The USD/CHF pair struggles to attract any meaningful buyers and remains on the back foot below the 0.8100 mark through the first half of the European session on Monday.
Friday's disappointing US Nonfarm Payrolls (NFP) further tempered bets of an immediate interest rate hike by the US Federal Reserve (Fed), which, in turn, is seen undermining the US Dollar (USD) and capping the USD/CHF pair. Investors, however, are still pricing in the possibility that the US central bank will raise borrowing costs by the end of this year amid inflation risks stemming from energy supply disruptions.
Apart from this, persistent geopolitical uncertainties might hold back traders from placing aggressive bearish bets on the safe-haven USD and contribute to limiting losses for the USD/CHF pair. The market focus now shifts to the release of the US inflation figures, due this week. The crucial data will be looked for fresh cues about the Fed's future policy path, which, in turn, will play a key role in influencing the USD demand.
From a technical perspective, the USD/CHF pair is holding below the 23.6% Fibonacci retracement level of the May-July rally, albeit bears await a break below the 50-day Simple Moving Average (SMA) before placing fresh bets. Meanwhile, the Relative Strength Index (RSI) hovers just below the 50 line and the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting upside momentum is tentative.
Hence, a break below the 50-day SMA will be seen as a key trigger for USD/CHF bears and pave the way for a decline to a dense Fibo. support band between the 38.2% retracement at 0.8037 and the 61.8% level at 0.7932 ahead of structural floors at 0.7857 and 0.7761. On the topside, initial resistance comes at the 23.6% Fibo. retracement at 0.8103, and a break above this barrier would expose the next upside objective at the cycle high zone around 0.8208.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/CHF daily chart
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-0.04%-0.07%0.48%-0.02%-0.05%-0.01%0.00%EUR0.04%-0.03%0.53%0.03%-0.02%0.02%0.04%GBP0.07%0.03%0.58%0.04%0.06%0.05%0.07%JPY-0.48%-0.53%-0.58%-0.54%-0.57%-0.56%-0.49%CAD0.02%-0.03%-0.04%0.54%-0.09%0.03%0.02%AUD0.05%0.02%-0.06%0.57%0.09%0.03%0.04%NZD0.00%-0.02%-0.05%0.56%-0.03%-0.03%0.03%CHF-0.01%-0.04%-0.07%0.49%-0.02%-0.04%-0.03% 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).
USD/CAD klesl na nejnižší úroveň od začátku června po slabých amerických mzdových datech a silných datech z Kanady. Trh zároveň snižuje sázky na další zvýšení sazeb Fedu.
USD/CAD opens the new week trading at its lowest level since early June, breaking lower on Friday following the release of a vastly divergent set of labour market data for July, continuing a trend seen across other economic figures over recent months.
A tale of two jobs reports That trend was on full display again last Friday, with a soggy US payrolls report sitting in stark contrast to a blowout set of figures north of the border. US non-farm payrolls fell by 23,000 in July against expectations for an 80,000 increase, with May and June also revised down by a combined 103,000. While the unemployment rate fell to 4.1%, average hourly earnings rose just 0.1% on the month, providing little evidence that labour market conditions are bolstering domestic inflation pressures.
Canada’s report could hardly have been more different. Employment jumped by 75,100 against expectations for an increase of just 16,500, with gains split almost evenly between full-time and part-time positions. The unemployment rate also fell to 6.4%, its lowest level in two years. But relativities matter. Despite the improvement, there is still considerable slack in the Canadian labour market, while annual wage growth slowed to 3.0% from 3.7%. That suggests a meaningful reacceleration in labour-driven inflation looks unlikely near-term, especially with inflation pressures already soft, questioning the need for the Bank of Canada to hike rates by year-end.
There are also reasons to be cautious about reading too much into the US payrolls miss. July has developed a habit of producing sizeable downside surprises in recent years, with seasonal adjustment around the summer months a possible factor. Much of the weakness was also concentrated in local government education, while private payrolls increased by 30,000. That doesn’t make the report strong, but it does raise questions about how much signal should be taken from the headline decline alone.
USD/CAD keeps one eye on Fed pricing
Source: TradingView, FOREX.com
When it comes to USD/CAD, there hasn’t been an obvious underlying driver of the recent move, at least based on the various relationships I’ve looked at. But one that has been reasonably consistent is the relationship between the pair and market pricing for the Fed out to its June meeting next year. As the amount of tightening priced over that period has been whittled away, USD/CAD has moved lower.
That puts plenty of emphasis on anything capable of shifting Fed pricing from here. With the Canadian calendar very quiet this week, the main event risk comes from the US, with CPI and PPI due on Wednesday and Thursday respectively. They are the key scheduled risk events for USD/CAD traders, alongside any fresh developments on the geopolitical front.
Interestingly, energy prices have shown little consistent relationship with USD/CAD over short, medium or longer-term periods, perhaps reflecting the fact that both the US and Canada are major energy producers.
CPI and PPI to test the Fed hike case
Source: LSEG Workstation, FOREX.com
A relatively soft set of inflation figures is expected this week. Core CPI is seen rising just 0.2% on the month, which would see the annual rate slow to 2.5%. That is still above the Fed’s target and CPI is not its preferred inflation measure, but it would still be a tepid outcome given how strongly the US economy has performed relative to much of the rest of the world.
The same applies to upstream inflationary pressures. Headline PPI is expected to rise just 0.1% on the month and 3.4% over the year, with the annual rate seen slowing slightly. And looking at Citi’s US inflation surprise index above, even with the supply-driven energy shocks of recent years and some inflationary pressure stemming from the AI buildout, there have been relatively few meaningful upside surprises. By and large, inflation outcomes have either been close to expectations or undershot them.
So while the Fed is still talking about the risk of further rate hikes and markets continue to mildly favour a move in September, expectations for this week’s inflation reports are benign. Could the data come in ugly? Absolutely. But based on the trend seen in recent years, repeated upside inflation surprises have not been a feature.
Canada’s data momentum continues to improve
Source: LSEG Workstation, FOREX.com
It’s not just US inflation prints that have tended to undershoot or come in close to expectations recently, but broader economic data as well. Citi’s Economic Surprise Index measures how economic releases print relative to market expectations. While the US economy is still performing strongly in absolute terms, the data have become less likely to beat expectations over recent weeks, with the index falling to its lowest level since early May.
At the same time, Canadian data have been heating up, with its surprise index moving sharply higher and overtaking the US measure for the first time since earlier this year. That relative shift has been mirrored in USD/CAD over the same period, with the pair breaking lower as the data backdrop has moved in Canada’s favour.
USD/CAD trend turns lower
Source: TradingView
From a technical perspective, USD/CAD has established a new downtrend, highlighted by a string of lower highs and lower lows. Friday’s jobs reports delivered a break below 1.3991, with the pair now sitting just above the 100-day simple moving average.
The message from the oscillators also favours selling into strength. RSI (14) continues to trend lower, setting lower highs and lower lows, and is not yet oversold. MACD has also staged a bearish crossover and slipped into negative territory, confirming that downside momentum continues to build.
The question is whether traders want to get short at current levels after the retracement already seen, especially with question marks around the signal from the US payrolls report and major inflation data looming. There are also signs that the geopolitical situation in the Gulf is deteriorating again, which could favour broader US dollar strength. With the big dollar off its highs, that raises the risk of a mild retracement in USD/CAD ahead of Wednesday’s CPI report.
In the interim, 1.3950 is worth watching. The pair has spent plenty of time either side of it this year, making it a useful near-term pivot for those looking at short-term setups. My preference would be to see a move back towards former support at 1.3991, and then watch how the price behaves. A clear rejection would suggest that former support has flipped to resistance, creating a more appealing setup for shorts, allowing for a tight stop to be placed above.
On the downside, the 100-day moving average is the first target, followed by 1.3870, which has acted as both support and resistance on several occasions this year. The 200-day moving average sits just beneath, making that broader area an obvious target zone for shorts. Beyond there, 1.3775 is a minor support level, before a much more important zone kicks in around 1.3710. It acted as resistance earlier this year and lines up with the 78.6% Fib retracement of the September 2024 to February 2025 bull move.
On the topside, a break back above 1.3991 into the low 1.40s would start to question the bearish bias, opening the risk of a retest of the minor downtrend from the July highs, currently found around 1.4070. That also lines up with the 50-day simple moving average, which the price has respected frequently in recent months. A clean break above that downtrend would break the sequence of lower highs and raise the risk of a resumption of the prior bullish trend.
EUR/USD podpořilo oslabení očekávání utahování Fedu, ale Commerzbank varuje, že silnější americká data z trhu práce mohou znovu zvýšit sázky na růst sazeb.
Commerzbank’s Michael Pfister notes that reduced expectations for Federal Reserve (Fed) tightening have helped EUR/USD climb, but questions how justified this move is. He stresses that Kevin Warsh’s lack of forward guidance does not preclude rate hikes, and that stronger US labour data could shift expectations back toward tighter policy. Commerzbank has cut its EUR/USD forecast by two cents across its horizon as perceived Dollar hike risks rise.
dollar risks reprice on Fed uncertainty"Since last week's Fed meeting, expectations of interest rate hikes have been priced out. Rather than tightening by roughly 44 basis points by the end of the year, the expectation is now for 'only' 33. This is likely the main reason why EUR-USD has recently climbed higher again."
"The key point is this: the absence of forward guidance does not mean that there will be no change in interest rates. It simply means that any change will not be announced in advance. This shifts the focus to the decision itself and places greater emphasis on the data."
"Today's labour market figures could provide an initial indication of the direction of future monetary policy. Our economists expect 100,000 new jobs to be created, which is a stronger increase than the current Bloomberg consensus forecast of +80,000. However, the USD’s reaction will depend not only on the headline figure, but also on the extent of revisions to previous months' figures and the unemployment rate."
"If today's figures are more positive than expected, this would strongly suggest possible interest rate hikes. While we still do not believe that the Fed ultimately intends to take this step, the market is unlikely to be deterred from continuing to bet on a rate hike. This is one of the main reasons why we have revised our EUR/USD forecast downwards by two cents over our whole forecast horizon this week."
"This is because, even though we have not adjusted our Fed forecast, the risk of an interest rate hike has clearly increased in recent weeks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
USD se ráno odrazil a stáhl EUR/USD z dřívějších maxim, protože nadšení z dohody s Íránem vyprchalo. Trh teď čeká na klíčová americká data, hlavně data z trhu práce a CPI.
The US dollar rebounded this morning and that caused the EUR/USD and the price of gold and silver to ease back from their earlier highs following yesterday’s big precious metals rally. The greenback lost ground yesterday after reports suggested Washington and Tehran were edging closer to an agreement that could ease tensions in the Middle East and help stabilise energy markets. The prospect of lower oil prices reduced concerns over inflation, encouraging investors to trim expectations for further Federal Reserve tightening, while favouring currencies that were undermined by the prior energy spike, such as the euro. However, as the anticipated announcement has so far failed to materialise, the dollar has recovered part of its losses, with investors becoming increasingly reluctant to chase risk ahead of key US data in the days ahead. The EUR/USD forecast remains cautious for now.
Iran deal or no deal? Markets embraced the prospect of a breakthrough in US-Iran negotiations, with expectations that any agreement could lead to the reopening of the strait of Hormuz and reduce the risk premium embedded in crude oil prices.
That encouraged flows into equities and precious metals while weighing on the greenback, as easing energy prices would lessen inflationary pressures and potentially reduce the need for the Federal Reserve to maintain restrictive policy for longer.
Yet again though, that enthusiasm has faded as the expected confirmation has so far failed to arrive. While negotiations may be progressing, traders are now demanding concrete developments rather than reacting solely to headlines. For now, the possibility of a deal continues to provide a supportive backdrop for broader risk sentiment, but it wouldn’t take much for markets to falter.
This keeps the near-term EUR/USD forecast highly uncertain. If oil prices were to spike again, then surely the currency pair will fall alongside risk.
Payrolls and inflation now take centre stage Meanwhile, attention will be shifting towards US economic data, with Friday’s non-farm payrolls report representing the next major test for financial markets, followed by CPI next week.
This week’s pre-NFP indicators have painted a mixed-to-weak picture. Private-sector hiring has cooled, while the employment component within the latest ISM services survey suggested labour market conditions may be softening. Today’s release of weekly unemployment data showed jobless claims rose by 199K vs. 203K eyed.
Policymakers from the Federal Reserve have repeatedly stressed that future decisions remain data dependent, meaning one report is unlikely to alter expectations dramatically unless it delivers a significant surprise.
Markets currently remain relatively steady in their expectations for Fed policy over the coming months, despite the sharp decline in oil prices this week. That highlights how investors are placing greater emphasis on labour market data and inflation than on short-term swings in commodity prices.
Looking beyond payrolls, next week’s CPI report is likely to prove even more influential. A stronger-than-expected inflation reading would reinforce expectations that the Fed may need to keep interest rates elevated for longer, supporting the dollar. Conversely, another soft inflation print could place renewed pressure on the US currency. As you may recall, the June report showed a bigger than expected decline in headline CPI to 3.5% compared a prior reading of 4.2%, while core CPI was also softer at 2.6% compared to both expectations and the prior reading (2.9%).
Technical EUR/USD forecast and levels to watch Source: TradingView.com The EUR/USD has held above the 1.1500 handle this week, keeping the near-term technical bias to the upside. It is not trying to break its bearish trend line, and a big bad of resistance between 1.1560 to 1.1620ish. Without a collapse in oil prices, or significantly weaker US data, the balance of risks remain tilted to the downside for the EUR/USD forecast from here, given that markets have priced in a deal already. Technically, a break below 1.1500 support could see the pair head down to low 1.14s again, the base of the recent breakout.
USD/CAD climbed toward weekly highs as falling oil prices weakened the Canadian dollar despite strong domestic trade data. Canada's trade surplus reached a four-year high, but the positive economic data was overshadowed by the sharp decline in crude oil prices. Markets are reassessing Federal Reserve expectations, limiting gains in the US dollar after weaker-than-expected US economic data. USD/CAD rises as oil prices pressure the Canadian dollar The USD/CAD exchange rate extended its gains on Wednesday, climbing toward the 1.4080 level as another sharp decline in oil prices continued to pressure the Canadian dollar.
The move came despite encouraging economic data from Canada, where the country’s merchandise trade surplus expanded to its highest level in four years during June. Under normal market conditions, stronger trade figures would support the loonie. However, investors remained focused on the collapse in crude oil prices, which has become the dominant driver of the Canadian currency this week.
Canada is one of the world’s largest crude exporters, meaning movements in oil prices often have a direct impact on the value of the Canadian dollar. With Brent crude slipping below $80 per barrel as hopes for a diplomatic breakthrough between the United States and Iran improved, traders reduced exposure to the loonie in anticipation of weaker export revenues.
Lower oil prices offset stronger Canadian economic data The Canadian dollar struggled to capitalize on stronger-than-expected domestic economic data as falling crude oil prices remained the dominant driver of market sentiment. Canada reported a merchandise trade surplus that climbed to a four-year high in June, reflecting resilient exports and healthy external demand. Under normal circumstances, such data would provide support for the loonie by reinforcing confidence in the country’s economic outlook.
However, investors largely overlooked the upbeat trade figures as oil prices extended their recent decline. Brent crude slipped below $80 per barrel, marking its lowest level in several weeks, after growing optimism that diplomatic negotiations between the United States and Iran could ease tensions in the Middle East and reduce the risk of supply disruptions. Expectations that global oil supplies could stabilize prompted traders to unwind part of this year’s geopolitical risk premium.
Because crude oil is Canada’s largest export, movements in energy prices have a significant impact on the country’s trade balance, corporate earnings and economic growth prospects. The latest decline in oil prices therefore outweighed the positive impact of Canada’s stronger trade data, leaving the loonie under pressure as investors continued to favor the US dollar.
Softer US data caps US dollar gains While USD/CAD continued to move higher, gains in the US dollar remained limited as investors reassessed the outlook for Federal Reserve policy following a fresh batch of weaker-than-expected US economic data. The greenback initially found support from broad risk sentiment but struggled to build sustained momentum as markets questioned whether the Fed would have enough justification to continue tightening monetary policy.
Recent economic releases painted a mixed picture of the US economy. JOLTS job openings fell by more than economists had anticipated, suggesting labor demand is beginning to cool after months of resilience. Meanwhile, factory orders unexpectedly declined, pointing to softer business investment and moderating manufacturing activity. Together, the data reinforced expectations that economic momentum is slowing, reducing pressure on the Fed to raise interest rates aggressively in the near term.
As a result, traders scaled back expectations for another interest rate hike, with market-implied odds of a September increase easing from the previous session. Lower rate expectations tend to weigh on the US dollar by narrowing its interest-rate advantage over other major currencies.
Despite this, USD/CAD remained supported because weakness in the Canadian dollar proved more significant than softness in the greenback. Falling crude oil prices continued to undermine the loonie, allowing the pair to edge higher even as US dollar gains were capped by expectations of a less hawkish Federal Reserve.
USD/CAD outlook The USD/CAD outlook remains cautiously bullish while the pair trades above the psychological 1.4000 support level. Buyers are now testing resistance around 1.4090, a key technical barrier that has capped recent advances. A decisive breakout above this level could expose 1.4125, with the yearly high near 1.4250 becoming the next major upside target.
However, if oil prices recover or expectations for further Federal Reserve tightening continue to fade, the Canadian dollar could regain some ground, potentially pulling USD/CAD back toward 1.4000.
Why is USD/CAD rising today?
USD/CAD is rising mainly because falling oil prices are weakening the Canadian dollar, while the US dollar remains relatively stable despite softer US economic data.
What is the next key level for USD/CAD?
The immediate resistance level is around 1.4090. A sustained move above this level could open the door for a test of 1.4125, followed by the 2026 highs near 1.4250.
Why do oil prices affect the Canadian dollar?
Canada is a major oil exporter. Lower crude prices reduce export revenues and typically weaken the Canadian dollar, while higher oil prices generally support the currency.
EUR/USD mírně roste, protože dolar oslabuje kvůli nižším výnosům amerických dluhopisů a nadějím na dohodu mezi USA a Íránem o Hormuzu. Měnový pár je aktuálně výše o 0,1 %.
The EUR/USD forecast is for a potential upside continuation as US Pres Trump says a Hormuz deal could be reached on Wednesday. The EUR/USD is inching higher this Wednesday as the US Dollar retreats following a shift in sentiment, with hopes for positive negotiations between the US and Iran on the geopolitical front gaining momentum. This Wednesday, the greenback is broadly lower as the markets digest the impact of falling US bond yields and softer US labor market indicators. Falling oil prices have also removed the safe-haven appeal of the US Dollar, with investors now willing to assume more market risk.
Furthermore, the US Dollar is also taking a beating after the ADP Non-Farm Employment Change surprised to the downside. US private sector employment as measured by this data set came in at 44K, lower than the market expectation of 68K and the prior of 95K.
The EUR/USD is currently trading 0.1% higher as of writing.
Today’s biggest macro driver is the decline in US bond yields due to softer US labor market data and reduced dollar appeal from falling oil prices and geopolitical de-escalation. Additional factors include profit-taking from recent dollar longs and rotation away from defensive dollar positioning toward a risk assumption.
2) Easing Geopolitical Fears
The recent pause in new US strikes has provided some relief to the markets on the geopolitical front. Despite the unresolved conflict, any headlines that point to a pause in hostilities are a piece of much-needed good news for a market that is looking drained by the elongated nature of the war. Oil prices are trading below $80 a barrel, suggesting a reduction in the geopolitical risk premium and improved market sentiment.
3) Markets Now Reassessing the Fed Outlook
Last week’s Federal Reserve meeting was interpreted as a hawkish hold. However, the reduction in fuel prices, the lowering of US bond yields, and the underwhelming US labor data released so far are forcing markets to reassess the Fed’s outlook. If the NFP data points to a slowing of US public sector employment and further inflation data suggests moderation, the Fed expectations could start turning dovish.
4) Stable Eurozone Fundamentals
Despite the growth concerns and the impact of rising energy costs on the energy-import-dependent single area, the single currency is benefiting from the ECB’s cautious stance. Furthermore, recent inflation data (Eurozone Core CPI Flash Estimates YoY: actual 2.5%, consensus/prior: 2.4) indicate that inflation has not disappeared totally. These factors are helping to create stability for ECB expectations and are currently supportive of Euro strength.
EUR/USD Near-Term Price Catalysts 1) US Data: Upcoming data from the US that will be on the watchlist of traders include Friday’s Non-Farm Payroll report. Subsequently, the consumer spending and consumer/producer price index data will also hit the newswires. If the data points to lowered US economic resilience, the weakness in the US Dollar could continue.
2) US Treasury Yields: Declining US bond yields will lead to a reduced demand for USD-denominated assets, which invariably supports further gains on the EUR/USD. On the flip side, USD strength is restored if bond yields start rising once more.
3) Middle East geopolitics: Headlines around the state of shipping or military encounters in the Strait of Hormuz will impact oil prices. If there is a renewal of bombardments, the markets will interpret this as a sign of escalation, and this would revive the USD’s safe-haven appeal at the Euro’s detriment.
EUR/USD Forecast Scenarios Base case: moderate bullishness is expected, with the recent pullback in the USD expected to extend if US bond yields remain pressured. Furthermore, the cooling of geopolitical tensions and stable ECB policy expectations are expected to provide further support for the pair.
Bull case: a combination of weak US data, continued de-escalation on the geopolitical front, and additional declines in US bond yields could see more USD longs being liquidated. Under these conditions, the EUR/USD may reclaim the 1.1670 resistance level or higher.
Bear case: if US bond yields resume the upside trend, coupled with better-than-expected US data and renewed fighting between the US and Iran, this is supportive of a bear case scenario. This scenario sees a further widening in the interest yield differential between the Euro and US Dollar, and a retreat in Fed rate cut expectations. A retreat towards support levels below 1.14 is the price expectation here.
EUR/USD: Technical Outlook The break of the neckline at 1.1480 confirms the bottoming pattern (progressing rising lows at 1.1324 and 1.1363). This unlocks the door for a measured move that is expected to complete at 1.1577, the prior low of 19 January 2026 and the lower edge of the resistance zone, with 1.1581 as the upper edge. Only when this zone is breached can the 1.1671 resistance (30 April 2026 low and neckline of the 16 April and 12 May 2026 double top) become available as a new upside target.
Fig 1: EUR/USD daily chart showing key price levels (snapshot taken on 5 August 2026) On the flip side, this upside move is only invalidated if the bottoming price levels are degraded, which leaves room for continuation of the recent near-term downtrend towards 1.1269, the high of 17 July 2023. A further downside target at 1.1210 (23 September 2024 high) becomes the next downside target if 1.1269 is breached.
AUD/JPY od konce července prudce oslabil kvůli rozplétání carry trade financovaného jenem a slabším cenám komodit. Včerejší odraz o více než 1 % dnes neudržel.
The AUD/JPY forex pair has declined sharply since late July and for a carry trade favourite, investors are weighing how to position themselves The Australian dollar has seen a significant depreciation against the Japanese yen since late July. The AUD/JPY exchange rate declined from approximately 114.50 to lows between 109 and 110. While a rebound of over 1% yesterday pushed the pair above 111, it has since eased again.
