic numbers generally surprising on the upside have failed to provide the euro with much of a lift. That may be owed to unresolved tension in the Gulf, which is keeping European natural gas prices above €60/MWh."

"In terms of geopolitics, there is very little clarity here, although the latest reports suggest Pakistan and Oman are managing to bring the US and Iran a little closer together."

"If the US CPI number does indeed come in on the soft side, EUR/USD should be able to challenge last week's high at 1.1580. That is about the extent of a move priced into one-day straddle options."

"Much more of a move may be too much to ask in quiet summer markets, given we will also see another round of CPI and jobs data – plus the Jackson Hole Fed symposium – before the Fed decides on policy mid-September."

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

The euro and pound are holding their ground against the US dollar, although the momentum in European currencies has become more subdued following their previous gains. Market participants are reluctant to establish new positions ahead of the release of the July US inflation report, which could alter expectations for the Federal Reserve’s future policy. Recent labour market data is also encouraging caution: a weak ADP report and a decline in the ISM employment component have added to signs of a gradual cooling in the US labour market.

Today, the main focus will be on the US Consumer Price Index (CPI). According to forecasts, annual inflation may slow to 3.4% from 3.5%, while monthly prices are expected to rise by 0.1% after falling 0.4% a month earlier. Core CPI is forecast at 2.5% year-on-year and 0.2% month-on-month. Weaker-than-expected figures could strengthen expectations of monetary policy easing by the Fed and put additional pressure on the dollar. If inflation comes in above forecasts or proves more persistent, the US currency could receive fresh support. Final inflation figures for Germany and Italy will also be released in Europe, although their impact is likely to remain limited in the absence of significant deviations from preliminary estimates. Therefore, US inflation data is likely to be the main driver for EUR/USD and GBP/USD during today’s session.

EUR/USD In recent trading sessions, EUR/USD has been moving within a relatively narrow range of 1.1500–1.1580. Technical analysis suggests the possibility of another test of the lower boundary, as a Dark Cloud Cover pattern has formed on the daily timeframe. If sellers manage to establish a position below 1.1500, the pair could resume its downward move towards 1.1430–1.1460. Conversely, weaker-than-expected US inflation data could push the price towards 1.1600–1.1620.

Key events for EUR/USD:

today at 09:00 (GMT+3): German Consumer Price Index (CPI); today at 11:00 (GMT+3): Italian Harmonised Index of Consumer Prices (HICP); today at 15:30 (GMT+3): US Consumer Price Index (CPI).

GBP/USD GBP/USD buyers managed to push the pair to a new local high around 1.3500. Technical analysis indicates the possibility of further gains towards 1.3540–1.3560 if the 1.3480–1.3500 area is established as support. Stronger-than-expected US inflation data could support the dollar and trigger another test of the 1.3400 level in GBP/USD.

Key events for GBP/USD:

tomorrow at 09:00 (GMT+3): UK GDP; tomorrow at 14:00 (GMT+3): NI’s monthly GDP tracker; tomorrow at 21:00 (GMT+3): US federal budget execution report.

Overall, EUR/USD and GBP/USD are holding their ground after their previous gains, but their next direction will largely depend on today’s US inflation report. Weaker CPI data could strengthen expectations of Fed easing and put additional pressure on the dollar, creating room for further gains in European currencies. If inflation comes in above forecasts, however, the US currency could receive fresh support, increasing the likelihood of EUR/USD and GBP/USD returning to their nearest support levels.

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US inflation surprises remain subdued versus history Fed rate hike pricing has eased through August EUR/USD grinds higher within ascending channel USD/JPY coils beneath 159.37 resistance For all the talk about today’s US inflation report, it is debatable whether anyone truly has a consistent edge in predicting how the data will print, let alone how markets will respond over a longer time frame. Looking at price action across major currency pairs heading into the release and identifying the technical levels that matter provides a framework as good as any for anticipating or reacting once it comes out.

No Repeat of 2022 Relative to the supply shock-driven inflation surge coming out of the pandemic and Ukraine war, the inflationary impact from the latest bout of energy price strength has so far been far less significant. Despite disruptions to energy supplies coming out of the Gulf, Citi’s US Inflation Surprise Index shows that, over recent years, inflation prints have by and large either met or undershot expectations.

The index measures whether inflation data is coming in above, in line with, or below market expectations, with readings above zero signalling upside surprises and readings below zero indicating downside surprises.

Source: LSEG, FOREX.com

Of course, that trend does not eliminate the risk of an upside surprise today. But it does suggest the recent skew has been towards inflation meeting or undershooting expectations rather than exceeding them.