These movements are influenced by differing central bank policies, the potential for intervention, and evolving market expectations for both the Reserve Bank of Australia (RBA) and the Bank of Japan (BoJ).
What Drove AUD/JPY Sell-off and Rebound? The sharp decrease in AUD/JPY during late July primarily resulted from a global unwinding of yen-funded carry trades. Previously, market participants borrowed yen at low interest rates to invest in currencies offering higher yields, such as the Australian dollar. However, market changes necessitated a rapid liquidation of these leveraged positions, leading to substantial buying of the yen across major currency pairs.
A notable factor emerged on July 30 when a rapid appreciation of the yen against major currencies led to widespread market speculation of official intervention by Japanese authorities. The AUD/JPY pair dropped more than 1.3% on that day and continued its downward trend in the following sessions, reaching its lowest point in several weeks.
Although Tokyo has not officially confirmed intervention, the magnitude of the currency move, combined with prior warnings regarding excessive yen weakness, provided strong indications to traders.
Yesterday’s temporary 1.0% rebound was sparked by a short-term resurgence in global equity markets and a temporary stabilization in risk appetite.
But the pair couldn’t hold onto those gains during today’s trading, which showed how vulnerable it still is. Softer commodity prices, particularly crude oil and industrial metals, have kept the growth-sensitive Aussie dollar struggling.
Near-Term Momentum and Outlook Yesterday’s rebound proved the pair can still draw buyers when the yen eases up or broader risk appetite improves. But since it couldn’t hold onto those gains today, it seems the risk of intervention is still capping any rise.
Traders are now looking ahead to the RBA’s next decision and any further signals from the BoJ, like the summary of opinions and upcoming Japanese inflation data.
In the near term, AUD/JPY might trade in a wider range. Support could hold near recent lows of 109-110, with resistance possibly around 112-113. For a lasting recovery, we’d need clearer signs that Japanese authorities are stepping back, and that Australian data actually back up the current yield advantage.
On the other hand, more yen strength or a dovish shift in RBA expectations could extend the decline.
Over the medium term, the outlook depends on how quickly policies adjust. If the BoJ speeds up normalization while the RBA remains on hold, the yield gap would narrow and favor the yen.
If Australian inflation proves more persistent and Japanese tightening remains gradual, carry demand could reassert itself and lift the pair once intervention fears calm down.
What caused the AUD/JPY to drop sharply at the end of July?
It fell fast because yen-funded carry trades were quickly unwound, and global commodity prices cooled down.
How are the Reserve Bank of Australia and the Bank of Japan affecting the AUD/JPY right now?
The RBA has stopped raising rates, and the Bank of Japan is starting to normalize its policies. This means the difference in interest rates between Australia and Japan is getting smaller.
Why did the AUD/JPY suddenly jump 1% yesterday?
Yesterday’s quick rise happened because global stock markets temporarily bounced back, and investors felt a bit more willing to take risks for a short while.
EUR/USD mírně roste kolem 1.1536, protože trh dál plně započítává zářijové zvýšení sazeb ECB o 25 bazických bodů. Dolar navíc slábne před daty ADP z USA za červenec.
The Euro (EUR) trades marginally higher at around 1.1536 against the US Dollar (USD) during the European trading session on Wednesday. The major currency pair edges up as the US Dollar ticks lower ahead of the United States (US) ADP Employment Change data for July, which will be published at 12:15 GMT.
According to estimates, US private employers hired 70K fresh workers, lower than 98K in June.
The impact of the US private sector employment data will be significant on the Federal Reserve’s (Fed) interest rate expectations as officials have stopped providing so-called “forward guidance”.
Meanwhile, the Euro is expected to trade strongly amid firm expectations that the European Central Bank (ECB) will hike interest rates.
Markets hold firm on September ECB hike expectationsAccording to TD Securities, market pricing remains aligned with its policy outlook, with investors "continue to fully price a 25bp ECB rate hike in September, which remains our base case." The bank sees no material shift yet in expectations around the upcoming meeting, underscoring the persistence of a hawkish bias in Eurozone rate markets.
While remarks from ECB Governing Council member Martin Kocher, released last week, showed that he remained data-dependent for the monetary policy outlook. However, Kocher has made clear that the central bank is committed to bringing inflation down to the 2% target on a sustainable basis.
EUR/USD technical analysis
EUR/USD trades at around 1.1537, holding above the 20-period Exponential Moving Average (EMA) at 1.1461, keeping the near-term bias constructive.
The Relative Strength Index (14) at 62 suggests positive momentum but is not yet in overbought territory, hinting that buyers retain control as long as price stays above the short-term EMA.
On the topside, immediate resistance is located at the downward resistance trend line break price at 1.1544, and a clear daily close above this barrier would strengthen the bullish outlook. On the downside, the 20-period EMA at 1.1461 offers initial support, and a drop back below this moving average would signal fading bullish pressure and expose the pair to the July 28 low at 1.1353.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Kocher flags data-dependent autumn decisions as geopolitical risks cloud Euro outlookKocher’s 5.6/10 score on FXS Speechtracker falls below the historic 6.3/10 average, pointing to a slightly less forceful tone than usual. The emphasis on how quickly geopolitical developments can alter energy prices and the inflation outlook underscores lingering upside risks to Euro area prices, which leans modestly hawkish despite the softer score.
The pledge that the ECB Governing Council will decide in autumn based on incoming data to bring Euro area inflation back to 2% on a sustainable basis reinforces a data-dependent but still anti-inflation stance. For the Euro, the combination of acknowledged inflation risks and conditional commitment to the 2% target suggests limited immediate policy aggression, but keeps the door open to renewed tightening rhetoric if energy-driven price pressures re-intensify into autumn.
Míra nezaměstnanosti na Novém Zélandu ve 2. čtvrtletí stoupla na 5,6 %, nejvýše od roku 2015, a snížila sázky na agresivní zpřísňování RBNZ. Dvouletý swap klesl na 3,61 %.
Unemployment hits highest level since June 2015 Underutilisation jumps despite stronger-than-expected hiring\ Kiwi swaps retreat as rate bets unwind AUD/NZD rebounds after support holds Labour market slack builds New Zealand's unemployment rate climbed to its highest level in over a decade in the June quarter, reinforcing the view that abundant labour market slack leaves little risk of a wage breakout that could reignite domestic inflationary pressures.
The unemployment rate climbed to 5.6% in the June quarter, the highest level since the June quarter of 2015, comfortably above the 5.4% expected by both markets and RBNZ. Broader measures softened too, with the underutilisation rate climbing to 13.8% from 12.9%. This measure includes unemployed, people wanting more hours and those on the sidelines available for work, making it a broader gauge of spare capacity in the labour market.
Source: StatsNZ, FOREX.com
Despite the increase in slack, the report masked what was a strong quarter for hiring. Employment increased 0.5%, more than double the 0.2% gain expected by markets and well above the 0.1% increase forecast by the RBNZ. Over the year, it grew by 1.2%.
The reason unemployment increased was a sharp lift in labour force participation, with the rate jumping to 70.7%, well above the 70.3% expected by both markets and the RBNZ. More people entered the workforce than the economy was able to absorb, leaving unemployment and underutilisation higher.
Wage growth wasn't a game changer either. While private sector labour cost inflation edged above the RBNZ's forecast at 2.0% year-on-year, it remains at levels inconsistent with the type of wage breakout that could fuel domestic inflationary pressures.
Markets may have overcooked the RBNZ Despite the softness of the report, it is unlikely to derail the near-term RBNZ outlook with another 25 basis point rate increase still highly likely at next month's meeting, fitting with the hawkish bias delivered in July when policymakers began the tightening cycle.
At the conclusion of that meeting, the RBNZ said "with inflation still above target and economic activity expected to strengthen, some further reduction in monetary stimulus is likely to be required to return inflation to the 2 percent target mid-point", while adding that future cash rate decisions would depend on incoming data, price-setting behaviour and the strength of economic activity.
Beyond next month's meeting, today's data does raise fresh questions over how far rates will ultimately need to move beyond neutral, estimated by the RBNZ to be around 3%.
Source: LSEG, FOREX.com
That was reflected in New Zealand's two-year swap rate, a key market gauge of expectations for the future path of the cash rate. The rate fell to 3.61% following the release, the lowest level since mid-July after briefly dipping beneath 3.60%. That's a notable reversal given it traded as high as 3.78% in late July as markets ramped up expectations for a more aggressive tightening cycle.
The move matters because two-year swap rates heavily influence the pricing of fixed-rate mortgages in New Zealand, making them one of the primary channels through which changes in RBNZ policy are transmitted to households and the broader economy.
Risk appetite calls the shots for NZD/USD
Source: TradingView
For NZD/USD, the domestic rates story is superseded by broader risk appetite as the primary directional driver, helping to explain why the Kiwi has only edged lower following the labour market report.
More importantly, the pullback has done little to threaten last week's break above resistance at 0.5860. Having bounced from around that level in each of the past two sessions, it remains the immediate level to watch on the downside. Below, the confluence of the 50 and 100-day moving averages, along with minor support at 0.5825, marks the next downside zone of note before the uptrend from the June lows comes into view.
On the topside, the pair stalled above 0.5900 on Monday, leaving that and more persistent resistance at 0.5920 as the immediate hurdles. A break above the latter would open the door for a retest of the 0.5992 double top established earlier this year.
Momentum indicators continue to favour buying dips over selling rallies. RSI (14) remains above the neutral 50 level despite losing some upside momentum in recent sessions, while MACD continues to hold above both its signal line and zero, maintaining the bullish bias established in early July.
AUD/NZD tries to turn the tide
Source: TradingView
Where relative rate expectations matter far more is in the crosses, including AUD/NZD. Combined with stronger-than-expected Australian household spending data for June released on Tuesday, New Zealand's soft labour market report has helped the pair rebound after a failed attempt to break below support at 1.1935.
Having held on this occasion, AUD/NZD is now pushing back towards 1.2000. Above there, former support at 1.2053 is the next hurdle, followed by the confluence of the 50 and 100-day moving averages and horizontal resistance at 1.2115.
Should the broader downtrend reassert itself, the recent lows beneath 1.1935 and the nearby 200-day moving average remain the immediate downside focus.
Momentum indicators have become less bearish in recent sessions. RSI (14) has turned higher from oversold territory and is pushing back towards the neutral 50 level, while MACD has started to curl back towards its signal line while remaining in negative territory. It suggests downside momentum is fading, leaving the near-term directional outlook looking far more balanced than it did only a few days ago.
GBP/CAD se odrazil od 55denního EMA a trh sleduje, zda kanadská pracovní data a ropa nad 86 USD potvrdí průlom nad 1,9042. Slabší data z Kanady by mohla pár vrátit k této rezistenci.
TL;DR: GBP/CAD looks ready to resume its uptrend after rebounding from the 55-day EMA, but a sustained breakout depends on two separate forces — Friday’s volatile Canadian jobs report and whether oil’s renewed strength above $86 continues to support the Canadian Dollar.
Why the Correction May Already Be Over After nearly a month of consolidation, GBP/CAD is showing signs that its broader uptrend may be ready to resume. The pair has rebounded convincingly after holding the 55-day EMA, suggesting the pullback from 1.9042 was a healthy correction rather than a change in trend. A retest of the July high now looks likely. Whether GBP/CAD can convert that into a sustained breakout, however, will depend on two very different forces: this week’s Canadian labor market data and the direction of oil prices.
Force One: The Scheduled Risk — A Volatile Canadian Jobs Report The first is the easier of the two to assess. Canada’s July employment report is expected to show job growth of 15k, with the unemployment rate holding steady at 6.5%. Those numbers would broadly indicate a labor market that remains stable despite slowing economic momentum. Yet recent history suggests caution — Canada’s employment data have repeatedly produced large surprises this year, swinging from an unexpected -18k decline in April to an 88k surge in May, before moderating to 18k in June. That volatility means another downside surprise cannot be dismissed.
A softer employment report would likely weaken the Canadian Dollar by reinforcing the Bank of Canada’s patient policy stance. The BoC has kept rates unchanged for five consecutive meetings since its October 2025 rate cut, repeatedly signaling it’s prepared to look through temporary inflation shocks as long as underlying price pressures remain contained. Weak labor market data would support that approach by reducing the urgency for any policy tightening — and could provide the catalyst for GBP/CAD to revisit 1.9042.
Force Two: The Unscheduled Risk — Oil’s Renewed Grip on the Canadian Dollar The bigger challenge lies beyond Friday’s data. The main reason GBP/CAD lost momentum after reaching 1.9042 in early July was the sharp reversal in oil prices. Brent crude had bottomed near $70 before surging above $100 following the collapse of the 60-day US-Iran ceasefire, restoring strong support for the commodity-linked Canadian Dollar and forcing GBP/CAD into a month-long consolidation.
The pair’s rebound from 1.8709 has coincided with Brent’s retreat from above $100 to around $80, which eased some of that support for the Canadian Dollar. But oil has since recovered above $86 as geopolitical tensions remain unresolved, once again acting as a headwind for Sterling. The current advance in GBP/CAD therefore looks less constrained by Canadian domestic fundamentals than by the renewed resilience of crude prices.
Why the Geopolitical Backdrop Hasn’t Actually Changed The geopolitical backdrop has changed little despite alternating headlines from Washington and Tehran. President Donald Trump has shifted from projecting confidence in imminent negotiations to warning that Iran faces a “last chance,” while Tehran continues to insist there are no immediate plans for direct talks with the United States, limiting engagement to Oman’s mediation over the Strait of Hormuz. The fundamental disagreement over the future of the waterway remains unresolved, leaving markets reluctant to remove the geopolitical premium embedded in oil prices.
That distinction is important. A weak Canadian employment report may be enough to propel GBP/CAD back toward 1.9042, but it’s unlikely to be sufficient for a sustained breakout if Brent remains elevated. For Sterling bulls, Friday’s jobs report could provide the trigger — but whether the rally extends beyond the July high will depend far more on whether oil prices retreat again, which in turn requires credible progress toward renewed US-Iran negotiations rather than another round of conflicting political statements.
ActionForex’s Technical View on GBP/CAD The technical outlook reflects that balance between constructive momentum and lingering macro risks. GBP/CAD remains firmly within the rising channel from 1.8017, and this week’s rebound from the 55-day EMA, now around 1.8716, strengthens the case that the correction ended at 1.8709. A break above 1.9042 would open the way toward the 61.8% projection of 1.8299 to 1.9042 from 1.8709, at 1.9168, in the near term.
However, rejection by 1.9042 will set up another leg to extend the corrective pattern, with risk of a deeper fall through 1.8709. In that case, strong support should be seen from the rising channel floor, now at 1.8617, to bring a rebound.
Key Takeaways GBP/CAD’s rebound from the 55-day EMA suggests the pullback from 1.9042 was a correction, not a trend change, with a retest of the July high likely. Canada’s July jobs report (consensus: 15k job growth, 6.5% unemployment) carries elevated surprise risk given three large misses already this year. A weak jobs print could push GBP/CAD back toward 1.9042, but a sustained breakout depends more on oil, which has recovered above $86 after briefly easing from $100. The US-Iran standoff over the Strait of Hormuz remains unresolved despite shifting rhetoric, keeping a geopolitical premium embedded in oil and a headwind on Sterling. 1.9042 is the key resistance; a break opens 1.9168, while rejection risks a deeper pullback toward 1.8709, with the rising channel floor at 1.8617 as the next support.
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.
AUD/NZD klesá, protože inflace na Novém Zélandu ve 2. čtvrtletí vzrostla na 4,1 % meziročně a posílila očekávání dalšího zpřísnění RBNZ. Trh čeká, že zítřejší data z trhu práce tento jestřábí výhled potvrdí.
TL;DR: With markets already convinced the RBA is done hiking, tomorrow’s New Zealand employment report matters less for whether the RBNZ turns more hawkish and more for whether the labor market stays resilient enough to keep its tightening bias intact — a dynamic already pressuring AUD/NZD lower.
Why the Focus Has Shifted Across the Tasman Markets have already reached a broad consensus that the Reserve Bank of Australia has finished tightening for this year. The focus is now shifting across the Tasman, where the Reserve Bank of New Zealand still appears to have work left to do. That makes tomorrow’s second-quarter employment report less about whether the RBNZ will turn more hawkish, and more about whether the labor market is resilient enough to keep its existing tightening bias intact.
Inflation Already Made the Case for More Tightening The case for further tightening was largely established by inflation. New Zealand’s second-quarter CPI rose 4.1% y/y, exceeding the RBNZ’s 3.9% forecast and reminding policymakers that price pressures remain more persistent than expected. More importantly, non-tradable inflation held at an elevated 3.4%, indicating domestic inflation — not just higher fuel costs linked to the Middle East conflict — continues to pose a challenge.
Stronger business sentiment since then has only reinforced that picture, with July’s ANZ Business Confidence jumping to 56.1 from 36.6.
Why Tomorrow’s Data Doesn’t Need to Surprise Against that backdrop, tomorrow’s labor market data don’t need to surprise on the upside to support the policy outlook. Consensus forecasts call for:
Employment growth of 0.1% q/q. Unemployment edging up from 5.3% to 5.4%. The Labour Cost Index accelerating from 0.5% to 0.6% q/q. Those figures are broadly consistent with the RBNZ’s own projections, meaning an in-line report would leave the Bank’s economic assessment largely intact. Instead of weakening the tightening narrative, it would reinforce the view that policy still needs to move somewhat further into restrictive territory to contain domestic inflation and limit second-round effects from higher energy prices.
What Would Actually Move Markets The bigger market reaction would likely come from a stronger-than-expected report. Faster employment growth, firmer wage inflation, or a lower unemployment rate would strengthen the case for another hike as early as September, and increase expectations that the Official Cash Rate ultimately reaches the upper end of the 2.75%–3.00% range currently expected by many economists. Only a materially weaker labor market would cast meaningful doubt on that outlook, by suggesting higher borrowing costs are beginning to bite more sharply than anticipated.
Why This Matters for AUD/NZD Those shifting policy expectations have become important for AUD/NZD. Australia’s softer-than-expected second-quarter CPI has persuaded markets the RBA is likely to keep the cash rate unchanged at 4.35% through year-end, effectively ending a period in which Australian rate expectations consistently outpaced those in New Zealand. With the RBA sidelined, investors are now watching whether the RBNZ can narrow the policy differential through further tightening, providing fundamental support for the New Zealand Dollar against its Australian counterpart.
ActionForex’s Technical View on AUD/NZD The technical picture complements the macro story. AUD/NZD’s decline from 1.2283 continues to look like a correction of the five-wave advance from 1.0649. As long as 1.2119 resistance caps rebounds, the bias remains lower. The next downside objective remains the 38.2% retracement at 1.1658, which sits just above the previous fourth-wave consolidation around 1.1412–1.1634.
Against a backdrop of narrowing policy differentials, tomorrow’s New Zealand labor market report has the potential to provide the catalyst for the next leg lower in AUD/NZD.
Key Takeaways New Zealand’s Q2 CPI beat the RBNZ’s own forecast at 4.1% y/y, with sticky non-tradable inflation at 3.4% keeping the tightening bias intact. Consensus expects tomorrow’s employment data to come in broadly in line with RBNZ projections, meaning an in-line print alone would reinforce, not weaken, the hawkish case. A stronger-than-expected report would raise September hike odds and support an Official Cash Rate move toward the top of the 2.75%-3.00% range. Australia’s softer CPI has convinced markets the RBA is done hiking, shifting the AUD/NZD policy narrative fully toward the RBNZ’s next move. AUD/NZD’s decline from 1.2283 remains capped below 1.2119 resistance, with 1.1658 the next downside objective if the labor data supports further RBNZ tightening.
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.
The AUD/JPY cross trades in positive territory near 110.70, snapping the six-day losing streak, during the early European trading hours on Tuesday. However, the potential upside for the cross might be limited due to the coordinated intervention between the United States (US) and Japan, which could provide some support to the Japanese Yen (JPY) against the Australian Dollar (AUD).
"The view that FX intervention cannot have a lasting impact and merely alters short-term market flows seems right in many cases. However, depending on the circumstances and broader context, intervention can exert a significant influence on the market and trigger an inflection,” said Bank of America analyst Shusuke Yamada.
Japan and US step in to stabilise Yen after historic slideStrategists at BNY note that Japan’s finance ministry and the US Treasury have “intervened in the foreign exchange market to support the yen” after the currency weakened to its lowest level against the Dollar since 1986. Japanese Finance Minister Satsuki Katayama is cited as saying the joint action was aimed at “countering excessive volatility and disorderly movements in recent months,” underscoring that Tokyo “would not hesitate to carry out further joint intervention if needed.” BNY concludes that the authorities have made it clear they “remain ready to defend the currency” should renewed pressure on JPY emerge.
Technical Analysis:In the daily chart, AUD/JPY extends a corrective move below the 100-day simple moving average (SMA) and the Bollinger Bands 20-day middle band, which form a dense overhead supply zone. The pair is now drifting toward the lower Bollinger band support, while the Relative Strength Index (RSI) at 34.33 hovers just above oversold territory, hinting that bearish momentum remains in control but could be nearing exhaustion.
On the downside, immediate support is located at the lower Bollinger band near 110.40, where a pause or bounce could emerge if sellers take profits. The next contention level to watch is the 110.00 psychological level, followed by the August 3 low of 109.24.
On the topside, initial resistance is seen at the 100-day SMA at 112.85, followed by the Bollinger Bands middle band at 113.00; a daily close above these clustered barriers would be needed to ease the current bearish bias and open the way toward the upper Bollinger band near 115.62.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
AUD/USD zůstává pod 0,7000 a trh čeká na jasnější signál. Pár se drží nad 200denním klouzavým průměrem kolem 0,6900, ale opakovaně naráží na rezistenci.
AUD/USD waits for a clearer signalDirectional bias: Neutral to bullish above 0.6900, although repeated difficulty clearing 0.7000 leaves the pair exposed to another rejection.
Preferred approach: Patience may offer a better risk-reward profile than chasing the pair immediately below resistance. A confirmed break above the 0.7000 threshold or a pullback that holds around the 200-day SMA would provide a cleaner setup.
Bullish trigger: A sustained move above 0.7000, ideally supported by firm Australian labour data, stronger expectations of another RBA rate increase, lower US yields or an improvement in risk appetite.
Bearish trigger: Another failure at 0.7000, accompanied by renewed US Dollar strength or a generalised deterioration in market sentiment.
Key invalidation level: A daily close below the 200-day SMA around 0.6900 would undermine the broader constructive structure and increase the risk of a deeper retracement in the short-term horizon.
Three paths from the 0.7000 crossroadsBase case: The range holds
AUD/USD could remain trapped between the 0.7000 psychological barrier and the 200-day SMA just above 0.6900 while traders wait for a sufficiently strong catalyst.
Australia’s relatively solid domestic fundamentals and the Reserve Bank of Australia’s (RBA) cautious stance should discourage aggressive selling. At the same time, persistent demand for the Greenback and geopolitical uncertainty could prevent an immediate breakout.
Until either boundary gives way, spot may be better treated as a side-lined trade than a convincing directional move.
Bull case: Buyers establish a foothold above 0.7000
A convincing break above 0.7000 would suggest that buyers have absorbed the selling pressure surrounding this closely watched threshold.
The breakout would carry greater conviction if supported by:
Firmer-than-expected Australian data releases.A stable or lower Unemployment Rate.Increased expectations of another RBA rate hike.Lower US yields and a softer US Dollar.An improvement in risk-linked sentiment.Under this scenario, the next important medium-term target would emerge around 0.7200, followed by the 2026 ceiling near 0.7280.
The sizeable build-up of speculative AUD shorts could add fuel to the move if a confirmed breakout forces bearish traders to unwind their positions.
Bear case: Another rejection opens the door to 0.6900
A fresh failure around 0.7000 could bring sellers back into the market, particularly if the Greenback regains momentum or global risk appetite deteriorates.
The next major test would then be the 200-day SMA around 0.6900. A daily close below this area would damage the wider bullish structure and increase the probability of a deeper correction.
Once that support gives way, previous resistance and consolidation zones below 0.6900 could return to focus.
Australia’s economy continues to hold its groundAustralia’s domestic backdrop remains relatively healthy, supported by firm demand, positive growth and a resilient labour market.
July business surveys reinforced that picture. The Manufacturing PMI improved to 52.0 from 51.5, while the Services PMI rose to 53.0 from 50.5, leaving both sectors comfortably in expansionary territory.
The June labour-market report was also encouraging. The Unemployment Rate held steady at 4.4%, while Employment Change jumped by 76.3K following a revised 44K increase in May.
Still, the picture is not uniformly positive. Australia recorded an A$3.018 billion trade deficit in May, reversing April’s A$1.383 billion surplus. Economic growth also slowed to 0.3% quarter-on-quarter in the first three months of 2026, down from 0.9%, while annual growth held at 2.5%.
Overall the figures suggest a resilient economy but perhaps not strong enough on its own to trigger a sustained breakout in AUD/USD.
Inflation leaves the RBA with unfinished businessAustralian headline inflation eased to 3.9% in the second quarter from 4.1%. Underlying price pressures, however, remained uncomfortable. Both the Trimmed Mean and Weighted Median measures rose to 3.6% from 3.5% in the previous quarter.
Consumer inflation expectations offered some relief, falling to 4.7% in July from 5.5%, according to the Melbourne Institute. Even so, inflation remains too high for the RBA to declare victory.
The central bank left its Official Cash Rate (OCR) unchanged at 4.35% in June and maintained a cautious message. Policymakers warned that further tightening could still be required if inflation proves more persistent than expected.
Governor Michele Bullock struck a more balanced tone. While keeping the possibility of another rate increase alive, she suggested there was no immediate need to tighten again as the economy was broadly evolving in line with expectations.
Markets expect the RBA to remain on hold at its August meeting while continuing to price the possibility of additional tightening before year-end. So far, nearly 15 basis points of extra tightening are pencilled in by the turn of the year.
That stance provides the AUD with some domestic support, but it is not necessarily enough to trigger an immediate rally. Further gains may require incoming data to strengthen the case for another rate increase.
China steadies but offers little additional liftChina remains an important influence on the Australian currency, although it is currently providing stability rather than a powerful tailwind.
The Chinese economy expanded by 4.3% YoY in the April-June period, Industrial Production rose by 5.3% in the year to June, and Retail Sales increased by a more modest 1.0%.
Business surveys suggest that activity is stabilising. The official Manufacturing and Services PMIs remained slightly above the 50 threshold, while private-sector gauges continued to signal expansion.
China’s trade surplus also widened to $125.62 billion in June from $105.4 billion, supported by stronger imports and exports.
Meanwhile, the People’s Bank of China (PBoC) left its Loan Prime Rates (LPR) unchanged, keeping the one-year rate at 3.00% and the five-year rate at 3.50%.
China is therefore neither delivering a major boost nor creating a significant drag. Unless the data reveal a clearer acceleration or deterioration, Chinese releases may generate short-term volatility without establishing a lasting direction for the pair.
Bearish positioning remains heavy, but momentum is fadingThe speculative mood on the Australian Dollar stayed bearish in the week ended July 28. Commodity Futures Trading Commission (CFTC) data showed net short positions rose to almost 40K contracts from 37.7K a week before.
However, the weekly increase in bearish exposure has decelerated to around 2.3K contracts from 7K previously. That said, the non-commercial players are still building on their downside positions, but with less urgency than earlier this summer.
Open interest also increased slightly to around 229.8K contracts from just above 225K, indicating a slight increase in market participation. In addition, speculative exposure decreased as well to -17.4% (from -16.7%).
The broader trend points to a similar loss of momentum. Indeed, the 4-week change improved to -22.3K contracts from -24.7K, suggesting that cumulative bearish flows are gradually cooling.
Overall, speculators remain firmly bearish on the Aussie, but that view is becoming more established than aggressive. This means the AUD position is increasingly reliant on incoming economic data.
It also creates an interesting asymmetry. Disappointing data could reinforce the prevailing bearish bias, but a convincing improvement in the outlook could trigger a sharper reaction as crowded short positions are unwound.
Jobs data take centre stageAustralia’s July Labour Force report will be the next major domestic test for the Australian Dollar. The release could influence expectations for the RBA’s next move and determine whether AUD/USD can establish itself above 0.7000.
Stronger-than-expected labour data
A solid increase in employment, particularly full-time employment, combined with a stable or lower jobless rate would reinforce the view that the labour market remains tight.
Firm participation and hours-worked figures would add credibility to the headline result. Such an outcome could strengthen expectations of another RBA rate increase and support a sustained move above 0.7000 of the pair.
A broadly balanced report
Employment growth close to expectations, accompanied by little change in unemployment or participation, would probably leave the RBA outlook largely unchanged.
In that case, AUD/USD could remain confined between resistance around 0.7000 and the 200-day SMA just past 0.6900, with its direction determined primarily by the US Dollar and global risk sentiment.
A clear deterioration in the labour market
Weak or negative employment growth, particularly alongside a rise in the Unemployment Rate, would raise questions about the resilience of the Australian economy.
A drop in hours worked or a result driven mainly by part-time employment would make the report look even softer. This could reduce expectations of further RBA tightening and leave spot vulnerable to a renewed test of 0.6900.
Participation will require careful attention. A lower Unemployment Rate caused by people leaving the labour force would be less encouraging than the headline figure might initially suggest.
Beyond the domestic data, traders should continue to monitor US yields, Federal Reserve expectations, Chinese developments, global risk appetite and geopolitical headlines.
Technical landscapeIn the daily chart, AUD/USD trades at 0.6994, holding above the 200-day simple moving average (SMA) at 0.6913 but still capped by the 55-day SMA at 0.7019 and the 100-day SMA at 0.7053, which keeps the near-term tone neutral-to-bearish. Momentum is modestly constructive, with the Relative Strength Index (14) hovering near 51, while the Average Directional Index (14) around 15 suggests a weak, non-trending environment where price is more likely to consolidate beneath these moving average barriers than to embark on a decisive directional move.
On the topside, immediate resistance is clustered at the short-term SMAs, with the 55-day SMA at 0.7019 followed by the 100-day SMA at 0.7053, ahead of a horizontal cap near 0.7079; higher up, the 0.7278–0.7283 region and then 0.7661 mark more substantial medium-term hurdles. On the downside, initial support aligns with the 200-day SMA at 0.6913, before the horizontal floor at 0.6833, while deeper retracements would expose 0.6660 and 0.6593, with 0.6414 and 0.6373 acting as longer-term bearish objectives if selling pressure resumes.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
The line in the sand remains 0.6900AUD/USD retains a constructive medium-term structure above its 200-day SMA, but the immediate outlook remains uncertain while the pair struggles to secure a foothold above 0.7000.
The most attractive setup remains conditional. Confirmed acceptance above 0.7000 would favour additional gains and could trigger a positioning-driven short squeeze. Another rejection, however, would leave the pair exposed to a return toward 0.6900.
Until one of these boundaries breaks, AUD/USD remains caught between supportive Australian fundamentals and an external backdrop still dominated by the US Dollar, geopolitical uncertainty and only moderate support from China.
Employment FAQs Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
USD/CHF roste, protože slabší švýcarská inflace drží SNB u sazeb na 0,00 % a tlačí CHF dolů. Pár se obchoduje kolem 0,8109, což zachovává mírně býčí výhled.
USD/CHF edges higher on Monday as softer Swiss inflation data and a modest recovery in the US Dollar (USD) weigh on the Swiss Franc (CHF). At the time of writing, the pair trades around 0.8109, up 0.38% on the day.
Franc under pressure as muted Swiss inflation keeps SNB on holdStrategists at Brown Brothers Harriman highlight that "Swiss July CPI stays muted," with inflation data underscoring the lack of price pressures in the economy. They note that, "in line with consensus, headline CPI printed at 0.4% y/y vs. 0.5% in June while core CPI remained at 0.3% y/y for a fourth straight month."
Against this backdrop, BBH concludes that the "bottom line: the SNB has plenty of room to keep rates at 0.00% for some time, which is an ongoing drag for CHF," adding that the Franc is currently "the worst performing G10 currency so far this quarter."
On the US side, the Greenback shows signs of stabilization following last week’s sell-off, triggered by coordinated intervention from Washington and Tokyo to counter excessive weakness in the Japanese Yen (JPY). Stronger-than-expected US ISM Manufacturing Purchasing Managers Index (PMI) data lends some support to the Greenback.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.96, rebounding from an intraday low of 99.42, its weakest level since June 15.
Technical analysis
On the daily chart, USD/CHF retests the 21-day Simple Moving Average (SMA) near 0.8110 after slipping below it last week. The pair is above the 50-day and 100-day SMAs, keeping the broader outlook mildly constructive.
Momentum is mixed, with the Relative Strength Index (14) hovering near a neutral 52.5 and the Moving Average Convergence Divergence (MACD) still in negative territory, which suggests upside may be steady rather than explosive in the near term.
On the upside, a daily close above the 21-day SMA would bring the psychological 0.8200 level back into focus. A decisive break above this area could open the door to additional gains.
On the downside, immediate support is seen at the 21-day SMA around 0.8110, followed by the 50-day SMA at 0.8038, ahead of the horizontal support near 0.8000 and the 100-day SMA at 0.7955.
As long as USD/CHF holds above this layered demand zone, the pair would likely continue to trade with a mild bullish bias, with any decisive break below 0.8000 needed to weaken the broader constructive tone and expose deeper retracements.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
SNB FAQs The Swiss National Bank (SNB) is the country’s central bank. As an independent central bank, its mandate is to ensure price stability in the medium and long term. To ensure price stability, the SNB aims to maintain appropriate monetary conditions, which are determined by the interest rate level and exchange rates. For the SNB, price stability means a rise in the Swiss Consumer Price Index (CPI) of less than 2% per year.
The Swiss National Bank (SNB) Governing Board decides the appropriate level of its policy rate according to its price stability objective. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame excessive price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Yes. The Swiss National Bank (SNB) has regularly intervened in the foreign exchange market in order to avoid the Swiss Franc (CHF) appreciating too much against other currencies. A strong CHF hurts the competitiveness of the country’s powerful export sector. Between 2011 and 2015, the SNB implemented a peg to the Euro to limit the CHF advance against it. The bank intervenes in the market using its hefty foreign exchange reserves, usually by buying foreign currencies such as the US Dollar or the Euro. During episodes of high inflation, particularly due to energy, the SNB refrains from intervening markets as a strong CHF makes energy imports cheaper, cushioning the price shock for Swiss households and businesses.
The SNB meets once a quarter – in March, June, September and December – to conduct its monetary policy assessment. Each of these assessments results in a monetary policy decision and the publication of a medium-term inflation forecast.
Japonský jen třetí den v řadě posílil vůči USD a EUR po koordinované intervenci úřadů, když vůči dolaru zpevnil o téměř 5 % a vůči euru o 4,2 %. USDJPY a EURJPY zůstávají pod tlakem kvůli riziku dalšího zásahu, přičemž za týden jen přidal 3,9 % vůči dolaru a 3,1 % vůči euru.
USDJPY edged higher from new lowest level in almost three months, following three-day sharp fall on coordinated intervention by Japan’s authorities and US central bank, to support weakening yen.
Massive intervention buying lifted yen against US dollar (nearly 5%) and Euro (4.2%), with yen’s weekly gains of 3.9% vs dollar and 3.1% vs Euro.
The authorities signaled that further intervention cannot be ruled out that keeps near-term focus at the downside, with current (still mild) bounce, seen as positioning for fresh push lower for both currency pairs (USDJPY and EURJPY).
The USDJPY surged through daily Ichimoku cloud (spanned between 160.67 and 158.48), broke through 200DMA (157.92) and trendline support (157.10), while EURJPY broke 200DMA support (183.62), to hit the lowest since 17 Nov 2025 (179.36) on Monday.
Technical picture on daily chart turned bearish for both pairs, but stretched indicators after sharp fall suggest that bears may take a breather, though with limited upticks, due to persisting risk for possible further intervention.
USDJPY – broken 200DMA turned to solid resistance which capped today’s action and should ideally limit upticks, guarding next significant barrier at 158.48, provided by the base of thick daily cloud.
Fresh bears eye next pivotal supports at 155.02/154.78 (May 6 low / Fibo 38.2% of 139.88/163.98 rally) break of which to generate stronger reversal signal and support scenario of direction change of 16-month uptrend.
EURJPY- upticks should ideally hold below 182.50 zone (Fibo 38.2% of 187.43/179.36 post-intervention fall) to keep bears intact for firm break through cracked 180 psychological support and acceleration towards 175.28 (Fibo 38.2% of 154.79/187.94) and 172.70 (100WMA) in extension.
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The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
EUR/USD begins the week around 1.1540. Following a volatile week, market attention has shifted from the Federal Reserve meeting to US economic data. Investors will assess whether incoming figures reinforce the case for a September rate hike or, conversely, point to a cooling of the US economy.
Monday brings business activity indices from China and the US. The US ISM Manufacturing PMI is expected at approximately 53.0, down from 53.3 previously. Holding firmly above 50 would support the dollar, while a more pronounced slowdown would raise doubts about economic resilience and provide support for EUR/USD. On Tuesday, attention turns to JOLTS job openings, with forecasts pointing to a decline to 7.3 million from 7.594 million.
Wednesday’s highlight is the ISM Services PMI, expected to rise to 55 from 54. A strong reading would support the dollar, as services remain a key component of the US economy and an important source of inflationary pressure. Thursday’s calendar is relatively quiet, leaving the pair to consolidate ahead of Friday’s key releases.
On Friday, Germany will release foreign trade data, with the surplus expected to narrow to €11.2 billion from €19.1 billion. The main event, however, will be the US labour market report. Non-farm payrolls are forecast to rise by 79,000, up from 57,000, while unemployment is expected to hold steady at 4.2%. A stronger reading would reinforce expectations of a Fed rate hike and weigh on EUR/USD, while weak job growth or rising unemployment would support the euro.
Technical analysis
On the H4 chart of EUR/USD, the market has formed a consolidation range around the 1.1533 level, currently extending between 1.1524 and 1.1538. This range is nearing completion. An upside breakout would suggest a corrective move towards 1.1556, followed by a decline to 1.1480. A direct downside breakout would open the way for a move to 1.1400. The MACD indicator supports this scenario, with its signal line above zero but pointing downwards, reflecting weakening upward momentum.
On the H1 chart, the market has completed an upward move to the 1.1556 level. A consolidation range is currently forming below this level. Today, a move lower towards 1.1480 is expected, followed by a move higher to 1.1518, and then a continuation of the downward move to 1.1400, with scope for the trend to extend to 1.1330. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.
ConclusionEUR/USD begins a data-heavy week with markets focused on US economic indicators following the Fed’s policy decision. The ISM manufacturing and services PMIs, JOLTS job openings, and Friday’s labour market report will be crucial in shaping expectations for a potential September rate hike. A strong set of data would support the dollar, while weaker readings could support the euro. Technically, the pair appears to be consolidating around 1.1533, with a potential corrective move towards 1.1556 before resuming its broader bearish trajectory towards 1.1400 and possibly 1.1330. The week’s data releases will be the key catalysts for direction.
EUR/USD vystoupal nad 1,1500 na nejvyšší úroveň od poloviny června, protože slábnoucí očekávání dalšího utahování Fedu tlačí dolar dolů. Trh čeká na ISM výroby a páteční payrolls.
EUR/USD climbed to its highest level in more than six weeks after breaking above 1.1500. Softer expectations for further Federal Reserve tightening continued to pressure the US dollar. Traders now await ISM manufacturing data before shifting attention to Friday's US payrolls report. The euro began the week on a stronger footing, extending last week’s rally as broad-based weakness in the US dollar continued to support the common currency. EUR/USD climbed above 1.1500, reaching its highest level since mid-June after investors scaled back expectations that the Federal Reserve will need to resume raising interest rates this year.
Last week’s Fed meeting marked a turning point for the dollar. Although policymakers left interest rates unchanged, markets were unconvinced that officials are prepared to deliver another hike unless inflation accelerates significantly. Treasury yields retreated after the meeting, dragging the greenback lower across major currency pairs and allowing the euro to recover sharply from July’s lows.
At the same time, geopolitical concerns eased after reports that the United States postponed further military action against Iran. The decline in oil prices that followed helped reduce immediate inflation concerns, removing one of the main factors that had recently supported the US dollar.
US economic data now becomes the next catalyst for EUR/USD With the Federal Reserve now temporarily out of the spotlight, investors are turning their attention to incoming economic data for fresh clues on the direction of US monetary policy.
Monday’s ISM Manufacturing PMI will offer an early indication of how the US industrial sector performed in July after recent signs that business activity has begun to stabilize. Markets will also monitor the S&P Global Manufacturing PMI for confirmation of broader economic momentum.
However, attention is already shifting toward Friday’s Nonfarm Payrolls report, widely regarded as the week’s most important release. A resilient labour market could revive expectations for tighter monetary policy later this year, while weaker employment growth would strengthen the view that the Fed has reached the end of its tightening cycle.
That makes this week’s data particularly important for EUR/USD after last week’s breakout.
Euro buyers regain technical control The technical picture has improved considerably over the past several sessions.
After establishing support around 1.1350, EUR/USD has produced a strong impulsive recovery, breaking through the psychological 1.1500 level while also clearing the descending trendline that had capped prices since June.
The rally has been accompanied by a move back above both the 100-day and 200-day moving averages, reinforcing the argument that medium-term bullish momentum is returning. Price is now consolidating just below 1.1560, suggesting buyers are pausing after a rapid advance rather than showing signs of exhaustion.
A sustained move above 1.1558 would expose the June high near 1.1620, while a successful break there could encourage a broader recovery toward 1.1650.
Bullish Outlook The outlook remains positive while EUR/USD holds above 1.1480. Continued weakness in the US dollar and softer Treasury yields could allow buyers to challenge 1.1558, with 1.1620 becoming the next major upside objective.
Bearish Outlook Failure to hold above 1.1480 would increase the risk of profit-taking after last week’s rally. A decisive break below 1.1430 could expose 1.1350, signalling that the recent recovery was only corrective rather than the beginning of a broader trend reversal.
On the downside, the first layer of support sits near 1.1480, followed by 1.1455, which represents the midpoint of the latest advance. A move below 1.1430 would weaken the current bullish structure and suggest that sellers are regaining control.
EUR/USD Outlook The near-term outlook for EUR/USD remains constructive after last week’s decisive break above the 1.1500 psychological level shifted momentum back in favour of buyers. However, the pair is entering a data-heavy week that could determine whether the rally has enough strength to extend toward the June highs. Traders will closely monitor the US ISM Manufacturing PMI and Friday’s Nonfarm Payrolls report for fresh clues on the Federal Reserve’s policy path. Softer-than-expected US data could reinforce dollar weakness and lift EUR/USD toward 1.1620, while stronger economic readings may trigger a pullback as investors revive expectations of tighter US monetary policy. For now, the broader bias remains bullish as long as the pair holds above key support around 1.1480.
GBP/USD minulý týden vzrostl asi o 1 % na 15denní maximum, protože slabší americká data oslabila dolar. Další směr určí páteční zpráva o zaměstnanosti v USA.
Pound-Dollar could extend its recovery if US labour market data weakens further, although stronger ISM surveys may help steady the Greenback. The Pound to US Dollar (GBP/USD) exchange rate climbed to a 15-day high last week as investors scaled back Federal Reserve rate hike expectations following softer US economic data and the latest central bank decisions.
At the time of writing, GBP/USD was trading around $1.3483, up approximately 1% over the week.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.347555 (-0.05%)
Euro to Dollar (EUR/USD): 1.153631 (+0.06%)
Dollar to Yen (USD/JPY): 156.42647 (-0.65%)
Image: GBP/USD monthly returns WEEKLY RECAP:
The US Dollar (USD) opened the week on a firm footing as a cautious market mood boosted demand for the safe-haven currency.
Trading remained subdued until Wednesday evening, when the Federal Reserve left interest rates unchanged by a 9-3 vote and adopted a broadly neutral tone.
Following the decision, markets pared back expectations for further Fed interest rate hikes this year, triggering broad-based US Dollar weakness.
Selling pressure intensified on Thursday after second-quarter US GDP growth slowed to 1.5%, missing expectations and decelerating from 2.1% in the first quarter.
At the same time, the latest core PCE price index suggested inflation cooled modestly in June, adding to expectations that the Fed may be in no hurry to tighten policy further.
An improving market mood also kept the safe-haven US Dollar under pressure into the end of the week.
Meanwhile, the Pound (GBP) traded without clear direction during the first half of the week ahead of the Bank of England's policy decision.
The BoE announcement provided modest support for Sterling, although gains were uneven as investors assessed the voting split and Governor Andrew Bailey's comments.
Policymaker Catherine Mann joined two colleagues in voting for an interest rate increase after previously supporting unchanged policy, while Bailey reiterated there was little evidence that inflation was becoming entrenched in the UK economy.
After a soft start on Friday, Sterling recovered after Chancellor John Healey confirmed the date of the Autumn Budget and reiterated the government's commitment to maintaining its fiscal rules, helping reassure investors.
Image: Pound-to-Dollar exchange rate forecast consensus range as of August 2026 Share article
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Near-Term GBP/USD Forecast: Non-Farm Payrolls Report in Focus Looking ahead, the US ISM manufacturing and services PMIs on Monday and Wednesday are expected to provide the first major clues on the health of the US economy.
If both surveys point to improving business activity, the US Dollar could regain some support.
However, the week's key release will be Friday's US non-farm payrolls report.
A stronger-than-expected increase in employment could revive support for the Greenback, although any further rise in the unemployment rate may offset the positive impact.
Meanwhile, the UK's final services PMI on Wednesday is the main domestic release for Sterling. Confirmation that the UK's dominant services sector returned to growth in July could provide additional support for the Pound.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
USD/JPY klesl po vzácné koordinované intervenci USA a Japonska, které koupily jeny za účelem omezení prudkých pohybů. Pár se krátce propadl na 155,27 a pohyboval se kolem 156,63, což bylo o 0,52 % níže za den.
The United States joined Japan in buying yen to contain disorderly currency moves, protect the US Treasury market and prevent Japan’s financial strains spilling into the global economy. The Japanese Yen strengthened sharply on Monday after Japan confirmed that Washington had joined Tokyo in a rare coordinated intervention to support the currency.