Based on forecasts compiled by the Wall Street Journal, monthly estimates for headline CPI range from 0% to 0.16%, centred around a median of 0.12%. For core, the range is 0.16% to 0.26%, with the median at 0.22%. That leaves the hurdle for an upside surprise relatively low.

Importantly, it will not just be the headline figures that matter. Traders will be looking for evidence that inflationary pressures are becoming more entrenched in core services excluding housing, which would provide a read on domestically generated price pressures and labour market conditions. Core goods prices will also be important in assessing whether tariff pass-through is largely complete.

Those components will help shape expectations for the PCE inflation report later this month, with PPI due Thursday providing another piece of the puzzle.

Fed Hike Bets Retreat

Source: TradingView

Despite the re-emergence of energy-led inflationary pressures, market pricing for Fed rate hikes out to the June meeting next year has been edging lower in August. According to Fed funds futures, around 44 basis points of tightening is priced over this period, with the September meeting effectively deemed a coin flip.

Back in late July, around 62 basis points of hikes were priced over the same period. But a run of relatively tepid US economic data, following a series of strong beats earlier this year, including an underwhelming payrolls report last Friday, has curtailed hawkish pricing.

Euro Retains Its Bid

Source: TradingView

Looking at EUR/USD, we have seen a series of bullish breakouts over recent weeks. The first came from a minor downtrend in the wake of the Fed meeting two weeks ago. Then came the joint intervention by the US Treasury and Japan’s Ministry of Finance, which saw the pair bounce strongly from beneath former resistance around 1.1480, where the 50-day simple moving average was also located.

Since then, the price has settled into a grind within an ascending channel, breaking above downtrend resistance in place from the highs set earlier this year. That slowdown in the bullish move has coincided with renewed energy price strength, with the Gulf effectively shut as geopolitical tensions between Iran and the United States escalate again. Even so, it has not been enough to derail the euro yet.

The pair continues to attract bids within the ascending channel that formed from the 23.6% Fibonacci retracement of the January to June bear move, leaving the near-term options clear cut.

While the structure holds, longs can be considered on dips towards the lower end of the channel, targeting a retest of the 100-day simple moving average, which capped the pair late last week, followed by the upper end of the structure. Beyond that, the 38.2% Fibonacci retracement at 1.1614 comes into view, with the 200-day simple moving average at 1.1627 not far above and now flatlining.

On the downside, a break of the lower end of the ascending channel would bring the 23.6% Fib back into focus. Beneath that, 1.1480 is the next level of note, having previously acted as resistance, followed by the 50-day simple moving average.

Longs are marginally favoured over shorts, with the oscillators still siding with bulls even though upside momentum is no longer strengthening. RSI 14 remains above the neutral 50 level at around 60, while MACD has staged a bullish crossover and moved into positive territory, although it too is flattening out.

While upside momentum is no longer building, the broader technical picture suggests retaining a modest bullish bias may be more advantageous than turning bearish.

Yen Weakness Refuses to Fade

Source: TradingView

As correctly flagged in my weekend USD/JPY note, upside risk in the pair has played out so far this week. Importantly, that has occurred despite both the soft US payrolls report and a further pullback in Fed hike pricing, reinforcing the point that yen weakness is broader and more structural than simply a US rates story.

Following the push above last week’s high, USD/JPY finds itself coiling in what resembles an ascending triangle on the four-hourly chart on the left. Gains have been capped around 159.37, while dips continue to be bought at progressively higher levels. The structure has not been in place for an extended period, but it still warns of the potential for an eventual topside break and continuation of the rebound seen so far in August.

On the upside, the first levels of note are the 100-day simple moving average on the daily chart on the right, followed by 160.73, the former record high hit in late April. That level has flipped between support and resistance on subsequent tests, leaving it as an obvious reference point if the rebound extends.

On the downside, the gradually rising trendline visible on the four-hourly chart runs from the Liberation Day lows in April last year. Even though it was broken convincingly during the latest intervention episode, the price respected it earlier this week, suggesting it remains relevant. It kicks in today around 159.00.

Beneath that, 158.58, last week’s high, is the next level of note, followed by 157.95, which has acted as both support and resistance since the intervention episode.

The oscillators are mildly bullish, even though upside momentum is no longer building. RSI 14 is flatlining above the neutral 50 level at around 61, while MACD staged a bullish crossover earlier this month and has since moved into positive territory, although it is now converging back towards the signal line. Overall, the setup still favours retaining a bullish bias on the four-hourly timeframe.