Image: USD/JPY crashed as seen in the 24h chart Japan’s Ministry of Finance said it purchased yen alongside the US Treasury on Friday to counter “excessive volatility and disorderly movements” after the currency fell towards a 40-year low near ¥164 against the Dollar. Finance Minister Satsuki Katayama warned that the two countries would not hesitate to intervene again.
At the time of writing, the US Dollar to Yen exchange rate (USD/JPY) was trading around 156.63, down 0.52% on the day. The pair briefly plunged towards 155.27 overnight before recovering, extending its retreat from levels above 163 in late July.
Latest — Exchange Rates:
Dollar to Yen (USD/JPY): 156.62001 (-0.53%)
Euro to Dollar (EUR/USD): 1.153244 (+0.02%)
Pound to Dollar (GBP/USD): 1.347124 (-0.08%)
Washington’s involvement was not simply an act of support for a key Asian ally.
Japan had already spent heavily buying yen, with Bank of Japan data suggesting that Tokyo may have deployed almost $59 billion during Thursday’s intervention. Funding further action by selling US government bonds risked driving Treasury prices lower and pushing American borrowing costs higher.
The US intervention therefore helped address two risks at once: a destabilising collapse in the yen and the possibility that Japan could become a forced seller of Treasuries as it raised dollars to defend its currency.
The Federal Reserve’s FIMA repo facility could also allow Japan to obtain temporary dollar liquidity without selling its Treasury holdings outright.
US Treasury Secretary Scott Bessent described the facility as an important backstop and said Washington was prepared to participate in further coordinated action.
The move also supports the Trump administration’s trade agenda.
An exceptionally weak yen makes Japanese exports cheaper and can offset some of the competitive impact of US tariffs, while higher import costs are intensifying inflation and political pressure within Japan.
The intervention has forced traders to unwind large speculative bets against the yen, but officials may struggle to secure a lasting recovery without help from monetary policy.
The Bank of Japan kept its benchmark rate at 1.00% last week, although the coordinated action and increasingly forceful US pressure have strengthened expectations of another increase as soon as September.
Image: Dollar-Yen exchange rate performance over 2026 For USD/JPY, the immediate risk is now two-sided.
Further intervention could drive the pair back below 155.00, while a failure to follow the currency purchases with tighter Japanese policy could eventually allow the underlying US-Japan yield gap to reassert itself.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/USD testuje dlouhodobou klesající trendovou linii, protože možné další intervence na jenu tlačí dolar níž. Nad touto rezistencí by se mohl potvrdit obrat trendu.
Joint intervention distorts dollar's strongest macro relationships EUR/USD tests January downtrend amid intervention threat Euro area data surprises strongest since early 2023 July payrolls to decide if dollar weakness persists EUR/USD is testing long-running downtrend resistance in early Asian trade on Monday, reacting to an artificial, and potentially temporary, slide in the dollar late last week. Rather than the economic calendar or technicals, it's likely the Japanese yen that determines whether resistance holds or snaps, with the threat of further joint intervention by Japanese and US authorities likely to dominate proceedings.
Yen intervention remains the dominant FX driver Markets widely expect Japan to announce on Monday that it coordinated with the US to support the yen last week, marking the first joint intervention by the two nations in decades. But the bigger question is whether authorities have finished.
As outlined in our USD/JPY week ahead report released over the weekend, prior intervention episodes suggest there's a strong chance of further action should yen weakness re-emerge. With USD/JPY already rebounding from the earlier session lows, the risk of additional intervention cannot be overlooked on Monday.
That points to further artificial downside in the dollar, driven by factors other than fundamental market forces. Should the intervention episode continue, it would likely provide another tailwind for EUR/USD, increasing the risk the recent rebound extends further.
However, whether that weakness lasts beyond the short term is another matter entirely. A heavy slate of US economic data, including Friday's non-farm payrolls report, will likely determine whether the move can grow into something more sustainable.
Traditional dollar relationships weaken
Source: TradingView
Assessing whether dollar weakness can be sustained is more difficult because some of this year's strongest relationships have weakened sharply over the past week. Over the past month, the US Dollar Index has continued to display a reasonably strong relationship with the Fed funds futures curve, reflecting market expectations for Fed rate hikes between June this year and June next year, along with US two-year Treasury yields, with 20-day correlation coefficients of 0.62 and 0.65 respectively.
However, over the past five sessions those relationships have deteriorated sharply. The correlation with the Fed funds futures curve has fallen to just 0.29, while the relationship with US two-year Treasury yields has weakened to only 0.14. Correlations with other drivers, including energy prices, have also deteriorated over the same period.
While month-end flows may explain part of the shift, the intervention episode unfolding in Japan also appears to be distorting the broader market message. What has driven the dollar for much of this year isn't necessarily what's driving it right now.
Euro data turns a corner
Source: LSEG Workstation
While intervention may be helping propel EUR/USD higher in the short term, it's not the only factor at work. Euro area economic data has staged a remarkable turnaround in recent months, with the Citi Economic Surprise Index, which measures whether data is beating or missing economists' forecasts, rebounding sharply from the lows seen during the early stages of the Iran conflict.
The recovery has been nothing short of V-shaped. Having languished in deeply negative territory in April, the index has surged to its highest level since early 2023, pointing to a growing prevalence of upside surprises across the euro area. Friday's inflation report only reinforced that trend, with both headline and underlying inflation accelerating, strengthening the case for another ECB rate hike.
By contrast, while the US economy continues to outperform, it is finding it harder to deliver upside surprises relative to elevated market expectations. That suggests EUR/USD's rebound is not solely a by-product of intervention-driven dollar weakness, with improving relative fundamentals also helping underpin the move.
The calendar takes a back seat
Source: TradingView
Speculation surrounding further intervention, along with the associated flows through the Japanese yen, are likely to remain the dominant influence on EUR/USD during Monday's session. As a result, the economic calendar may struggle to generate sustained moves unless it delivers a surprise.
Of the scheduled releases, US ISM services PMI looks the most likely candidate to spark a fundamentally driven move, although even that may be giving it too much credit in the current environment. The US Treasury's quarterly refunding announcement will also attract attention, but it's typically Wednesday's release detailing the composition of debt issuance that has the greater market impact.
The Senior Loan Officer Opinion Survey rounds out the calendar. While it has influenced markets before, it's a backward-looking report and, against this unique backdrop, its ability to generate meaningful volatility looks extremely limited.
Trendline showdown
Source: TradingView
Looking at EUR/USD on the daily timeframe, the technical stakes today are high with the pair now trading through downtrend resistance that's been in place since the highs set in late January.
The descending triangle structure that had contained price action last week was shattered following the Fed decision last Wednesday, delivering a breakout that saw EUR/USD push not only through former resistance at 1.1480, but also the 50-day simple moving average, extending the move into a test of the long-running downtrend. That becomes the key level to watch today, along with the 100-day simple moving average sitting marginally above at 1.1569.
A clean break and close above the trendline would strengthen the view that a trend change may be taking place, opening the door towards the 23.6% Fibonacci retracement of the January 2025 to January 2026 bull move at 1.1633, which also coincides with the 200-day simple moving average. Beyond that, 1.1670 is the next level to watch, with a break above opening the door towards 1.1800 and 1.1850.
On the downside, should the downtrend continue to cap gains, a reversal back towards the confluence of the 50-day simple moving average and former resistance at 1.1480 may be on the cards. A break beneath that would open the door for a retest of the support zone comprising the 38.2% Fibonacci retracement of the January 2025 to January 2026 bull move, horizontal support at 1.1364, and the June 24 swing low at 1.1325.
The oscillators continue to favour further upside. RSI (14) continues to push above the neutral 50 level without entering overbought territory at 64, while MACD has confirmed the bullish signal with a crossover above the signal line and a move back into positive territory. However, that message comes with the caveat that artificial factors have played a significant role in the latest bout of euro strength.
EUR/USD po výprodeji dolaru po Fedu prorazil nad 1,1500 a v červenci vzrostl o něco přes 1 %. Danske varuje, že další pokles amerických reálných výnosů by jeho short na EUR/USD dál tlačil.
Danske Bank says EUR/USD’s break above 1.1500 has challenged its bullish Dollar view, with further declines in US real yields likely to place its short-Euro position under increasing pressure. The Euro to Dollar exchange rate ended July near 1.1530 after the post-Federal Reserve Dollar selloff carried the pair decisively above 1.1500.
EUR/USD gained just over 1% during July, recovering from a monthly low near 1.1354 and reaching a high around 1.1547. The pair remains 1.7% lower since the start of 2026, having traded between January’s peak at 1.2075 and a June low of 1.1325.
Image: Euro-to-Dollar exchange rate chart - 3 month timeframe Danske Bank said “modestly stronger-than-expected Q2 GDP and July flash inflation data from the largest euro area economies supported EUR”, but stressed that domestic European data were not the main reason for the move.
Instead, the bank said “the main driver behind EUR/USD rising above 1.15 has been the post-FOMC decline in US real rates.”
Nominal US yields fell following the Federal Reserve meeting, while medium and longer-term inflation expectations moved higher. According to Danske, this reflected markets reassessing “Kevin Warsh’s commitment to bringing inflation back to target”.
That combination lowered inflation-adjusted US yields and weakened one of the central supports for the Dollar.
The effect was not confined to the Euro. Danske noted that “the same effect could be seen across other risk-sensitive currencies as well”, with easier financial conditions supporting the Swedish Krona, New Zealand Dollar and South African Rand.
For the bank, the market reaction directly challenges its recent positioning.
“The shift does challenge our recent USD-positive narrative,” Danske said, adding that this view had been “underpinned by expectation of the Fed remaining on a firm tightening bias.”
The bank is not abandoning the prospect of further US rate increases. It said: “We still think the macro case for the Fed hiking rates is very much alive.”
That remains the foundation of its medium-term case for renewed Dollar strength. Sticky inflation, resilient activity and the risk that the Fed ultimately tightens more than markets now expect could restore support to US yields.
The immediate risk, however, has moved in the opposite direction.
Image: EUR/USD chart - performance so far in 2026 Danske conceded that “tactically, further decline in US real rates would certainly put our recent short EUR/USD recommendation under even more pressure.”
The technical backdrop has improved alongside the change in rates. EUR/USD has moved above both its 20-day and 50-day moving averages after spending much of July below them.
A sustained hold above 1.1500 would leave the recovery intact and bring the 1.1600-1.1665 region back into focus. The latter marked the upper part of June’s trading range before the Euro’s slide towards 1.1325.
The broader three-month trend remains less convincing. EUR/USD is still below May’s highs near 1.1800 and has fallen around 1.7% over that period.
Danske’s forecast therefore hinges on whether the post-Fed fall in real yields persists. A further decline would reinforce the Euro’s breakout and threaten the bank’s short position, while a recovery in real rates and renewed expectations of Federal Reserve tightening could pull EUR/USD back towards 1.1400.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
BOJ zvažuje v září nebo říjnu zvýšení úrokové sazby na 1,25 %, což spolu s intervencemi proti jenu tlačí USDJPY dolů. Měnový pár za červenec oslabil zhruba o 3 % a uzavřel měsíc kolem 157,40.
Key Points:The BOJ may consider raising its policy rate to 1.25% in September or October.Yen intervention and expectations of higher Japanese rates are pressuring USDJPY.USDJPY could extend its correction if it remains below key technical support.
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The Bank of Japan kept its policy rate at 1% in July. It came after a 25 basis point hike in June. But the last meeting did not indicate that the tightening cycle was over. The BOJ placed more weight on the risk of the underlying inflation exceeding its 2% target.
The depreciating yen has increased the pressure for higher interest rates. It increases the costs of imported fuel, food and industrial materials. While currency intervention can slow the rate of decline, it may not eliminate the big interest rate spread between Japan and the United States. That could mean that the BOJ needs to tighten policy to counter the primary driver of yen weakness.
In my view, the BOJ may consider a policy rate increase to 1.25% in September/October. September is now the first realistic window while October remains possible if policymakers want more inflation and wage data.
BOJ Interest Rate Decision Keeps September Hike in Focus The BOJ maintained the interest rates steady with 8-1 vote. But the board member Hajime Takata supported an immediate increase to 1.25%. This means that the tightening camp is beginning to grow within the bank as evidenced by his dissent. The bond yield of the 2-year Japanese bond also rose to 1.51% following the meeting. This suggests the bond market expects the interest rates to remain higher.
Governor Kazuo Ueda gave clear warning about the cost of waiting too long. He said that the lack of action could increase the risk of inflation. The bank would also begin to discuss these risks starting with its September meeting. This guidance opens the door for a potential rate hike in September.
This message was supported by the BOJ’s July forecast. The bank added that it would consider raising the policy rate if the economy and prices evolve in line with the bank’s expectations. The bank said that the financial environment is accommodative, as real interest rates remain negative. So, a 1% policy rate might still be too low if the inflation 2%.
The next move will depend on the upcoming data about inflation, wages and currency. The strong wage data and another increase in inflation expectations could warrant a September rate increase. The yen’s depreciation again may push the BOJ into a more urgent decision. The bank could hold off until October or December if these pressures ease.
Japan Inflation and Wage Growth Support Further BOJ Rate Hikes The annual inflation rate in Japan climbed to 1.7% in June and the core inflation rate to 1.6%. Both readings are below BOJ’s target. But they are not based on current prices and take into account government energy subsidies. The BOJ is expecting the core inflation to surge to above 2% in the second half of fiscal 2026.
The producer prices suggest the future inflation. These grew 7.1% year on year in June, following 6.6% growth in May. The chart below shows a strong rise in producer prices since March 2026. Most of this increase was due to increased energy, chemical and petroleum prices. The companies could shift some of these costs back to consumers, making it more difficult for the BOJ to maintain the rates.
The wage data also indicates additional tightening. The average cash earnings grew 3.2% year on year in May.
On the other hand, the real earnings grew 1.4% year on year and continue to grow in 2026 as seen in the chart below.
At the same time, business inflation expectations increased from 2.4% to 2.7%. When wages are growing, consumers can more easily afford higher prices and when expectations are increasing, inflation is more likely to continue.
Strong demand for semiconductors, high energy prices and the weak yen may continue to weigh on inflation. These forces are in favor of transitioning to 1.25% by the end of 2026.
If these factors remain positive and continue to grow, the BOJ could hike rates further to 1.5% in early 2027. But if the oil price drops and the yen continues to strengthen, the bank may be able to take a break after its next rate increase.
USDJPY Forecast as BOJ Rate Hike Supports the Yen The hawkish BOJ and suspected currency intervention pushed the USDJPY lower. The strength in yen at the end of July has pushed USDJPY to close the month around 157.40. This is around 3% down for July and opens the door for further correction in August.
If the BOJ raises rates, then the US dollar will become less attractive relative to the yen. This may put more pressure on USDJPY on the downside.
But the difference in rates between the U.S. and Japan is still quite large. The 2-year yield in the United States was nearly 4.31%, while in Japan it was around 1.51%.
If the BOJ hikes rates and US yields drop, USDJPY may retreat to the 152-155 area. But a BOJ rate hike and another US rate increase would drag the pair back towards 160.
USDJPY Technical Analysis as Pullback Reaches Key Support USDJPY dropped after marking a high at the 164 level and closed the month below the 157 level. This means that the breakout above the 160 level, which was triggered in June 2026, failed. USDJPY still needs to consolidate below the 160-162 area.
The weekly chart below shows that USDJPY has been trending within an ascending channel pattern since the January 2023 lows. If USDJPY continues to drop below 157 next week, it will likely continue its momentum toward the 149-150 area as seen by lower support of the ascending channel pattern.
The importance of the current support zone is highlighted on the daily chart, which shows that USDJPY closed slightly below the rising trend line and the 200-day SMA.
But this was the last day of the month, which triggered strong volatility in the financial markets. This means that a recovery above 158 next week and continued upside momentum may allow the pair to rally toward the 160 area.
However, if the pair continues to drop below the 157 level, it will open the door for a continued decline toward the 152 area. This level is marked by the red dotted support line.
But the RSI indicator shows an extremely oversold condition in the short term and indicates a rebound before the next drop. A recovery above 161.50 will suggest that the bottom has formed. This bottom may allow the pair to continue upside.
In Closing The BOJ has opened the door to another interest rate hike. Rising producer prices, strong wage growth and higher inflation expectations support the tighter policy. The weak yen also increases imported inflation. In my view, the BOJ may raise the policy rate to 1.25% in September or October. It could delay the move if inflation eases or the yen continues to recover.
The higher Japanese interest rates could place further pressure on USDJPY. A continued decline below 157 may push the pair toward the 150-152 area. But the oversold conditions could trigger the short term rebound first. A recovery above 161.50 would indicate that the bottom is confirmed and the pair is ready to move higher again.
Read more: BOJ Rate Hike to 1.25% Puts Japanese Yen in Focus
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Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.
The Pound to Rupee (GBP/INR) exchange rate ended July at 128.63 after a volatile month carried the pair above 130.80 before part of the advance was reversed.
The Reserve Bank of India’s policy decision now provides the week’s main event risk for GBP/INR.
Latest — Exchange Rates: Pound to Rupee (GBP/INR): 128.6262 (-0.14%)
July: +2.55%
July High: 130.8147
WEEKLY RECAP:
The Pound to Rupee exchange rate (GBP/INR) recovered during the closing sessions of July after falling towards 127.28 at the start of the week.
Pound Sterling retained support following the Bank of England’s decision to hold Bank Rate at 3.75%.
Three policymakers voted for an immediate increase, although Governor Andrew Bailey played down the urgency of another move. Scotiabank noted that UK yield spreads continue to provide Sterling with underlying support.
The Indian Rupee finished the week more strongly.
Persistent Reserve Bank of India intervention, a softer US Dollar and a modest retreat in oil prices helped the currency record its strongest weekly advance since March.
The RBI’s June measures have now attracted more than $40 billion in foreign-currency inflows, providing policymakers with another tool for stabilising the Rupee.
However, India remains vulnerable to energy costs. Brent crude posted a sharp July increase, keeping inflation and the import bill firmly in focus.
Near-Term GBP/INR Forecast: RBI Decision and Technical Levels in Focus For Sterling, Monday’s final manufacturing PMI is followed by Wednesday’s services PMI and Thursday’s construction survey.
For the Rupee, Wednesday is the key session. India’s services PMI is followed by the RBI policy announcement, with most economists expecting the repo rate to remain at 5.25%.
A neutral hold accompanied by confidence in capital inflows could support the Rupee. A dovish assessment of growth risks or renewed concern over oil prices would leave it exposed.
Technically, GBP/INR is trading close to its 20-day moving average near 128.60 and above the 50-day average around 127.70.
Image: GBP/INR 3-month chart with 20MA an 50MA Share article
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The 20-day line has also moved back above the 50-day average, giving the chart a mildly positive bias.
Initial resistance sits at 129.00–129.20, followed by 130.00 and July’s 130.81 peak. Support is located around 128.00 and 127.30.
A sustained break above 129.20 could reopen 130.00, while a close below the 50-day average would expose 127.00.
In the near-term, Exchange Rates UK Research forecast that the Pound to Rupee exchange rate will trade within the 127.00–130.50 range.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
UBS expects the Australian Dollar to strengthen steadily over the coming year, with AUD/USD forecast at 0.73 by September and 0.76 by June 2027. The Australian Dollar to US Dollar exchange rate (AUD/USD) ended July at 0.7026, having gained 1.65% over the month and more than 5% since the start of the year.
That leaves the pair back above 0.70 after a difficult June, when AUD/USD fell 3.73% and briefly traded below 0.69. See our full history here.
UBS sees the recovery extending well beyond current exchange rate levels.
Its latest global forecasts put AUD/USD at 0.73 in September 2026, 0.74 in December, 0.75 in March 2027 and 0.76 by June.
The final target implies upside of just over 8% from the latest close.
The shape of the forecast matters.
UBS is not looking for one sudden surge.
It expects the pair to rise by roughly one cent in each quarter, pointing to a broader improvement in the Australian Dollar backdrop alongside a gradual weakening of the US currency.
We think that makes the 0.73 September target the key first test.
If AUD/USD can reach and hold that level, the later forecasts at 0.74, 0.75 and 0.76 become much easier to justify. If it fails well before then, the whole path starts to look more vulnerable.
The bank’s wider currency table also supports the view that this is partly a Dollar story.
UBS expects both EUR/USD and GBP/USD to rise over the same period, suggesting it sees a broad retreat in the US Dollar rather than an Australian Dollar move driven by domestic factors alone.
That distinction is important after softer Australian inflation reduced expectations for another near-term Reserve Bank of Australia rate rise.
The absence of an immediate hike removes one potential source of support for the Aussie, but it does not rule out further gains if US yields fall and the Federal Reserve becomes less restrictive.
A favourable global backdrop would help as well.
The Australian Dollar tends to perform better when equity markets are firm, commodity demand is improving and investors are prepared to hold more risk-sensitive currencies.
In our view, UBS’s forecast assumes those external forces will prove strong enough to outweigh any fading support from Australian interest rates.
The pair still has technical work to do before the first target comes into view.
AUD/USD closed July near 0.7026, above the rising 20-day moving average and around the declining 50-day average.
That is a clear improvement from late June, when the exchange rate fell towards 0.6880, but it is not yet a decisive medium-term breakout.
The immediate obstacle is the July high around 0.7044.
A move through 0.7050 would strengthen the recovery and bring 0.7100 back into focus.
Beyond there, resistance is likely around 0.7180-0.7200, followed by the May peak at 0.7277.
We would treat a break above 0.7277 as the point at which the UBS forecast starts to look technically credible.
That would complete the recovery from June’s decline and leave the market within reach of 0.73.
Image: AUD/USD three-month chart showing support near 0.7000, resistance around 0.7045 and the May high at 0.7277 The broader 2026 trend remains constructive, but the May high still guards the path to UBS’s first target The year-to-date chart is more positive than the shorter three-month view.
AUD/USD began 2026 near 0.6670 and has since gained 5.34%.
The pair rallied strongly through January, traded above 0.72 during the spring and reached a year-to-date high at 0.7277 in May.
The subsequent decline was sharp, but the exchange rate held well above its January low before recovering through July.
That leaves the broader upward structure intact.
The 20-day moving average has turned higher, while the 50-day average has begun to flatten.
A sustained hold above 0.70 would keep the recovery on course and increase the likelihood of another test of the spring highs.
Initial support is located around 0.7000, followed by the 20-day average near 0.6970.
A break beneath 0.6970 would weaken the near-term picture and expose the July support zone around 0.6940, with the late-June low near 0.6880 providing the more important downside level.
We would view a move back below 0.6970 as a warning that the July recovery is losing momentum.
Image: AUD/USD year-to-date chart showing the rise from 0.6670, May peak near 0.7277 and July recovery above 0.70 Share article
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UBS’s 0.76 forecast ultimately rests on more than the Australian Dollar story.
A move that far would require a sustained improvement in global risk appetite, supportive commodity conditions and a weaker US Dollar.
The first two targets look achievable if AUD/USD can maintain its position above 0.70 and clear the May high.
The longer-term move towards 0.76 would require a more convincing Dollar decline and a clear break from the broad range that has contained the pair since February.
For now, the technical tone has improved, but the exchange rate remains in recovery rather than full breakout mode.
A close above 0.7277 would materially strengthen the bullish case and place UBS’s 0.73 September forecast within reach.
Analysts at Scotiabank expect renewed pressure on USD/CAD after its July decline, with a break below 1.4000 opening the way towards 1.3981 and the upper 1.39s. The US Dollar to Canadian Dollar exchange rate ended July near 1.4015 after falling 1.36% over the month.
USD/CAD opened July around 1.4208 and reached a monthly high close to 1.4239 before retreating to a low near 1.3992. The pair remains 2.1% higher for 2026, having traded between approximately 1.3482 and 1.4248 since the start of the year.
Scotiabank says the Canadian Dollar has benefited from the broader deterioration in US Dollar sentiment following the Federal Reserve meeting, although progress through the 1.4000 area has so far proved difficult.
Short-term US-Canada interest-rate spreads narrowed modestly after the FOMC decision, providing some support for the Loonie. The bank cautions, however, that the remaining yield gap is still wide enough to restrain a more substantial Canadian Dollar advance.
The latest weekly close may be more significant. Scotiabank believes the move suggests that the rebound in USD/CAD from its mid-July low is beginning to reverse.
The pair has moved decisively below its 40-day moving average, which Scotiabank places at 1.4104. The bank now expects minor recoveries towards 1.4100 to encounter firm resistance.
USD/CAD tested the 1.4000 region during the final sessions of July but failed to reach the 38.2% retracement of the May-June rally at 1.3981.
According to Scotiabank, “a low close on the week suggests the USD rebound from mid-July is reversing and more pressure is likely on the upper 1.39s in the days ahead.”
The one-month chart supports the softer technical picture. USD/CAD has fallen below its declining 20-day moving average and closed close to the bottom of July’s range.
The broader year-to-date chart is less conclusive. The pair remains above its rising 50-day average and is still well above the January low, reflecting the scale of the Dollar rally during May and June.
Canada’s domestic data provide the next potential catalyst. May industry-level GDP is expected to rise 0.2% on the month and 1.4% from a year earlier. A stronger reading could help the Canadian Dollar force a clearer break below 1.4000.
Scotiabank’s short-term assessment is bearish, with 1.3981 marking the immediate downside target and the upper 1.39s likely to come under further pressure. Resistance around 1.4100 should now limit any near-term USD recovery.
Canadian Dollar Prices: This Week USDEURGBPJPYCADAUDNZDCHFUSD -1.37%-1.17%-3.91%-0.57%-0.61%-1.66%-1.35%EUR+1.39% +0.21%-2.57%+0.82%+0.78%-0.29%+0.03%GBP+1.18%-0.21% -2.77%+0.61%+0.57%-0.50%-0.18%JPY+4.07%+2.64%+2.85% +3.47%+3.43%+2.34%+2.66%CAD+0.57%-0.81%-0.60%-3.36% -0.04%-1.10%-0.78%AUD+0.61%-0.77%-0.56%-3.32%+0.04% -1.06%-0.74%NZD+1.69%+0.29%+0.50%-2.28%+1.11%+1.07% +0.32%CHF+1.37%-0.03%+0.18%-2.59%+0.79%+0.75%-0.32% The FX heat map compares how Canadian Dollar (CAD) has performed against a basket of major currencies over the past week. The largest move was against the Japanese Yen, where Canadian Dollar recorded its sharpest decline. Data comparing prices today (01/08/2026 12:20 UTC) and daily close on 25/07/2026.
To read the table, choose the base currency from the left-hand column and then move across to the quote currency along the top row. For example, the GBP row and USD column shows the weekly percentage move in GBP/USD.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
MUFG uvádí, že jestřábí postoj Bank of England podporuje GBP/USD, ale Baileyho odmítnutí brzkého zvýšení sazeb omezuje další růst. Pár zakončil červenec kolem 1,3482 po zisku 1,75 % za měsíc.
MUFG says the Bank of England’s hawkish hold should keep Sterling supported, but Governor Bailey’s pushback against imminent rate increases limits the scope for a sustained GBP/USD rally. The Pound to Dollar exchange rate (GBP/USD) ended July around 1.3482 after gaining 1.75% over the month and rebounding strongly from lows below 1.33.
GBP/USD rose around 0.85% over the final 48 hours of July, reaching a high near 1.3495 and finishing close to the top of that range.
Image: Pound to Dollar (GBP?USD) exchange rate chart - final 48hr pre-close Over the past three months, the pair has traded between approximately 1.3142 and 1.3658, leaving the latest rate near the middle of its broader spring and summer range.
MUFG believes the Bank of England’s latest communication remains supportive for Sterling, although policymakers stopped short of signalling an imminent rate increase.
The Monetary Policy Committee left rates unchanged, with MUFG’s textual analysis describing the written contributions as consistent with a hawkish hold. Policymakers continued to emphasise inflation persistence, second-round effects and the risks posed by energy prices and geopolitical uncertainty.
The committee remains divided. MUFG’s framework placed Catherine Mann firmly in hawkish territory, followed by Huw Pill and Megan Greene, while Swati Dhingra and Alan Taylor remained on the dovish wing.
Mann’s shift was particularly notable, with her comments placing greater weight on inflation risks arising from Middle East tensions and volatile energy prices.
The press conference delivered a more balanced signal than the written statement, however.
MUFG scored the MPC contributions at 23.3 on its hawk-dove scale, compared with a softer 17.0 for Governor Andrew Bailey’s press conference.
Bailey explicitly warned markets not to leave the meeting believing that the MPC was “edging towards a hike”.
That distinction is important for Pound Sterling.
The BoE remains concerned enough about inflation to resist a dovish shift, supporting UK yields and the Pound, but it is not yet preparing investors for another tightening move.
According to MUFG, “the communication remains supportive, but the deliberate pushback against rate hike expectations limits the scope for upside.”
Image: GBP/USD 3-month history The Pound-Dollar exchange rate charts reinforce that mixed picture.
GBP/USD has recovered above both its short-term moving averages, but remains below the May high near 1.3658.
A clean move through 1.3500 would improve the immediate technical tone, while the 1.3550-1.3660 area is likely to offer stronger resistance.
Pound Sterling’s rebound can therefore extend while the Dollar remains under pressure, but MUFG’s assessment suggests the BoE alone is unlikely to drive GBP/USD decisively beyond its recent highs.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
ING čeká, že EUR/USD zůstane poblíž 1,1500 po prudkém výprodeji dolaru. Trvalý růst nad 1,1600 by podle banky vyžadoval další výrazné přecenění sazeb v USA.
ING expects EUR/USD to remain supported around 1.1500 following the sharp Dollar selloff, although a sustained move above 1.1600 would require a further dovish repricing of US interest rates. The Euro to US Dollar exchange rate (EUR/USD) gained just over 1% in July, recovering from a monthly low near 1.1354 and reaching a high around 1.1547.
EUR/USD pair remains 1.7% lower for 2026, having fallen from January’s peak at 1.2075 to a year-to-date low of 1.1325 in June.
Image: EUR/USD exchange rate performance over 48h chart The latest 48-hour chart above shows the pair rising from below 1.1440 to above 1.1530, leaving it close to the upper end of its recent range. The daily chart also shows EUR/USD moving back above its 20-day moving average, although it remains close to the declining 50-day average.
ING believes the sharp change in Dollar momentum leaves the Euro better supported in the near term.
The Greenback came under pressure after the Federal Reserve delivered a more dovish message than markets had expected. Investors were left questioning whether policymakers would follow through on their inflation-fighting rhetoric with actual rate increases.
The US Dollar’s decline accelerated after US core PCE inflation rose only 0.1% in June and second-quarter growth undershot expectations.
Suspected Japanese intervention against the Yen added to the pressure by triggering a sharp fall in USD/JPY and spilling over into broader Dollar sentiment.
Positioning may also keep the move going.
ING estimates that speculative long-Dollar exposure against other major currencies was at its most stretched since January 2025, while leveraged funds held their largest EUR/USD short positions since 2021.
According to the bank, “there may still be room for further USD long-squeezing”, making it too early to call a firm bottom in the Dollar selloff.
Analysts at ING note EUR/USD broke through 1.1500 “with little resistance” and expects the level to attract buyers for a while longer.
The bank sees near-term risks tilted towards further Euro gains, although it is cautious about chasing a sustained move above 1.1600.
Such a break would probably require another material repricing lower in US rates, together with an easing in Middle East tensions.
Image: EUR/USD Year-to-Date historical chart For now, ING expects buyers to continue emerging around 1.1500, with 1.1600 marking the more difficult test for the recovery.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/USD uzavřel červenec poblíž 1,1500 a za poslední obchodní týden přidal přes 1,1 %. Euro podpořila slabší data z USA a lepší výsledky z Německa a eurozóny.
The EUR/USD pair closes July with modest gains near the 1.1500 mark, adding over 1.1% in the last trading week. Price action throughout the month was dull to say the least as investors remained clueless, although the pair managed to hit 1.1530 ahead of the close. The lack of action was compounded by persistent uncertainty, centered on developments in the Middle East and the United States (US) Federal Reserve’s (Fed ) monetary policy path.
Regarding the first, an escalation of the US-Iran war spurred US Dollar (USD) demand at the beginning of the week after continued tit-for-tat attacks around the Strait of Hormuz, which, by the way, is once again closed. Mood improved early in the week amid a pause in attacks and headlines suggesting a fresh round of negotiations.
Renewed war headlines, however, were quickly overshadowed by the US Fed monetary policy announcement on Wednesday. The USD plunged after the central bank decided to leave the benchmark rate unchanged, with the split vote leaving it at a range of 3.50%-3.75%. Three regional bank presidents dissented, preferring an immediate 25-basis-point (bps) rate hike: Cleveland's Beth Hammack, Minneapolis's Neel Kashkari, and Dallas's Lorie Logan.
Chairman Kevin Warsh chickens outThe USD collapsed following the Fed’s decision as investors believed Chair Warsh had chickened out. He kept repeating his commitment to curb inflation and to price stability, but the Fed left rates unchanged for the fifth consecutive meeting.
Of course, he did not provide clear guidance on the future path of monetary policy, not actually a surprise. And he failed to specify how he intends to resolve five-year-long inflationary pressure despite affirming that there is no “soft” inflation target.
“We are on the job, we will deliver, we are focused like a laser on making sure we can do it, but the suggestion that we're going to be able to do it with our magic wand is one I want to disabuse you and everyone else of,” Warsh said.
Market players did not take well to the myriad empty words and the lack of action. However, bets on a September rate hike have increased after the dust settled. According to the CME FedWatch Tool, the chances of a hike increased to 65% from 55% one week before the Federal Open Market Committee (FOMC) announcement.
Still, there’s a long way ahead of September, and loads could happen in the way. The focus will remain on data — inflation and employment figures — and Middle East developments.
Meanwhile, the US published the preliminary estimate of the Q2 Gross Domestic Product (GDP), which showed that the economy expanded at an annual rate of 1.5%, missing expectations and below the Q1 reading of 2.1%. Other details of the report showed that the GDP Price Index jumped to 6.3% in Q2 from 3.6% in Q1, while the quarterly core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge, increased 3.3% on a yearly basis, matching the market expectation. In June, the core PCE Price Index ticked lower on a yearly basis, to 3.3% from 3.4% in May, still far above the Fed’s 2% goal.
Middle East crisis here to stayUS President Donald Trump said for the umpteenth time on Friday that the war is “going well” and that the US “keeps winning.” No strikes between Washington and Tehran were reported by the end of the week, a short truce that at least was enough to contain fears. Still, unrest leads the region as traffic through the Strait of Hormuz declined to the levels seen before the Memorandum of Understanding (MoU), while Kuwait and Egypt reported Iranian attacks early Friday.
On a positive note, US President Trump announced an historic agreement to secure the disarmament of Hamas, while a senior Hamas official confirmed it to CNN, contingent on Israel upholding its obligations. This is the first time Hamas has agreed to a specific plan to hand over weapons.
The song remains the same: the US demands Iran drops its nuclear program, while Iran requests full control of the critical sea passage. Neither side is willing to give up on those terms.
Euro finds support in dataData coming from Europe provided support to the Euro: Germany and the Eurozone (EU) released the preliminary estimates of the Q2 GDP. Annualized growth in Germany rose 0.9%, modest yet better than the 0.4% posted in Q1. The EU figure printed at 1%, up from the previous 0.3%.
German inflation met expectations as the preliminary estimate of the July Harmonized Index of Consumer Prices printed at 2.8% YoY, higher than the 2.4% from June. The EU HICP in the same period resulted in 2.5%, in line with expectations and slightly above the previous 2.4%.
Still, financial markets price in roughly a 65% probability that the European Central Bank (ECB) will deliver a 25 bps rate hike at the September meeting. Again, too early to speculate about that.
Regardless, European data was encouraging enough to spook concerns, which ended up helping the Euro on its way north. It should not be a surprise, however, if the Greenback resumes its rally on the back of war-related fears.
What’s next in the docketThe first week of August will be a busy one. Germany will kick-start macroeconomic releases by publishing June Retail Sales, while the US will publish the ISM Manufacturing Purchasing Managers Index (PMI) on Monday. The ISM Services PMI will be out on Wednesday, while EU June Retail Sales are scheduled for Thursday.
S&P Global, alongside local banks, will release the final estimates of the July PMIs for major economies throughout the week.
Midweek, the focus will turn to employment as the US releases June JOLTS Job Openings, the July ADP Employment Change report, and July Challenger Job Cuts ahead of the July Nonfarm Payrolls (NFP) report scheduled for Friday. The US is expected to have added 91K new jobs in the month, up from the 57K added in June, while the Unemployment Rate is foreseen at 4.3%, up from the 4.2% posted in June.
EUR/USD Technical Outlook:From a technical perspective, based on the daily chart, EUR/USD has partially recovered its bullish poise. The pair has run past a now mildly bullish 20-day Simple Moving Average (SMA) at 1.1430, although it remains below the 100-day and 200-day simple SMAs at 1.1568 and 1.1631, respectively, keeping the broader backdrop bearish despite the latest bounce. The 14-day Relative Strength Index (RSI) indicator turned lower but stands at 58, while the Momentum indicator holds flat above its midline, suggesting that buying interest has improved, though not enough to confirm a trend change.
In the weekly chart, EUR/USD maintains a mildly bearish near-term bias, holding below the 20-week SMA at 1.1565 while still trading above the 100- and 200-week SMAs at 1.1311 and 1.1032, respectively. Technical indicators have rotated higher, but remain below their midlines, reflecting the latest advance yet far from suggesting a bullish extension ahead.
On the topside, initial resistance is at the 100-day SMA near 1.1568, with the 200-day SMA at around 1.1631 as the next significant barrier if buyers extend the advance. On the downside, immediate support emerges at the 20-day SMA at 1.1424, where a break would expose a deeper pullback toward the June low at 1.1324.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed credibility questions underpin USD SSA spreads as EUR and GBP seen outperformingAccording to TD Securities, recent price action has seen "US swap spreads have tightened, and the yield curve has steepened," reshaping relative value across rates and credit markets. The bank argues that "questions around the Fed's credibility are supportive for USD SSA G-spreads," and, in this context, it "look[s] for front-end EUR and GBP to outperform vs USD" as investors reassess opportunities along the front end of major curves.
AUD/USD včera vzrostl o více než 1 % a dnes se dostal na intradenní měsíční maximum 0,7045. Růst podporují vyšší očekávání sazeb RBA a slabší americký růst.
Higher-for-longer RBA interest rate expectations, persistent domestic inflation, and widening yield differentials against the U.S. Federal Reserve continue to fuel the currency's upward trajectory Broader risk-on sentiment is adding tailwinds, as investors favor growth-sensitive, higher-yielding currencies like the Aussie over safe havens amid improving global market mood The RBA's August 11 decision and upcoming US data could quickly reverse momentum The Australian dollar experienced significant gains this week. Yesterday, it rose over 1% against the US dollar, marking one of its most substantial single-day movements this year. This upward trend continued today, reaching an intraday monthly high of 0.7045.
Zoom out, and the pair is up roughly 9% over the past twelve months. So what’s behind this fresh burst of momentum, and is it something traders should lean into or treat with caution?
What Is Driving this Jump? The main reason for the Aussie dollar’s quick rise is the growing gap in monetary policy between Australia and the United States.
Back home, Reserve Bank of Australia (RBA) Governor Michele Bullock again took a hawkish tone. She warned that underlying inflation is still too high, meaning more interest rate hikes aren’t off the table.
The official RBA Monetary Policy Statement confirms the central bank is determined to bring inflation back to its target. They’re keeping the official cash rate at a high 4.35%. This firm approach has made markets expect a longer period of tight policy compared to other G10 countries.
Concurrently, the US dollar faced headwinds following macroeconomic reports showing a distinct deceleration in second-quarter US GDP growth.
The combination of weaker US economic growth figures and expectations of future monetary easing by the Federal Reserve has put downward pressure on US dollar yields. This situation is prompting a redirection of capital towards commodity-linked currencies, such as the Australian dollar, which offer higher yields.
Secondary support for the Australian dollar comes from commodity prices and global risk appetite. Australia’s export sector is closely tied to industrial metals and energy. Consequently, any improvement in global market sentiment generally benefits the Australian dollar.
Is It Sustainable? That’s the harder question. The rate-differential argument holds only as long as the data keeps cooperating. A hotter-than-expected US inflation print or a surprisingly resilient jobs report could quickly revive Fed-hawkish bets and cap the Aussie’s gains.
On the Australian side, the RBA’s next decision on August 11 is a real event risk. Any indication of concern regarding the currency’s current strength or a resurfacing of growth anxieties could rapidly shift market sentiment. In the near-term, the price range of 0.7045-0.7065 is likely to be the key resistance level to monitor.
What Traders and Investors Should Consider For short-term traders, this market movement appears driven by specific data points and upcoming events, rather than a fundamental change in valuation. Therefore, careful position sizing in anticipation of the RBA announcement and the next US inflation and payrolls data releases is more critical than attempting to capitalize on the immediate breakout.
For longer-term investors, including those with Australian equity or currency exposure, it’s worth remembering not to overreact to a single week’s move. Rate-differential shifts like this can unwind quickly if either central bank changes its guidance.
Why has the Australian dollar risen sharply against the US dollar?
A shifting interest-rate differential is driving it, and markets now expect a more dovish Fed while the RBA looks set to hold rates through 2026.
Should investors increase AUD exposure immediately?
A measured approach is preferable. Confirmation of the breakout and favourable upcoming data would strengthen the case for adding positions.
Will the Reserve Bank of Australia increase interest rates again soon?
While the RBA remains hawkish, recent cooling inflation makes an extended rate hold much more likely.
NZD/USD klesl k 0,5860 poté, co slabá čínská data PMI obnovila obavy ze zpomalující poptávky. Americký dolar zároveň zpevnil po přehodnocení výhledu Fedu.
NZD/USD slipped to around 0.5860 after weaker-than-expected Chinese PMI data reinforced concerns over slowing demand. The US dollar rebounded as traders reassessed the Federal Reserve's policy outlook following this week's meeting. Improving New Zealand consumer confidence failed to offset concerns about China's economic slowdown, the country's largest export market. The New Zealand Dollar weakened against its US counterpart on Friday, with NZD/USD extending losses to trade around 0.5860 as disappointing economic data from China reignited concerns over the outlook for regional growth. The move came as investors reacted to a sharper-than-expected contraction in Chinese business activity, a development that carries significant implications for New Zealand given China’s position as the country’s largest trading partner. At the same time, the US Dollar regained traction after Thursday’s selloff, with markets continuing to digest the Federal Reserve’s latest policy decision and the prospect that US interest rates could remain elevated for longer.
Although domestic data from New Zealand painted a more encouraging picture of household confidence, external factors continued to dominate price action. Slowing Chinese demand, together with renewed demand for the US Dollar, outweighed improving sentiment at home and kept the Kiwi under pressure heading into the final trading session of the week.
Why Is NZD/USD Falling Today? The primary catalyst behind Friday’s decline was a weaker-than-expected batch of Chinese Purchasing Managers’ Index (PMI) data, which suggested the world’s second-largest economy lost momentum in July. Official figures showed the Manufacturing PMI fell to 49.2 from 50.3 in June, slipping back into contraction territory and missing economists’ expectations. Meanwhile, the Non-Manufacturing PMI dropped to 49.0 from 50.2, signalling that weakness was not confined to the factory sector but had spread across the broader economy.
The figures reinforced concerns that China’s recovery remains fragile despite previous policy support from Beijing. For New Zealand, whose economy is heavily dependent on exports of dairy products, meat, timber and other commodities to China, weaker Chinese activity often translates into expectations of softer export demand and slower economic growth. As a result, the New Zealand Dollar tends to react quickly to disappointing Chinese data, making it one of the most China-sensitive currencies in the G10 complex.
US Dollar Rebounds as Markets Reassess Fed Outlook The US Dollar also provided headwinds for NZD/USD after recovering from Thursday’s sharp decline. While the Federal Reserve left interest rates unchanged at its latest meeting, investors continue to debate whether policymakers will need to tighten monetary policy further if inflation remains stubbornly high.
Fed Chair Kevin Warsh reiterated that the central bank remains committed to restoring price stability and stands ready to adjust policy if necessary. Although he avoided offering explicit guidance on the timing of future rate moves, markets interpreted the Fed’s overall message as keeping the door open to another rate increase should inflation fail to moderate. That shift in sentiment helped the Greenback recover against most major currencies after suffering broad-based losses immediately following the policy announcement.
Additional support for the US Dollar came from stronger revisions to the University of Michigan Consumer Sentiment survey. Consumer confidence improved slightly from the preliminary reading, while both one-year and five-year inflation expectations remained elevated, reinforcing expectations that inflation risks have not yet fully subsided.
Improving Consumer Confidence Offers Limited Support On the domestic front, New Zealand released more encouraging economic data, with the ANZ-Roy Morgan Consumer Confidence Index rising eight points to 99.3 in July, marking its strongest reading since February. Households also became more optimistic about economic conditions over both the one-year and five-year horizons, suggesting that higher interest rates and easing inflation pressures are gradually improving consumer sentiment.
However, the stronger confidence figures had little impact on the currency market. Traders remained focused on external developments, particularly China’s slowing economy and the broader direction of the US Dollar. Until global growth concerns begin to ease, positive domestic indicators are likely to play a secondary role in determining the Kiwi’s direction.
China’s Slowdown Remains the Biggest Risk for the Kiwi China’s economic performance continues to be one of the most important drivers of the New Zealand Dollar. Any sustained weakness in manufacturing activity, consumer spending or property investment has the potential to reduce demand for New Zealand exports, ultimately weighing on economic growth and the country’s terms of trade.
At the same time, investors remain alert to the possibility of additional stimulus measures from Beijing. Any meaningful fiscal or monetary support aimed at stabilising growth could improve market sentiment and provide renewed support for commodity-linked currencies, including the New Zealand Dollar. Until then, concerns over slowing Chinese demand are likely to remain a significant drag on the Kiwi.
NZD/USD Technical Analysis NZD/USD remains under pressure after slipping below 0.5860, with the pair extending its recent corrective decline. Price action continues to favour sellers after failing to sustain gains above the 0.5900 psychological level, while momentum indicators suggest bearish pressure remains intact in the near term.
Immediate support is seen around 0.5850, followed by the recent swing low near 0.5800. On the upside, initial resistance is located at 0.5900, with stronger selling interest likely to emerge around 0.5950. A sustained break above that zone would be needed to signal that bullish momentum is returning.
NZD/USD Outlook The near-term outlook for NZD/USD remains tilted to the downside as markets continue to weigh slowing Chinese economic activity against expectations that US interest rates could remain restrictive for longer. While improving consumer confidence points to greater resilience within New Zealand’s domestic economy, external developments are likely to remain the dominant driver of the currency.
Investors will now look ahead to upcoming US economic data for further clues on the Federal Reserve’s next move, while any fresh announcements from Chinese authorities aimed at supporting growth could influence sentiment toward the New Zealand Dollar in the sessions ahead.
Why is NZD/USD falling today?
NZD/USD is under pressure after China’s manufacturing and services PMIs unexpectedly fell into contraction, raising concerns about demand from New Zealand’s largest trading partner, while the US dollar rebounded.
Why does China’s economy affect the New Zealand dollar?
China is New Zealand’s largest export market. Weaker Chinese economic activity can reduce demand for New Zealand exports such as dairy and agricultural products, weighing on the Kiwi.
Why does China’s economy affect the New Zealand Dollar?
China is New Zealand’s largest trading partner and a major buyer of its dairy, meat and agricultural exports. Strong Chinese economic growth typically supports the New Zealand Dollar, while weaker Chinese data often puts pressure on the currency.
UK economists expect the GBP/USD exchange rate to retreat in the near-term outlook as steady BoE rates and doubts over the durability of hawkish policy guidance weigh on Pound Sterling. The Pound to Dollar exchange rate (GBP/USD) traded around 1.3443 on Friday morning after gaining more than 1.3% over the previous two sessions.
GBP/USD closed Thursday at 1.3461, leaving the pair 1.6% higher for July but still below the month’s 1.3558 peak.
Rabobank expects that recovery to fade, forecasting Cable in a 1.32–1.33 range over the next one to three months.
The bank’s argument is that markets have already tightened UK monetary conditions on the Bank of England’s behalf by pricing further rate increases and pushing borrowing costs higher.
“In RaboResearch’s view, the heavy lifting done by the market may help the Bank avoid an actual hike in policy rates,” Rabobank said.
Thursday’s BoE decision reinforced that possibility. Bank Rate remained at 3.75%, despite three policymakers voting for an immediate increase.
The vote looked hawkish, but the majority still preferred to wait for clearer evidence that higher energy costs were feeding into wages and domestic prices.
Rabobank believes markets will initially continue “taking the BoE’s hawkish rhetoric at face value and maintain its expectations of rate hikes”.
The risk is that investors eventually demand action.
The bank questioned whether another unchanged decision could cause markets to doubt whether the Monetary Policy Committee is “truly focused on its inflation mandate”, particularly if policymakers continue talking tough without raising rates.
Image: GBP/USD median bank forecast path showing a near-term fall towards 1.33 before a longer-term recovery The latest Exchange Rates UK forecast survey poll, see chart above, broadly supports Rabobank’s near-term caution. The median bank projection falls to around 1.33 by the end of the third quarter before recovering gradually through 2027 and moving above 1.40 in late 2028.
Rabobank is less convinced about the Pound’s medium-term prospects.
“Further out we see risk that UK fiscal concerns will combine with steady BoE rates to weigh on the pound,” the bank said.
The UK labour market remains central to that view. Before the energy shock, weaker employment conditions had supported expectations that the BoE would cut rates this year.
Recent signs of stabilisation have complicated the picture and may increase the risk of “second order price effects” as oil prices rise again.
Rabobank said stronger labour data or “another ramp higher in UK CPI inflation data” could increase pressure on the Bank “to put its money where its mouth is”.
Near-Term GBP/USD Forecast: Rabobank Targets 1.32–1.33 as BoE Credibility Faces a Test Rabobank’s range implies that Thursday’s move above 1.34 will not be sustained.
A decline to 1.33 would reverse much of the latest rally, while 1.32 would return Cable towards the lower part of its recent trading range.
The Dollar side is also important. Sterling benefited when short-term US yields and the greenback fell after the Federal Reserve held rates steady, but Rabobank does not view that as enough to secure a lasting Pound advance.
Its central judgement is that the BoE may continue using hawkish language while avoiding an actual increase.
That strategy can support Sterling only while markets believe a hike remains credible. Rabobank’s 1.32–1.33 forecast suggests that confidence will become harder to maintain.
The USD/CAD pair seesaws between tepid gains/minor losses through the early European session on Friday, consolidating its recent losses to the lowest level since June 17, touched the previous day. However, a combination of supporting factors assists spot prices in holding above the 1.4000 psychological mark.
The US Dollar (USD) regains some positive traction as inflation risks stemming from volatile energy prices keep inflation risks and the US Federal Reserve (Fed) rate hike bets in play. Furthermore, retreating crude oil prices undermine the commodity-linked Loonie and act as a tailwind for the USD/CAD pair. The lack of any meaningful buyers, however, warrants some caution before confirming that a three-day-old downtrend has run its course.
From a technical perspective, this week's breakdown below the 200-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for bearish traders. Adding to this, the Moving Average Convergence Divergence (MACD) sits below zero with the line in negative territory, while the Relative Strength Index (RSI) hovers near 37. Momentum indicators hint that downside momentum remains dominant despite the proximity of initial support.
However, it will be prudent to wait for some follow-through selling and acceptance below the 1.4000 mark before positioning for deeper losses. The USD/CAD pair might then weaken to the 38.2% Fibo. retracement around 1.3979, which is followed by deeper retracement levels at 1.3897 and 1.3814, where the 50.0% and 61.8% Fibo levels could slow further losses.
On the topside, any recovery would first need to overcome resistance at the 23.6% retracement near 1.4082, with the 200-period SMA at 1.4130 capping the broader upside. Failure to clear the said hurdle will reinforce the prevailing bearish structure while the USD/CAD pair remains below it.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/CAD 4-hour chart
Canadian Dollar Price This week The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies this week. Canadian Dollar was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-1.00%-0.81%-1.96%-0.48%-0.39%-1.13%-1.03%EUR1.00%0.17%-0.98%0.53%0.62%-0.13%-0.04%GBP0.81%-0.17%-1.29%0.35%0.44%-0.30%-0.21%JPY1.96%0.98%1.29%1.54%1.64%0.88%0.89%CAD0.48%-0.53%-0.35%-1.54%0.06%-0.65%-0.56%AUD0.39%-0.62%-0.44%-1.64%-0.06%-0.74%-0.65%NZD1.13%0.13%0.30%-0.88%0.65%0.74%0.09%CHF1.03%0.04%0.21%-0.89%0.56%0.65%-0.09% 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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
The Euro (EUR) extends the intraday rally to near 185.20 against the Japanese Yen (JPY) after the Bank of Japan’ (BoJ) monetary policy decision during the Asian trading session on Friday. The BoJ has kept interest rates steady at 1%, as expected, with an 8-1 majority.
BoJ member Hajime Takata dissented from the vote to hold and favored a 25 basis points (bps) interest rate hike to push rates to 1.25%.
The Japanese central bank has warned that medium-to-long-term inflation expectations are set to climb and has reiterated that the monetary policy path will remain on the upside. “Will keep raising interest rates in response to economic, price trends and financial conditions,” BoJ said.
The BoJ was already anticipated to do so as it is unlikely to deliver back-to-back rate hikes to build pressure on the economy. In the June meeting, the Japanese central bank raised borrowing rates by 25 basis points (bps) to 1%, the highest level not seen since 1995.
On the Eurozone front, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for July, which will be published at 09:00 GMT. The inflation data from Germany and Spain showed on Monday that inflationary pressures grew at a faster-than-expected pace.
According to TD Securities, Eurozone inflation is likely to firm only modestly in the latest print, with the bank expecting “euro area HICP to pick up only slightly to 2.9% y/y (mkt: 2.9%; prior: 2.8%), as the recent rebound in energy is largely offset by softer food and core goods prices.” The analysts note that “airfares may provide some upside given higher jet fuel costs and the start of the summer holiday season,” but they judge that “broader services HICP is likely to remain contained, with limited evidence so far of a wider pass-through of the energy shock.” In this context, TD Securities concludes that “we see the core inflation number remaining steady at 2.4% y/y (mkt: 2.4%, prior: 2.4%).”
Signs of acceleration in inflationary pressures in the Eurozone would prompt expectations of more interest rate hikes by the European Central Bank (ECB) in the near term.
Bank of Japan FAQs The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Asian FX intervention may not be finished yet BOJ surprise hike risk has increased marginally Softer US data adds to dollar pressure AUD/USD and NZD/USD break to fresh highs AUD/USD and NZD/USD ripped higher on Friday, fuelled by broad-based US dollar weakness following apparent coordinated intervention from Asian foreign exchange authorities, softer-than-expected US economic data and a surge in risk appetite after strong earnings from Microsoft and Amazon.
Coordinated intervention rattles the US dollar The biggest driver behind the Australian and New Zealand dollars' outperformance was suspected intervention by Japanese authorities, likely undertaken in coordination with South Korean authorities and with at least tacit support from the United States. The move came with the US dollar already under pressure after the Fed opted against raising rates on Wednesday, providing an ideal backdrop to maximise the impact.
Source: TradingView
An important consideration for traders on Friday is that intervention often doesn't occur in one sitting. Earlier this year, Japanese authorities stepped into the market over several sessions rather than relying on a single operation. If authorities return to the market again, particularly around the Bank of Japan policy decision later in the session, it would point to renewed upside risks for AUD/USD and NZD/USD.
Softer US data adds to dollar headwinds Amplifying the effectiveness of intervention, US economic data broadly disappointed on Thursday. Core PCE inflation rose 0.1% in June, below the 0.2% expected, while the annual rate eased from 3.4% to 3.3%. The unrounded increase was 0.14%, meaning the downside surprise was marginal rather than dramatic.
Accompanying personal income and spending figures were also disappointing. Personal income rose just 0.2%, undershooting expectations, while personal spending increased 0.3%. With spending continuing to outpace income, the household savings rate fell to 2.7%, its lowest level in four years. That questions the sustainability of the strong rebound in consumer spending seen during the June quarter.
US Q2 GDP also disappointed, weighed down by a sizeable drag from net trade that masked underlying strength in business investment and consumer spending. Annualised growth slowed to 1.5%, below the 2.1% consensus forecast. Consumer spending rebounded to a 3.2% annualised pace after a subdued first quarter, while business investment surged 15.2%, continuing to be supported by AI-related capital expenditure. The downside surprise instead reflected a widening trade deficit and inventory drawdowns, which subtracted almost 1.7 percentage points from headline growth.
Risk appetite returns with a vengeance Alongside softer US economic data and suspected intervention, the Aussie and Kiwi ripped higher as risk appetite surged. Strong earnings updates from Microsoft and Amazon fuelled the rally, with Microsoft adding more market value in a single session than any listed company on record.
Given their sensitivity to global risk sentiment, the improvement in sentiment helped drive gains not only against the US dollar, but across most major crosses, with the yen the one exception.
All eyes turn to Tokyo When it comes to what may influence the Aussie and Kiwi on Friday, the events of the past 24 hours suggest risk appetite, the Bank of Japan policy decision and the threat of further intervention from Asian FX authorities will matter far more than economic data. That was reinforced by the total lack of reaction to an upside surprise in Tokyo's July inflation report released early Friday.
Intervention raises the stakes for the BOJ I previewed the Bank of Japan meeting in detail earlier this week, and much of that analysis still holds true. However, the intervention episode over the past 24 hours has increased the risk, at least marginally, of the Bank of Japan moving pre-emptively to raise rates today rather than later in the year, with a full hike already priced into the overnight index swap curve by year-end.
US Treasury Secretary Scott Bessent has made it clear he wants the Bank of Japan to continue normalising policy. If Japanese authorities are already working alongside their South Korean and US counterparts to strengthen the yen through intervention, it raises the question of whether the Bank of Japan may choose to oblige by delivering a surprise rate hike today.
While such a shock outcome would point to a sharply lower USD/JPY and potentially broader US dollar weakness, it would not necessarily be an outright positive for the Australian and New Zealand dollars. They may initially pop against the greenback, but given their sensitivity to shifts in risk appetite, would likely underperform lower-beta currencies if a surprise Bank of Japan hike sparked a broader risk-off episode.
As for when the Bank of Japan decision is likely to drop, it remains a frustration for traders worldwide that there is still no set time for the announcement. Generally, it tends to arrive around 12:30pm Tokyo time, although it can come earlier or later depending on how long the meeting runs. However, the general rule of thumb is that the longer it takes for the decision to drop, the greater the perceived risk that there may be some form of policy shock on the way. So expect markets to become extra twitchy if we extend well beyond 12:30pm Tokyo time.
AUD/USD breakout puts higher levels in play
Source: TradingView
AUD/USD had been coiling in what resembles an ascending triangle before a false downside break followed the softer-than-expected Australian June quarter underlying inflation report on July 29. However, that move has now been completely reversed, with the pair not only breaking back into the triangle structure, but also reclaiming the 50-day moving average and clearing resistance at 0.7020, the top of the structure.
With the price now holding above 0.7020, it provides a level to build long setups around, looking for an extension of the bullish move. Longs could be considered above that level, with a stop below, initially targeting the 100-day moving average at 0.7053 before resistance at 0.7080. A break above the latter would open the door for a potential run towards 0.7200.
The oscillators marginally favour long setups over shorts. RSI(14) has pushed above the neutral 50 level and continues to edge higher, while MACD has flipped into positive territory after staging a bullish crossover earlier this month. It's not a definitively bullish signal, but it does suggest upside momentum is building.
Should AUD/USD slip back below 0.7020 and hold there, it would instead point to a pullback towards the lower boundary of the triangle structure, which comes in around 0.6975 today.
Kiwi joins the breakout party
Source: TradingView
NZD/USD offers a similar technical picture to AUD/USD, breaking higher after grinding higher within an uptrend over recent weeks. The latest surge has seen it break above the confluence of the 50, 100 and 200-day moving averages, along with resistance at 0.5825 and, importantly, 0.5860, a level that has repeatedly acted as both support and resistance over the past couple of months.
The break above 0.5860, taking the pair to its highest level since early June, suggests scope for a further extension of the bullish move. For those looking to play from the long side, longs could be considered while the pair holds above 0.5860, with a stop below, initially targeting 0.5920, another level that has repeatedly acted as support and resistance this year. A break above that would open the door for a retest of the double top at 0.5992 set in May and early June.
The oscillators favour long setups over shorts. RSI(14) has climbed to 64, with the bullish signal reinforced by MACD, which has crossed above the signal line, continues to diverge and remains in positive territory. That suggests upside momentum is building, favouring long setups.
Should NZD/USD slip back below 0.5860 and hold there, it would instead point to a pullback towards the moving average confluence zone and the uptrend, which comes in around 0.5775 today.
The pound sterling has started to show relevant strength against the U.S. dollar. At the moment, GBP/USD has gained slightly more than 1.3% in the short term, reflecting an important buying bias.
Buying pressure began to gain relevance after the Federal Reserve decision during yesterday’s session and strengthened even further after the Bank of England decision today. For now, the central bank dynamic could continue to be key for demand in the pound sterling and maintain possible buying pressure on GBP/USD over the next few trading sessions.
Fed and BoE signals shape the outlook During today’s session, the Bank of England published its interest rate decision and kept the reference rate at 3.75%, in line with expectations. However, the vote delivered an important signal: 6 members voted to keep rates unchanged, while 3 members voted for a 0.25% hike.
Although the rate did not change, this division was interpreted as a slightly more aggressive signal, as it shows that an important part of the committee is starting to consider the need for further increases over the coming months.
In the statement after the decision, the central bank highlighted that energy prices remain volatile and that this factor could continue to pressure inflation. For this reason, although additional hikes were not confirmed, the BoE does not appear ready to ease its stance either. If annual inflation fails to move closer to the 2.00% target, the central bank could continue to consider a more restrictive monetary policy.
The dynamic in the United States was slightly different. Although the Federal Reserve also kept rates unchanged in the 3.50% - 3.75% range, Kevin Warsh’s comments after the decision did not offer a clear signal of a possible hike in September.
This difference is important because the market expected a more aggressive stance from the Fed, but the event did not confirm that expectation. According to the CME Group probability table, for the September 16 decision, there is still a probability near 61% of a rate hike in the United States. However, a probability of almost 40% that rates remain unchanged has also started to emerge, something that had not been observed with the same strength in previous weeks.
Source: CMEGROUP
As a result, the market is facing an interesting dynamic. In the United States, expectations of a more aggressive Fed have lost strength, while in the United Kingdom, the BoE showed internal division that keeps open the possibility of a more restrictive stance if inflation remains a problem.
This contrast has started to be reflected in the U.S. dollar. The DXY index, which measures the dollar’s strength against its main peers, has shown a relevant decline since the Federal Reserve announcement and is now below the 100-point area. This suggests that demand for the dollar has started to weaken significantly after the U.S. central bank decision.
Source: TradingEconomics
With this in mind, and considering that both the United States and the United Kingdom maintain rates near 3.75%, the main difference lies in each central bank’s message. While the market is starting to price in a Bank of England that appears more willing to act if necessary, the Federal Reserve has reduced signals of early rate increases.
This dynamic could continue to weigh on the dollar and open room for the pound sterling to recover more consistently. If this scenario remains in place, GBP/USD could continue to show buying pressure over the next few trading sessions.
Technical forecast for GBP/USD
Source: StoneX, Tradingview
The broad sideways range continues to dominate: Despite GBP/USD’s recovery attempts, the chart continues to show a broad sideways channel that has acted as the main technical structure for several months. This range remains between an upper area near 1.37492 and support around 1.32079. If price fails to break consistently out of these levels, the sideways structure will remain the most relevant pattern and could continue to reflect indecision over the coming trading weeks.
RSI: Now, the RSI remains above the neutral 50 level, suggesting that bullish impulses have started to gain relevance in the short term. If this dynamic continues, the indicator could keep supporting the formation of a more important buying bias over the next few sessions.
MACD: The MACD shows a histogram near the neutral 0 area, suggesting balance in the strength of short-term moving averages. This reading indicates that, although the pound has gained strength, the indecision bias has not completely disappeared from the GBP/USD chart.
Key levels:
1.36255 – Relevant resistance: This relevant high is positioned as the main bullish barrier in the short term. Price movements toward this area could reinforce the current buying pressure and open room for a more consistent bullish bias over the next few sessions. In addition, a clear break above this level could start to put at risk the broad sideways range that has remained in place for several months.
1.34079 – Near-term barrier: This recent neutral area coincides with the 50- and 200-period simple moving averages. If price moves back toward this level consistently, it could once again highlight a phase of indecision and keep the sideways range as the dominant technical structure.
1.32079 – Crucial support: This low coincides with the lower barrier of the broad sideways range. Sustained moves below this point could reflect a dominant selling bias and open room for the formation of a short-term bearish trend line over the coming trading weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
EUR/GBP po zasedání BoE krátce klesl, ale po ponechání sazeb na 3,75 % se vrátil nad 0,8585. Trh zůstal bez větší jistoty, že zářijové zvýšení sazeb skutečně přijde.
MUFG warned that Sterling needed stronger September BoE hike conviction to advance, but Thursday’s guidance left markets with little reason to bring tightening forward. The Euro to Pound exchange rate (EUR/GBP) traded around 0.8574 on Thursday afternoon after the Bank of England held interest rates at 3.75%, with Sterling failing to draw lasting support from a surprisingly hawkish 6–3 vote.
Latest — Exchange Rates:
Euro to Pound (EUR/GBP): 0.856684 (-0.14%)
Pound to Dollar (GBP/USD): 1.342999 (+0.47%)
Euro to Dollar (EUR/USD): 1.150526 (+0.33%)
Huw Pill, Megan Greene and Catherine Mann backed an immediate increase, but the guidance suggested most policymakers remain prepared to wait for clearer evidence that higher energy costs are feeding into persistent domestic inflation.
EUR/GBP initially moved lower before rebounding above 0.8585, then settled back near 0.8574. The pair remained around 0.4% lower for July but was well above its mid-month low near 0.8467.
MUFG had argued before the announcement that the unchanged rate itself would not determine Sterling’s direction. With “nothing priced for today”, the bank said markets would focus instead on “the vote, the communication in the statement, the minutes and the updated forecasts”.
That proved accurate. The three dissenting votes looked supportive for the Pound at first glance, yet the wider message did not materially increase confidence that a September hike was coming.
MUFG had set a clear test for Sterling: “For market rates to move higher and the pound to advance in response to today’s meeting we will need to see increased conviction on a September rate hike.”
The decision did little to meet that threshold.
The Monetary Policy Committee acknowledged that inflation risks remain skewed higher, particularly because of energy prices and the uncertain geopolitical backdrop. However, it also pointed to “clear signs of underlying disinflation” and limited evidence so far of stronger second-round effects.
That combination leaves the Bank concerned, but not yet ready to act.
MUFG had warned that if the inflation forecasts showed prices returning to target over time, “the take-away is likely to be that there is time to assess the inflation risks”.
In that scenario, the bank said “pricing for a September rate hike could ease back somewhat, taking the pound lower”. Thursday’s Sterling reaction was consistent with that interpretation.
Image: EUR/GBP intraday price chart showing the post-BoE rise above 0.8585 and subsequent retreat The intraday move captured the market’s changing reading of the announcement. EUR/GBP initially fell as traders reacted to the three votes for higher rates, but the decline quickly reversed once the guidance was absorbed.
The pair’s jump above 0.8585 suggested the vote count was not enough to convince investors that the next increase had moved materially closer. Its later retreat showed that the decision was not decisively dovish either.
Energy prices remain the strongest argument for keeping a hike in play.
MUFG said the backdrop had become “difficult with crude oil and natural gas prices rebounding significantly”, while a prolonged increase in energy costs “could certainly force the BoE to act, even in circumstances of mixed labour market conditions”.
That risk prevents markets from abandoning tightening expectations altogether. It also helps explain why Sterling’s losses were contained rather than severe.
Image: EUR/GBP year-to-date chart showing the July recovery from below 0.8470 towards 0.8575 The wider price history shows EUR/GBP recovering sharply after Sterling’s strongest run of the year.
The pair fell below 0.8470 in July before rebounding by more than a cent. Thursday’s decision has not broken that recovery, and the cross is again approaching levels that repeatedly contained declines during May and June.
The implication is straightforward: EUR/GBP does not require a major improvement in the Euro outlook to move higher. A modest reduction in expected UK rate support may be enough.
Near-Term EUR/GBP Forecast: September BoE Expectations Remain the Deciding Factor MUFG expected Sterling to remain “well supported at these levels” only on the assumption that “pricing for a September rate hike holds up”.
After Thursday’s announcement, that assumption looks less secure.
The 6–3 vote keeps tightening risk alive, but the guidance suggests the majority is comfortable waiting. Unless energy prices rise sharply or incoming inflation data deteriorate, September may prove too early for another move.
A further decline in September hike expectations could send EUR/GBP back above 0.8590 and towards July’s high near 0.8619.
Pound Sterling would regain firmer support if markets conclude that the three dissenters represent the beginning of a broader hawkish shift. That would require stronger inflation evidence or clearer concern from the MPC’s swing voters.
The vote looked hawkish. The message was more patient. For EUR/GBP, that leaves the recovery from July’s lows intact.
EUR/JPY ve čtvrtek prudce klesl o 2,54 % na zhruba 182,60 poté, co jen zřejmě zasáhla japonská intervence. Pár během několika minut ztratil více než 400 pipů.
EUR/JPY plunges on Thursday, down 2.54% on the day to trade around 182.60 at the time of writing, after a sudden surge in the Japanese Yen (JPY) triggered by what appears to be another intervention by Japanese authorities in the foreign exchange market. The move has been particularly violent, with the pair losing more than 400 pips in just a few minutes.
The JPY rally comes without any obvious economic catalyst, reinforcing speculation that the Japanese Ministry of Finance has stepped into the market to curb the currency's persistent weakness. USD/JPY is also tumbling below the 161.00 mark, while other major Japanese Yen crosses are posting broad-based losses.
The suspected intervention recalls the episode at the end of April, when the Japanese Yen appreciated by nearly 3% against the US Dollar after USD/JPY reached a high of 160.72. At that time, the Japanese Finance Minister Katayama Satsuki warned that "decisive" action was imminent, while top currency diplomat Atsushi Mimura described it as the market's "final warning." Two sources familiar with the matter later told Reuters that Japanese authorities had intervened to support the currency. Since then, the Finance Minister has continued to warn that further intervention remains possible as the Japanese Yen has continued to weaken.
Market attention now shifts to the Bank of Japan (BoJ) policy decision on Friday. The central bank is widely expected to leave its policy rate unchanged at 1%, but investors will closely watch the updated economic projections and Governor Kazuo Ueda's comments for clues on whether another rate hike could come as early as October or be delayed until December. A more hawkish message could extend the Japanese Yen's rebound and keep pressure on JPY crosses.
On the European side, the latest economic data has offered only limited support to the Euro (EUR). Preliminary figures showed that Germany's Gross Domestic Product (GDP) expanded by 0.2% QoQ in the second quarter, beating expectations of 0.1%, while annual growth accelerated to 0.9%.
Across the Eurozone, the economy expanded by 0.4% in the second quarter and 1% YoY, also exceeding market forecasts. Meanwhile, the European Commission reported an improvement in July Consumer Confidence and Economic Sentiment, although the Unemployment Rate edged up to 6.3%.
Japanese Yen Price Today The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.56%-0.53%-2.58%-0.28%-0.91%-1.33%-1.12%EUR0.56%0.02%-2.00%0.34%-0.37%-0.79%-0.53%GBP0.53%-0.02%-2.01%0.30%-0.38%-0.79%-0.53%JPY2.58%2.00%2.01%2.37%1.73%1.29%1.57%CAD0.28%-0.34%-0.30%-2.37%-0.62%-1.05%-0.78%AUD0.91%0.37%0.38%-1.73%0.62%-0.41%-0.17%NZD1.33%0.79%0.79%-1.29%1.05%0.41%0.29%CHF1.12%0.53%0.53%-1.57%0.78%0.17%-0.29% 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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
EUR/USD roste, protože trh přehodnocuje očekávání vůči ECB: ropa nad 100 USD zvyšuje šance na zářijové zvýšení sazeb zhruba na 70 %. Silnější HDP eurozóny navíc oslabuje argument, že růst je příliš slabý.
TL;DR: EUR/USD’s rebound reflects broad-based Euro strength as oil’s rebound since mid-week pushes markets toward the ECB’s own hawkish scenario, lifting September hike odds to roughly 70%.
Euro’s Broad-Based Strength Tells a Bigger Story EUR/USD has staged a notable rebound in the last 24 hours, but attributing the move solely to Dollar weakness misses a broader shift taking place in currency markets. The Dollar has indeed softened after investors pared expectations for a September Fed rate hike. Yet the Euro has strengthened not only against the Dollar, but against most major peers. That broad-based performance suggests investors are repricing the European Central Bank itself, rather than merely rotating away from weaker currencies.
Oil Is Moving the ECB’s Reaction Function in a Hawkish Direction The catalyst isn’t that the ECB has changed its policy stance, but that the assumptions feeding its reaction function have shifted. In its March staff projections, the ECB outlined a baseline scenario built around Brent crude averaging around $90 and European natural gas around €57/MWh through 2026, while an adverse scenario assumed oil near $120 and gas around €102/MWh — resulting in materially higher inflation.
That framework has become relevant again. At the ECB’s July 23 press conference, held as Brent broke above $100, President Christine Lagarde remarked that the earlier US-Iran ceasefire had been “short-lived,” leading to “serious developments on commodity markets.” She also stressed the ECB’s reaction function was “very well understood” by markets and projected inflation to remain well above target into the first half of 2027. This week’s renewed attacks involving Iran, US forces, and Saudi energy infrastructure have reversed much of the earlier decline in oil prices, pushing markets back toward the ECB’s own baseline energy scenario.
Oil Doesn’t Trigger Hikes Automatically Importantly, the ECB hasn’t become mechanically more hawkish simply because oil prices have risen. Lagarde has repeatedly emphasized that policymakers ultimately look for second-round effects — particularly stronger wage growth, firmer services inflation, and higher inflation expectations — before concluding inflation is becoming entrenched.
However, higher oil prices still matter because they shift the starting point. A sustained rise in energy costs lifts the projected path for headline inflation, making it easier for the Governing Council to conclude another rate hike is warranted. In effect, stronger oil prices lower the evidentiary burden for tightening even if second-round effects have yet to fully emerge, because the ECB’s own scenario analysis already treats prolonged energy shocks as sufficient to generate materially higher inflation.
GDP Removes One of the Dovish Arguments Today’s stronger-than-expected GDP data reinforce that assessment. Eurozone GDP expanded 0.4% qoq in the second quarter, beating expectations and rebounding from the flat first quarter. While hardly signaling an economic boom, the figures weaken one of the main dovish arguments — that growth is too fragile to absorb another rate increase. With activity proving more resilient than expected, the ECB has greater room to tighten policy without immediately risking recession.
Markets and Banks Are Converging on a September Hike That combination has fed directly into market pricing. Investors now assign roughly a 70% probability to a September rate hike, with much of this week’s repricing driven by renewed oil strength outweighing the more dovish tone that emerged from the ECB’s Sintra forum earlier this month.
Several major banks have moved in the same direction:
Deutsche Bank now describes a September increase to 2.50% as “highly likely” and close to a “done deal.” UOB expects one final 25 basis point hike followed by an extended pause. ING notes that around 23 basis points are already priced and argues the ECB has historically preferred to fully telegraph its policy moves. What to Watch Next Attention now turns to whether the oil rally proves durable. If tensions involving Iran continue to support energy prices into September, the ECB’s adverse inflation scenario will become increasingly relevant. Conversely, a renewed de-escalation could quickly reduce the urgency for another hike. Investors will also closely monitor upcoming remarks from ECB officials to see whether the stronger GDP data strengthens confidence that another move is becoming appropriate.
ActionForex’s Technical View on EUR/USD Technically, EUR/USD has improved but has yet to confirm a bullish reversal. The pair remains capped below 1.1499, which has switched from support to resistance. Encouraging signs are nevertheless emerging: the 4H MACD continues to strengthen, price has broken its near-term falling trend line, and the daily MACD continues to display bullish divergence. The pair is also finding support around the 38.2% retracement of 1.0176 to 1.2081, at 1.1353.
A decisive break above 1.1499, followed by sustained trading above the 55-day EMA at 1.1484, would strengthen the case that the decline from 1.2081 completed as a three-wave correction at 1.1323, opening the way toward 1.1848 and potentially higher.
Nevertheless, failure to overcome 1.1499 would keep the broader decline intact and leave scope for a deeper fall toward the 100% projection of 1.2081 to 1.1408 from 1.1848 at 1.1175.
Key Takeaways EUR/USD’s rebound reflects broad Euro strength against most major peers, not just Dollar weakness from fading Fed hike bets. Oil’s return above $100 is pushing markets toward the ECB’s own adverse inflation scenario, lowering the bar for another hike without requiring new second-round effects. Stronger-than-expected Q2 Eurozone GDP (0.4% qoq) removes the argument that growth is too fragile to absorb another rate increase. Markets now price roughly a 70% probability of a September ECB hike, with Deutsche Bank, UOB, and ING all leaning toward a move to 2.50%. EUR/USD needs a decisive break above 1.1499 and the 55-day EMA at 1.1484 to confirm the decline from 1.2081 has completed as a corrective structure.
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USD/JPY held near 163.50 on Thursday, with the yen retreating slightly after strengthening in the previous session. The currency had been supported by a broader dollar decline following the Federal Reserve's decision to keep interest rates unchanged.
However, three FOMC members voted in favour of a rate hike, and Fed Chairman Kevin Warsh stressed that the pause should not be interpreted as a rejection of further policy tightening. Future decisions will continue to be data-dependent.
The Bank of Japan is also expected to keep rates unchanged on Friday but is likely to signal that further hikes remain possible to contain the yen's decline. Verbal interventions from Japanese authorities have so far provided little relief, and the BOJ has offered no clear guidance on the timing of its next move.
Geopolitical tensions have once again intensified, with media reports indicating that the United States has resumed airstrikes on Iran following attacks on American forces in the region.
Technical analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 163.60 level, currently extending between 163.20 and 163.89. A move higher towards 163.60 is expected, with scope for the trend to extend to 164.15 and then to 164.85. The MACD indicator supports this scenario, with its signal line above zero but pointing downwards, indicating the potential for short-term consolidation before further upside.
On the H1 chart, USD/JPY has completed a downward move to the 163.20 level. A move higher towards at least 163.60 is expected next. A breakout above this level would open the way for a continuation towards 164.15. The Stochastic oscillator confirms this scenario, with its signal line above 50 and pointing upwards towards 80, indicating short-term bullish momentum.
ConclusionUSD/JPY is trading in a narrow range as markets digest the Federal Reserve's decision to hold rates steady, despite three dissenting votes and Chairman Warsh's insistence that the pause does not signal the end of tightening. The dollar's modest decline after the announcement provided some relief for the yen, although the currency remains vulnerable. Attention now turns to the Bank of Japan's policy meeting on Friday, where rates are expected to be left unchanged but with hawkish signals to support the currency. Geopolitical risks have re-emerged following reports of renewed US airstrikes on Iran. Technically, the pair appears poised for further upside towards 163.60 and beyond, with the BOJ's guidance and intervention risks likely to determine the near-term direction.
The Pound-Dollar rate could remain under pressure unless the Bank of England delivers a sufficiently hawkish message after an inconclusive Federal Reserve decision. The Pound to US Dollar (GBP/USD) exchange rate weakened on Thursday morning as markets turned their attention to the Bank of England following a divided Federal Reserve policy decision.
GBP/USD retreated towards $1.3345 during early European trading, extending its recovery from Wednesday’s pre-Fed lows but remaining under pressure from renewed safe-haven demand for the US Dollar.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.333627 (-0.23%)
Euro to Dollar (EUR/USD): 1.144507 (-0.19%)
Dollar to Yen (USD/JPY): 163.59918 (+0.17%)
Federal Reserve Holds Rates but Offers Little Guidance The Federal Reserve left interest rates unchanged at 3.50%–3.75% on Wednesday, in line with the majority of economists’ forecasts.
The decision was nevertheless more divided than expected, with three policymakers voting for an immediate 25-basis-point rate increase because of persistent inflation risks.
Fed Chair Kevin Warsh reaffirmed the central bank’s commitment to returning inflation to its 2% target but provided few firm clues over the timing of any future policy move.
Warsh indicated that further tightening could be required if inflation pressures remained elevated, although he resisted offering the explicit forward guidance markets had become accustomed to under previous Fed leadership.
The initial market response was mixed. Short-term Treasury yields declined as investors reduced expectations of a September rate rise, while long-term yields climbed sharply amid concerns that the Fed was not acting decisively enough to contain inflation.
The Dollar initially weakened following the announcement but recovered during Asian trading as renewed US attacks on Iranian targets increased demand for defensive assets.
Pound Sterling Awaits Bank of England Guidance Attention now turns to Thursday’s Bank of England interest-rate announcement.
The Monetary Policy Committee is widely expected to leave Bank Rate unchanged at 3.75%, placing the focus on the vote split, updated economic forecasts and Governor Andrew Bailey’s comments.
UK inflation fell to 2.6% in June, but policymakers continue to face uncertainty over the impact of elevated oil and gas prices on household costs and inflation expectations.
Markets have priced a meaningful risk of higher UK interest rates during the coming year, although economists remain divided over whether the Bank will ultimately need to tighten policy.
A hawkish vote split or a warning that renewed energy-price pressures could make inflation more persistent would offer the Pound support.
Sterling could struggle, however, if the Bank emphasises weak domestic growth, slowing private-sector wages or the risk that tighter financial conditions will weigh on the economy.
Near-Term GBP/USD Forecast: BoE Tone to Determine Next Move The near-term Pound-Dollar outlook is likely to depend heavily on whether the Bank of England validates or pushes back against expectations for future rate increases.
A hawkish BoE announcement could allow GBP/USD to recover towards the $1.3400–$1.3430 area.
A move above this zone would ease immediate downside pressure and potentially bring $1.3480 back into view.
Conversely, a cautious policy statement or a less hawkish vote than markets expect could drive the Pound back towards $1.3300.
A sustained break below $1.3300 would expose the recent lows around $1.3220.
The Dollar will also remain sensitive to developments in the Middle East, with any further escalation likely to increase safe-haven demand and maintain upward pressure on global energy prices.
Later in the week, the latest US GDP figures could also influence the pair. Stronger-than-expected second-quarter growth would reinforce expectations that the US economy can withstand elevated interest rates and could provide additional support for the Dollar.
GBP/AUD ve středu vyskočil, protože slabší australská inflace snížila sázky na další zvýšení sazeb RBA. Meziroční CPI ve 2. čtvrtletí zpomalila na 3,9 % z očekávaných 4,1 %.
Pound-Australian Dollar could extend gains if the Bank of England keeps the door open to higher rates after Australia's softer inflation weakens the Aussie. The Pound to Australian Dollar (GBP/AUD) exchange rate surged on Wednesday after weaker-than-expected Australian inflation sharply reduced expectations for another Reserve Bank of Australia interest rate hike.
At the time of writing, GBP/AUD was trading around AU$1.9161, up approximately 0.5% on the day.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.920489 (-0.01%)
Pound to Dollar (GBP/USD): 1.335415 (-0.10%)
DAILY RECAP:
The Australian Dollar (AUD) tumbled through Wednesday's Asian session after Australia's latest inflation figures came in below expectations.
Official data showed annual consumer price inflation slowed to 3.9% in the second quarter, below forecasts that it would remain at 4.1%.
The weaker inflation reading prompted investors to further reduce expectations for additional Reserve Bank of Australia (RBA) policy tightening.
The ‘Aussie’ fell sharply as markets cut the implied probability of an August interest rate hike to the low single digits, with several major banks abandoning forecasts for near-term tightening.
Meanwhile, while the Pound (GBP) strengthened against the Australian Dollar, it traded in a relatively narrow range against most other major currencies as investors awaited Thursday's Bank of England (BoE) interest rate decision.
No policy changes are expected, leaving markets focused on the Bank's accompanying statement and any guidance from Governor Andrew Bailey.
Investors remain divided over whether the BoE could still raise interest rates later this year or instead keep policy unchanged before eventually resuming its easing cycle.
Near-Term GBP/AUD Forecast: Dovish BoE to Sink Sterling? Looking ahead, Thursday's Bank of England interest rate decision is expected to be the main driver of the Pound to Australian Dollar exchange rate.
If the BoE adopts a more dovish tone, Sterling could surrender much of Wednesday's gains and potentially retest recent lows against the Australian Dollar.
However, if policymakers warn that inflation risks are building again during the second half of 2026, expectations for another interest rate hike could strengthen and provide additional support for the Pound.
Meanwhile, any renewed escalation of tensions in the Middle East could continue to weigh on the risk-sensitive Australian Dollar through the second half of the week.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The AUD/USD pair turns lower following a modest Asian session uptick to the 0.6965 region on Thursday amid the emergence of some US Dollar (USD) dip-buying. Spot prices, however, hold above an over two-week low, touched on Wednesday, and currently trade around mid-0.6900s, down less than 0.10% for the day.
The growing acceptance that the US Federal Reserve (Fed) will hike interest rates in 2026 amid inflation risks stemming from volatile oil prices, along with escalating US-Iran tensions, helps revive demand for the safe-haven Greenback. Furthermore, soft Australian consumer inflation figures on Wednesday led to some unwinding of near-term Reserve Bank of Australia (RBA) rate hike bets, which undermines the Australian Dollar (AUD) and contributes to capping the AUD/USD pair.
From a technical perspective, the recent repeated failures near the 0.7020 horizontal resistance and the overnight close below the 100-period Exponential Moving Average (EMA) on the 4-hour chart favor bearish traders. Furthermore, the Relative Strength Index (RSI) drifts below the neutral 50 line and Moving Average Convergence Divergence (MACD) stays marginally below zero. Momentum indicators together hint at subdued bullish momentum and a corrective tone after recent losses.
However, it will still be prudent to wait for some follow-through weakness below the overnight swing low, around the 0.6925 region, and a technically significant 200-day Simple Moving Average (SMA) near 0.6900 before positioning for further losses. The AUD/USD pair might then aim to challenge the June monthly swing low, around the 0.6865 zone, and extend the downfall further to the 0.6835 area, or the year-to-date low touched in March, and the 0.6800 round-figure mark.
On the topside, initial resistance is defined by the 100-period EMA at 0.6974. A sustained move above this barrier would be needed to ease immediate downside pressure and open the way for a more constructive recovery. Until then, the AUD/USD pair remains vulnerable to further slippage, with traders likely to fade upticks while spot prices remain capped below the said EMA.
AUD/USD 4-hour chart
Australian Dollar Price This week The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.50%-0.10%-0.08%-0.28%0.67%-0.10%-0.11%EUR0.50%0.38%0.43%0.21%1.18%0.40%0.39%GBP0.10%-0.38%-0.09%-0.17%0.76%0.02%0.00%JPY0.08%-0.43%0.09%-0.21%0.76%-0.02%-0.12%CAD0.28%-0.21%0.17%0.21%0.94%0.19%0.17%AUD-0.67%-1.18%-0.76%-0.76%-0.94%-0.77%-0.80%NZD0.10%-0.40%-0.02%0.02%-0.19%0.77%-0.01%CHF0.11%-0.39%-0.00%0.12%-0.17%0.80%0.01% 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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Rabobank říká, že tříměsíční cíl pro USD/JPY na úrovni 159 nyní vypadá optimisticky. Pár se drží poblíž 163,86 a další růst závisí na jestřábím postoji BoJ a slabších očekáváních Fedu.
Economists say the Dollar-Yen could extend higher unless the BoJ signals faster rate hikes, with its three-month forecast at 159 now requiring several factors to align. The US Dollar traded close to 163.84 against the Japanese Yen on Wednesday, holding near its highest level of 2026 as markets awaited policy decisions from both the Federal Reserve and Bank of Japan.
USD/JPY has gained around 4.5% since the end of December and approximately 0.8% in July alone. The pair has also risen in five of the past six months, leaving the Yen under sustained pressure.
Latest — Exchange Rates:
Dollar to Yen (USD/JPY): 163.86431 (0.00%)
Euro to Dollar (EUR/USD): 1.137884 (-0.06%)
Pound to Dollar (GBP/USD): 1.328349 (-0.02%)
Rabobank says Friday’s BoJ meeting will come with one advantage: policymakers will already know the outcome of the Fed decision.
That matters because the bank believes the FOMC “may have more impact on the USD/JPY exchange rate than” the BoJ’s own announcement.
A surprise Fed hike would likely deliver another powerful Dollar boost. Rabobank does not expect that outcome, however, and says unchanged US rates could instead trigger “a little profit-taking on long USD positions”.
The Yen’s bigger test comes a day later.
Rabobank argues that recent BoJ comments may have been “specifically aimed at preparing markets for hawkish signals” from Friday’s meeting. Without them, the risk is straightforward: “an absence of hawkish signals from the BoJ this week could open the door for further upside pressure on USD/JPY”.
Image: USD/JPY year-to-date chart showing the climb from January lows near 152 towards 164 USD/JPY’s path this year helps explain why Rabobank thinks the BoJ cannot afford an ambiguous message. The pair has not simply spiked towards 164; it has rebuilt its advance in stages since May, repeatedly recovering from shallow setbacks.
That persistence is the uncomfortable part for Tokyo. Verbal warnings and earlier Ministry of Finance intervention have slowed the move at times, but neither has changed its direction for long. The chart therefore supports Rabobank’s view that intervention alone may be “too costly” when the underlying force is an appreciating US Dollar.
Rabobank notes that the MoF has not bought Yen in the open market since spending JPY11.73 trillion between late April and late May.
One explanation is cost. The bank says officials may simply consider it “too costly to push against an appreciating USD”, particularly while US rate expectations remain firm.
There are signs that Japanese policy support has had some impact. Although USD/JPY has climbed sharply, the Yen is still the fourth-best-performing G10 currency over the past three months because the Dollar has strengthened even more broadly.
Rabobank says this suggests “both the MoF’s intervention and the hawkish signals from the BoJ have had some impact in supporting the JPY”.
Near-Term USD/JPY Forecast: A Move Back to 159 Needs a Hawkish BoJ and Softer Fed Expectations Rabobank maintains a three-month USD/JPY forecast of 159, but admits that target “currently looks optimistic”.
A faster BoJ tightening cycle would help. The bank says an October rate increase, rather than waiting until December, could provide the Yen with support.
Japan’s inflation backdrop gives policymakers room to sound firmer. The BoJ has said an underlying price measure remains well above its 2% target, while wage negotiations have delivered another strong result.
Even that may not be enough on its own.
Rabobank says a move to 159 would likely require “various factors to come together”: greater reassurance over Japan’s fiscal outlook, a clearly hawkish BoJ and a decline in fears of further Fed tightening.
The final ingredient may prove decisive. As the bank puts it, “how far the JPY can recover versus the USD, if at all, is likely to be determined” by the Fed Chair’s message.
The dollar’s next move hinges on tonight’s Fed decision, and this time markets genuinely don’t know what to expect. While economists still lean toward a hold—with CME FedWatch odds sitting near 68.5% for no change—Kevin Warsh’s hawkish rhetoric on having “no tolerance” for inflation, paired with growing internal FOMC support for a hike, has pushed hike odds up sharply from just 18% two weeks ago to over 30% today. Complicating things further, Warsh has deliberately scaled back forward guidance, meaning tonight’s press conference may offer fewer clues than usual.
The euro, meanwhile, has already had its say: the ECB held rates steady at 2.25% last Thursday, as expected, with Lagarde reaffirming the 2% target while flagging that energy-driven inflation risks from the Middle East conflict have yet to fully play out. Eurozone inflation cooled to 2.8% in June, but sticky services inflation near 3.5–4% keeps the door only cautiously open for a September move in either direction.
With EUR/USD trading near 1.1408, tonight’s Fed decision—not the ECB—is what will likely determine the pair’s next major direction.
EUR/USD Technical Analysis
As the EUR/USD chart shows, the pair has been consolidating within a defined range since late June, squeezed between an ascending trendline and a descending trendline, both converging around the current price near 1.1400. The 200-period EMA continues to slope lower above price, reinforcing a cautious backdrop ahead of tonight’s Fed decision.
Bullish Scenario Should the dollar weaken on a dovish Fed outcome, price would need to break above the converging trendlines and reclaim the 0.382 Fibonacci retracement near 1.1420, with the 200-period EMA just above acting as the next key test. A confirmed break above the EMA would open the path towards the 0.5 and 0.618 retracements near 1.1480–1.1500, where stronger resistance has capped rallies since late June.
Bearish Scenario Conversely, a hawkish surprise—or even a hike—could send the euro sharply lower, breaking both the ascending trendline and the psychological 1.1360 support level. A confirmed break here would expose the 1.1320 zone, the 0.0 Fibonacci level marking the origin of the entire recovery move, with further downside risk towards fresh multi-week lows if selling pressure accelerates.
With price coiled right at the intersection of both trendlines and the Fed decision just hours away, EUR/USD looks primed for a decisive move. Will the dollar reassert its dominance, or will the euro finally break free of this range?
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AUD/USD klesá už třetí den v řadě po slabších australských inflačních datech a je asi 0,25 % níže za den. Pár se propadl na více než dvoutýdenní minimum.
The AUD/USD pair attracts sellers for the third straight day on Wednesday and dives to an over two-week trough following the release of softer Australian consumer inflation figures. Spot prices, however, rebound a few pips from the Asian session low and currently trade just above mid-0.6900s, still down around 0.25% for the day.
The US Dollar (USD) remains on the back foot below the monthly high, touched on Tuesday, as bulls opt to move to the sidelines ahead of the crucial FOMC policy decision, due later today. This, in turn, offers some support to the AUD/USD pair. However, a fresh escalation of tensions between the US and Iran revives inflation fears. This, in turn, bolstered bets for at least one rate hike by the US Federal Reserve (Fed) in 2026, which favors USD bulls and backs the case for further depreciation for the currency pair.
From a technical perspective, the recent repeated failures to find acceptance above the 0.7000 psychological mark and the latest leg down below the 0.6965-0.6960 confluence support could be seen as a key trigger for AUD/USD bears. The said area marked the lower boundary of a two-week-old range and the 38.2% Fibonacci retracement level of the recent move up from a multi-month low, touched in June. Meanwhile, the Relative Strength Index (RSI) hovers near 38, hinting at lingering downside pressure.
Moreover, the slightly negative Moving Average Convergence Divergence (MACD) suggests that bearish momentum is present but not accelerating decisively. Moreover, an intraday resilience below the 50% retracement level makes it prudent to wait for some follow-through selling below the daily swing low, around the 0.6935 region, before placing fresh bearish bets on the AUD/USD pair. If selling extends, spot prices could fall to the 61.8% level at 0.6926 as traders await the FOMC decision.
Meanwhile, a deeper slide would expose the 78.6% retracement at 0.6898 and the structural floor at 0.6863, levels that could attract dip-buying interest should the current bearish bias persist.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/USD 4-hour chart
Australian Dollar Price This week The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the British Pound.
USDEURGBPJPYCADAUDNZDCHFUSD-0.05%0.25%-0.15%0.02%0.64%0.22%0.15%EUR0.05%0.28%-0.09%0.06%0.69%0.26%0.19%GBP-0.25%-0.28%-0.48%-0.21%0.42%-0.01%-0.08%JPY0.15%0.09%0.48%0.14%0.76%0.35%0.19%CAD-0.02%-0.06%0.21%-0.14%0.59%0.21%0.13%AUD-0.64%-0.69%-0.42%-0.76%-0.59%-0.42%-0.49%NZD-0.22%-0.26%0.01%-0.35%-0.21%0.42%-0.07%CHF-0.15%-0.19%0.08%-0.19%-0.13%0.49%0.07% 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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Slabší australská CPI posílila sázky na to, že RBA už letos sazby nezvýší, a AUD/USD spadl pod rostoucí kanál. Další klíčová support zóna je kolem 0,6750.
TL;DR: Australia’s soft CPI print has pushed all four major banks into agreement that the RBA’s tightening cycle is over for now, driving AUD/USD below its rising channel with 0.6750 emerging as the next major support cluster.
Why This CPI Print Changes the Story Australia’s softer inflation report is more than just another downside CPI surprise — it marks the point where markets concluded the RBA’s tightening cycle has effectively run its course. That shift in policy expectations triggered a sharp decline in AUD/USD, but its implications extend well beyond Wednesday’s trading session. With expectations for further RBA tightening fading rapidly, the Australian dollar is losing one of its few remaining domestic pillars of support.
What the Data Actually Showed The inflation data itself offered little justification for another near-term rate increase. Headline CPI slowed from 4.0% to 3.8% y/y in June, while trimmed mean inflation was unchanged at 3.6%. Quarterly figures echoed the same trend, with headline inflation easing from 4.1% to 3.8% and trimmed mean inflation rising only modestly from 3.5% to 3.6%.
The most important detail, however, was how those figures compared with the RBA’s own expectations. Both the monthly and quarterly trimmed mean measures came in below the central bank’s May forecast of 3.8%. That outcome effectively validated Governor Michele Bullock’s remarks on Tuesday that underlying inflation had evolved broadly as expected since May — while also hinting the disinflation process may be progressing slightly faster than policymakers themselves anticipated.
Westpac’s Reversal Seals a Rare Bank Consensus The biggest surprise came from Westpac. Until Wednesday, it had been the only one of Australia’s Big Four banks still forecasting another rate hike in August. Following the CPI release, Westpac abandoned that call, now expecting the RBA to remain on hold for the rest of 2026 — leaving open only a conditional risk of a November hike should inflation reaccelerate sharply during the third quarter.
That revision carries significance beyond a single economist’s forecast. For the first time this tightening cycle, all four major Australian banks are united in expecting the RBA to leave policy unchanged through year-end based on current information. That consensus reinforces the perception that Australia’s monetary tightening phase has probably ended — unless a fresh inflation shock, such as another sustained surge in oil prices, materializes.
Where the Risk Shifts Now: The Fed and Asian Equities Attention therefore shifts away from Australia and toward global developments. Domestically, the policy story is largely settled for now. Externally, however, AUD/USD still faces several potentially bearish catalysts.
The first is the Federal Reserve, with the FOMC rate decision scheduled for today. Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan are widely expected to vote in favor of another rate increase. If additional FOMC members also dissent, markets would likely interpret the outcome as a more hawkish signal than currently anticipated — supporting higher Treasury yields and extending the Dollar’s recent strength. The second is regional risk sentiment. Asian equity markets remain fragile despite Wednesday’s brief rebound. Renewed selling in technology shares has already pushed the KOSPI roughly 17% lower this week, while pressure continues to build across the broader AI sector. Given the Australian dollar’s strong correlation with Asian equity performance and global growth expectations, a deeper regional correction could reinforce downside momentum. ActionForex’s Technical View on AUD/USD The technical picture has already begun reflecting that deteriorating backdrop. AUD/USD broke decisively below its short-term rising channel after once again failing to overcome the falling 55 D EMA near 0.7004. The price action strongly suggests the rebound from 0.6864 ended at 0.7026 as merely a corrective recovery within the broader decline from 0.7277.
As long as rallies remain capped below the 55 4H EMA around 0.6981, the path of least resistance remains lower. A retest of 0.6864 should be seen next, with a sustained break opening the way toward the 61.8% projection of 0.7277 to 0.6864 from 0.7026, at 0.6771. That level sits just above a major medium-term Fibonacci support — the 38.2% retracement of 0.5913 to 0.7277, at 0.6756 — creating a critical support cluster around 0.6750.
Whether buyers are prepared to defend that area should decide whether the broader uptrend from 0.5913 remains intact or gives way to a much deeper medium-term decline.
Key Takeaways Australia’s Q2 trimmed mean CPI came in below the RBA’s own 3.8% May forecast, validating Bullock’s “evolving as expected” framing. Westpac abandoned its lone August hike call, leaving all four major Australian banks aligned on an RBA hold through year-end. Today’s FOMC decision and continued Asian equity weakness (KOSPI down ~17% this week) are now the dominant risks for AUD/USD, not domestic policy. AUD/USD broke its short-term rising channel after failing at the 55 D EMA (0.7004), with the 0.6864–0.7026 rebound now viewed as corrective. 0.6750 is the key support cluster to watch — a break opens a deeper medium-term decline; holding it keeps the broader uptrend from 0.5913 intact.
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.
GBP/JPY broke below 218 on Monday, trading near 217.84, pressured by UK political uncertainty and softer bond yields The wide UK-Japan rate gap still supports carry trades, but Japanese intervention fears and dovish repricing are capping gains Investors should monitor 217.50 support and 218.50 resistance while watching central-bank guidance for clearer signals on the pair’s next direction. The British pound’s strong performance against the Japanese yen in early July has moderated, with the yen seemingly turning the tables. After reaching a high near 219.61-219.70 in mid-July, the GBP/JPY pair consolidated before falling below the significant 218.00 level. By July 27, the exchange rate was trading around 217.84, reflecting broader pound weakness.
What’s Driving the Slide? Several factors seem to be lining up right now. Political shifts created fresh uncertainty, with the pound losing ground as new Prime Minister Andy Burnham took office. Markets don’t like uncertainty, and a leadership change naturally raises questions about policy direction, even before anything real shifts.
That gap, usually around 275 basis points, hasn’t gone away. What has changed is how confident the market feels about the gap widening further. Plus, persistent talk that Japanese authorities might step in to prop up the yen has kept the pair from advancing much for weeks.
Meanwhile, traders have been cutting back exposure ahead of this week’s central bank decisions. The Bank of England (BoE) will likely hold its benchmark rate at 3.75%, and the Bank of Japan (BoJ) is also expected to keep its policy rate unchanged at 1%.
Oil price drops and a temporary calm in US-Iran tensions have also eased inflation worries. This, in turn, pulled UK government bond yields lower, taking away one of the Pound’s recent supports.
Is the Carry Trade Losing Its Grip? The strength of GBP/JPY in recent months was largely attributed to the significant interest rate differential between the UK and Japan. This gap made the pair attractive for carry trades, where investors borrow low-interest yen to invest in higher-yielding pound assets.
That gap, historically estimated near 275 basis points, hasn’t disappeared. What has changed is the market’s confidence in how much further that gap might widen, and lingering speculation that Japanese authorities could step in to support the yen has kept a lid on the pair’s advances for weeks.
At the same time, reports of BoJ officials being open to faster rate increases, combined with ongoing speculation about possible currency intervention, have intermittently supported the yen.
Both the BoE and BoJ were widely expected to keep rates steady at their late-July meetings. This limited the chance of a sudden policy split that would drastically change the pair’s medium-term path. So, the current dip looks more like a correction after a strong run, rather than the start of a long downturn.
How Should Investors Position? Considering the current political uncertainty, cautious central bank outlooks, and reduced carry trade appeal, adopting a defensive investment approach appears prudent for the short term. Investors should closely monitor the Bank of England and Bank of Japan announcements this week, as any unexpected policy shifts could lead to significant repricing of the GBP/JPY pair.
A sustained move below 218.00, confirmed by a break under 217.50, could increase bearish pressure towards 216.60 and 215.00. Conversely, a recovery above 219.00 would support the possibility of testing previous highs.
Is the UK-Japan rate gap still supporting the pair?
Yes, though intervention fears and reduced confidence in further widening have weakened its usual carry-trade support.
What should investors focus on this week?
The BoE and BoJ policy decisions, both expected to hold rates, but any surprise could move the pair sharply.
Goldman Sachs čeká, že AUD/NZD ve střednědobém horizontu klesne, protože silnější inflace na Novém Zélandu zvyšuje sázky na další dvě zvyšování sazeb RBNZ. Vyšší ceny energií ale mohou pár krátkodobě držet nad vodou.
Goldman Sachs sees scope for AUD/NZD to retreat over the medium term as stronger New Zealand inflation revives RBNZ rate-hike expectations, despite near-term support from higher energy prices. Analysts at Goldman Sachs expect the Australian Dollar to New Zealand Dollar exchange rate (AUD/NZD) to correct lower over the medium term, although higher energy prices may continue to support the cross in the immediate outlook.
AUD/NZD was trading around 1.2098 on Monday, up approximately 0.3% on the day. The pair has fallen around 0.7% since the beginning of July but remains more than 4% higher in 2026.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.907748 (+0.30%)
Pound to Dollar (GBP/USD): 1.330182 (+0.09%)
Australian Dollar to US Dollar (AUD/USD): 0.697252 (-0.20%)
The bank said AUD/NZD has recently been “buoyed up” by the rise in global energy prices, reflecting Australia’s more favourable commodity exposure and the relative resilience of the Australian Dollar during periods of higher raw-material costs.
Goldman nevertheless believes that monetary-policy developments in New Zealand could ultimately place renewed downward pressure on the cross.
New Zealand inflation surprised firmly to the upside, with consumer prices rising 1.5% quarter-on-quarter and annual inflation accelerating to 4.1%.
The stronger reading has led Goldman Sachs to revise its Reserve Bank of New Zealand outlook. The bank now expects the RBNZ to raise interest rates in September, followed by a final 25-basis-point increase in December.
That would take the Official Cash Rate to 3.00%, creating a stronger rate backdrop for the New Zealand Dollar and narrowing one of the key sources of support for AUD/NZD.
The shift is important because the cross has spent much of 2026 benefiting from a widening contrast between expectations for Australian and New Zealand monetary policy.
Stronger New Zealand inflation now challenges that narrative by increasing the likelihood that the RBNZ will need to tighten policy further to prevent price pressures becoming entrenched.
Australian inflation data will provide the next major test for the outlook.
A stronger-than-expected Australian CPI reading could reinforce expectations that the Reserve Bank of Australia will also need to maintain a restrictive policy stance, potentially extending near-term support for the Australian Dollar.
Energy prices remain another source of uncertainty. Australia is a major commodity exporter, meaning higher energy and raw-material prices can improve the country’s terms of trade and support the currency.
This helps explain why Goldman is cautious about expressing its bearish AUD/NZD view through a short-dated trade.
Medium-Term AUD/NZD Forecast: Goldman Prefers Longer-Dated Puts Rather than betting on an immediate decline, Goldman Sachs prefers longer-dated AUD/NZD put options to express its expectation that the cross will eventually move lower.
The strategy is designed to manage the risk of sharp near-term volatility surrounding Australian inflation data and further energy-price shocks.
In practical terms, longer-dated puts allow investors to retain exposure to a future AUD/NZD decline without relying on the correction beginning immediately.
The bank’s central view is that higher energy prices can keep the cross supported in the short run, but a renewed RBNZ tightening cycle should become increasingly important over the medium term.
With AUD/NZD still trading above 1.20 and recording a sizeable year-to-date gain, Goldman sees scope for some of that strength to unwind as markets price a higher New Zealand interest-rate path.
The immediate direction will depend on Australian CPI and commodity markets, but the prospect of two additional RBNZ increases strengthens the case for the New Zealand Dollar to recover against its Australian counterpart over the months ahead.
Despite the Canadian dollar’s recovery attempts in previous weeks, a renewed loss of strength against the U.S. dollar is becoming evident. This is reflected in USD/CAD, which has gained more than 0.2% over the last 2 trading sessions, including the close of last week and the first session of this week.
For now, buying pressure remains stable, in a context where the behavior of U.S. bonds and expectations around the Federal Reserve continue to limit a consistent recovery in the CAD. This is also being reinforced by uncertainty around possible trade tariffs on Canada, a factor that could remain relevant for the pair over the next few trading sessions.
Is the Federal Reserve still relevant? When analyzing USD/CAD expectations, it is important to consider the central bank dynamic in both the United States and Canada. On one hand, the Bank of Canada maintains an outlook of unchanged rates near 2.25%. On the other hand, the United States continues to hold a higher reference rate at 3.75%.
What is relevant is that the Federal Reserve’s interest rate decision is expected this week, and market probabilities have started to gain importance. The event could reinforce expectations of a more aggressive monetary policy stance in the United States and widen the rate differential with Canada, favoring the relative appeal of USD-denominated investments.
For this week’s decision, the market assigns a probability close to 62.00% that there will be no change in interest rates. However, this probability was close to 83% one week ago, while the probability of a possible hike at the July 29 decision now stands near 38%.
In addition, for the September 16 meeting, the probability remains above 50% that the United States could raise interest rates toward a new area close to 4.00%.
Source: CMEGROUP
Source: CMEGROUP
With this in mind, and unlike the more neutral outlook from the Bank of Canada, the market is starting to consider a potentially more aggressive Federal Reserve over the coming months. This possibility could be confirmed by this week’s decision and continue to support the relative appeal of USD-denominated assets.
This scenario also helps sustain strength in the U.S. 10-year Treasury market. Now, these securities maintain a yield near the upper 4.6% area, around 2026 highs, representing a robust return for one of the safest markets in the world.
Source: TradingEconomics
Therefore, the situation remains complicated for the Canadian dollar. If the Bank of Canada maintains a neutral stance and the market continues to anticipate a more aggressive Fed, USD-denominated investments could preserve a relative advantage. This would make a clearer recovery in the CAD more difficult and could continue to support buying pressure in USD/CAD over the next few sessions.
Does the tariff threat remain in place? So far, the threat of a 50% tariff on Canadian goods imposed by the United States last week remains relevant. The latest update is that Canada has not responded immediately with retaliatory measures, as Mark Carney announced that the country is intensifying negotiations with the United States before the tariffs come into effect.
However, no major progress has been seen yet that would reduce this threat in the short term. Trade uncertainty remains elevated, especially because the goods directly affected are estimated to represent nearly 28 billion Canadian dollars in exports. This could significantly affect Canadian trade and confidence around investments in Canada.
For this reason, the tariff issue could continue to weigh on the Canadian dollar. If no solid negotiations are seen that remove the threat of new tariffs, the appeal of the CAD could remain limited, and USD/CAD could maintain relevant buying pressure over the next few trading sessions.
Technical forecast for USD/CAD
Source: StoneX, Tradingview
Lack of direction begins to become evident: Over the last few weeks, USD/CAD has started to show a phase of neutrality on the chart, with most movements taking place between an upper area near 1.42132 and a lower area around 1.39968. For now, price continues to move within these levels. If it fails to break consistently out of this possible range, indecision could continue to gain relevance in the short term.
RSI: Now, the RSI remains close to the neutral 50 level and shows important flattening. This reflects a balance between buying and selling impulses over the last few sessions. If this behavior continues, the indicator could continue to highlight a relevant neutral phase over the next few sessions.
MACD: The MACD also maintains a histogram close to the neutral 0 level, suggesting balance in the strength of short-term moving averages. This reading reinforces the possibility that the indecision phase could remain important for USD/CAD over the next few sessions.
Key levels:
1.42132 – Relevant resistance: This area corresponds to 2026 highs and remains the main bullish barrier on the chart. Price movements toward this level could reactivate a buying bias and open room for a possible recovery of the bullish trend line that was relevant in previous weeks.
1.40907 – Near-term barrier: This area corresponds to the most relevant 23.6% Fibonacci level on the chart. Price movements that fail to move consistently away from this level could continue to highlight an important neutral phase and even open room for a more relevant short-term sideways range.
1.39968 – Crucial support: This relevant bearish barrier corresponds to the 38.2% Fibonacci retracement and also aligns with the 50-period simple moving average. Price movements below this level could reaffirm a more consistent selling bias and open room for a possible short-term bearish trend line over the next few sessions.
Written by Julian Pineda, CFA, CMT – Market Analyst
The USD/INR pair fell nearly 0.7% after failing to breach 97.00, driven by active RBI intervention and declining crude oil prices The pair’s rejection near higher levels echoes mid-May failures around 97.00, highlighting persistent resistance without stronger supporting catalysts Rising oil prices and US inflation present key risks, while delayed exporter dollar conversions offer opportunities for further rupee appreciation The USD/INR currency pair experienced a notable reversal on Monday, declining by nearly 0.7% after a period of steady gains since late June. The Indian rupee strengthened, with early trading showing gains of approximately 28 paise, reaching levels near 96.25 against the US dollar, before settling in the mid-95.80s.
This movement mirrors previous attempts to push towards the 97.00 psychological level, including a peak in mid-May. Such instances where a clear trend encounters significant resistance often lead market participants to consider whether the change is temporary or signals a broader shift.
What Drove the Latest Decline? The main source of pressure was a sharp drop in crude oil prices. Brent futures fell over 4% to about $92.74 per barrel, which eased pressure on India’s large oil import bill. Adding to this, positive signals from West Asia emerged, where the United States and Iran indicated a halt to strikes and opened the door for diplomatic talks.
US Ambassador to the United Nations Mike Waltz said negotiations were progressing on multiple fronts. This helped reduce the geopolitical risk premium that had pushed oil prices higher and boosted dollar demand.
A softer US dollar index, which came down from its highs, also helped. Strong buying in domestic equity markets encouraged capital flows, which in turn benefited the rupee.
A Familiar Ceiling Near 97.00 Today’s pullback feels like history repeating. Back in mid-May, USD/INR pushed toward the 97.00 mark but just couldn’t hold. The pair swung through one of its widest ranges in modern history in the first half of 2026, hitting an all-time record high of 96.84 on May 20. It then recovered partly to around 94.35 by late H1. That recovery was helped by RBI intervention, falling crude prices, and a coordinated package of capital-account reforms.
Now, the pattern feels almost repetitive. The pair climbed back toward similar territory over the past week. Wise’s exchange rate data shows it hit a high of 96.888 on July 23, 2026, before rolling over again. Today’s dip to a low of 96.166 on July 27, 2026, suggests the 97.00 zone remains a meaningful resistance level. The pair has now failed to clear it twice.
Risks and Opportunities for Investors For investors and traders monitoring the USD/INR pair, the current situation presents a balanced outlook. Repeated rejections near the 97.00 level indicate a technical ceiling, likely reinforced by consistent dollar selling, potentially including actions by the RBI.
Opportunities may arise for those anticipating a reduction in market volatility. A sustained decrease in oil prices would positively impact India’s macroeconomic balance by reducing the import bill and inflationary pressures.
However, underlying factors that could drive the pair higher remain. Elevated crude oil prices linked to tensions in West Asia and ongoing foreign portfolio outflows are persistent risks that could push USD/INR back towards its recent highs.
Why did USD/INR decline sharply today?
Falling crude oil prices and signals of easing US-Iran tensions reduced dollar demand and supported the rupee in Monday’s session.
How does this compare to earlier moves towards 97.00?
Similar to mid-May, advances near 97.00 failed to sustain, reflecting market caution at higher levels without stronger catalyst.
What should investors watch for in USD/INR going forward?
Going forward, investors should monitor crude oil price movements, the trend of foreign institutional investor outflows, and whether the 97.00 level holds as resistance or experiences a decisive break.
