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Gold (XAU/USD) price edges up at the beginning of the week as the reopening of the Strait of Hormuz faces delays due to demands from Iran to the US, and is capped by the modest strength of the Greenback, with traders eyeing the release of crucial US inflation data. At the time of writing, the XAU/USD pair trades at $4,352, up 0.50%, after bouncing off daily lows of $4,316.

XAU/USD holds above $4,350 as investors weigh Oil-driven inflation risks, Fed bets and upcoming US dataThe US Dollar Index (DXY), which measures the performance of the buck against a basket of peers, is up 0.14% at 99.75 as market participants continue to digest the US and Japanese interventions in the FX markets.

Last week, a softer-than-expected Nonfarm Payrolls report showed that the jobs market remains in a low-hiring, low-firing mode, as said by Richmond Fed President Thomas Barkin. The US economy slashed 23K jobs, missing forecasts for an 80K increase, and the May and June numbers were revised downward. Although the data sparked a trimming of Fed hawkish bets, it's just one reading, and now eyes turn to the release of US inflation figures.

July’s Consumer Price Index (CPI) is expected to ease from 3.5% to 3.4% YoY. Core CPI, which excludes volatile items, is projected to tick lower from 2.6% to 2.5% YoY. A day after this, on Thursday, the Producer Price Index is also projected to ease.

On the same day, Initial Jobless Claims for the week ending August 8 are expected to rise from 199K to 201K. Due to the weaker-than-expected NFP, claims will be closely watched by investors, who are also looking for signs of weakness in the labor market that could prevent the Fed from cutting interest rates, even though inflation remains stubbornly high.

So far, money markets have priced in 22 basis points of tightening by the Federal Reserve towards the end of 2026, up from 17 basis points expected last Friday, according to Prime Terminal data.

Aside from this, geopolitics continued to move the needle, including the exacerbated rally in Oil prices, a headwind for the yellow metal. West Texas Intermediate (WTI), the US crude benchmark, is up nearly 6% to $81.54 per barrel as talks for a reopening of Hormuz continue, but progress has slowed after Iran said the US should agree to Tehran’s demands.

Iran’s demands are that there should be an end to hostilities, a halt to military actions, withdrawal of US forces, compensation for war damages, lifting of sanctions and release of frozen assets. If met, the reopening of the Strait of Hormuz could be faster.

XAU/USD price forecast: Gold faces 100-day SMA as bulls target $4,500Gold price advance continued, but as of writing, it remains below the 100-day Simple Moving Average (SMA) at $4,389, seen as crucial for buyers if they would like to conquer higher prices. 

Momentum is bullish, as indicated by the Relative Strength Index (RSI), which confirms further upside. Hence, the path of least resistance is tilted to the upside. If XAU/USD clears the 100-day SMA, this clears the path to challenge the $4,400 psychological level. Above lies the 200-day SMA at $4,498, followed by the $4,500 milestone.

On the downside, initial support is at the July 6 high, now at $4,202. If this level fails, the next support levels are the 50-day SMA at $4,150 and $4,100.

Gold daily chart Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Treasury yields moved higher as bond traders focused on rising oil prices. The yield of 2-year Treasuries climbed above the 4.24% level, while the yield of 10-year Treasuries settled above 4.70%.

Rising Treasury yields did not put pressure on gold markets as traders remained focused on the recent Non Farm Payrolls report, which indicated that U.S. economy lost 23,000 jobs in July. The report had a material impact on Fed policy outlook.

FedWatch Tool indicates that there is a 50.3% chance that Fed will keep rates unchanged at the next meeting in September. It should be noted that the probability of a rate hike has started to rise again due to the rally in the oil markets, but it did not have a material impact on gold price dynamics.

U.S. dollar gained ground against a broad basket of currencies, supported by rising Treasury yields. Stronger dollar is bearish for gold and other dollar-denominated commodities but traders have mostly ignored the dynamics of the American currency in today’s trading session.

Gold continues its attempts to settle above the resistance level at $4360 – $4380. In case gold manages to settle above the $4380 level, it will head towards the next resistance, which is located in the $4480 – $4500 range. RSI remains in the moderate territory, so there is plenty of room to gain momentum in the near term.

Silver Gains Ground As Rally Continues

Key Points:EUR/USD settled near the 1.1550 level as traders focused on the strong rally in the oil markets. USD/CAD pulled back as precious metals markets moved higher. USD/JPY climbed towards the 159.00 level amid rising Treasury yields.

U.S. Dollar Rebounds As Oil Markets Rally

DXY 100826 4h Chart U.S. Dollar Index gains some ground as traders focus on the strong rally in the oil markets. Oil prices are up by +5% as U.S. and Iran did not reach any deal over the weekend. President Trump signaled that he would use economic pressure to force Iran back to negotiations.

High oil prices may push inflation towards higher levels and force the Fed to raise rates at the next meeting in September, which will be bullish for the American currency.

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

EUR/USD Moves Away From Multi-Week Highs EUR/USD 100826 4h Chart EUR/USD moved lower as traders took some profits off the table near multi-week highs. There are no important economic reports scheduled to be released in the EU today, so traders will stay focused on general market sentiment.

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

GBP/USD Tests New Highs GBP/USD 100826 4h Chart GBP/USD climbed above the 1.3500 level as traders ignored rising oil prices and bet on dovish Fed.

In case GBP/USD stays above 1.3500, it will head towards the nearest resistance level at 1.3550 – 1.3565. A move above the 1.3565 level will push GBP/USD towards the 1.3650 level.

On the support side, a move below the support at 1.3465 – 1.3480 will open the way to the test of the 50 MA at 1.3444. If GBP/USD manages to settle below the 50 MA, it will head towards the next support level at 1.3335 – 1.3350.

USD/CAD Attempts To Settle Below The Support At 1.3920 – 1.3935

USD/CAD 100826 4h Chart USD/CAD pulls back as traders focus on rising precious metals markets. Gold climbed above the $4350 level, while silver settled above $65.00. Other commodity-related currencies are mostly flat in today’s trading session.

Currently, USD/CAD is trying to settle below the support at 1.3920 – 1.3935. If USD/CAD manages to settle below the 1.3920 level, it will head towards the next support level, which is located in the 1.3825 – 1.3840 range.

USD/JPY Moves Higher As Treasury Yields Rise USD/JPY 100826 4h Chart USD/JPY gains ground as the yen continues to lose ground after interventions. Rising Treasury yields provide additional support to USD/JPY. The yield of 2-year Treasuries climbed above the 4.23% level, while the yield of 10-year Treasuries settled near 4.70%.

At this point, forex traders are not worried that BoJ would intervene again to support the yen. Fundamentally, the yen remains weak due to the difference in interest rates in U.S. and Japan.

If USD/JPY settles above the 50 MA at 158.84, it will head towards the resistance level at 159.50 – 160.00. A move above the 160.00 level will push USD/JPY towards the 162.00 level.

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

US Dollar, USD/JPY Talking Points: Markets are still showing a near 50/50 chance of a rate hike in September, with a near 80% probability of one by the end of the year. US CPI is expected to soften at Wednesday’s release and this will likely have a large toll on both rate expectations and USD trends.

The Friday NFP report was not good as the US showed a contraction in jobs, and initially, this jolted a move of weakness in USD/JPY. But, like I had said in the prior week, on the heels of the intervention-fueled sell-off in both USD and USD/JPY, support around 155.00 could be a more attractive concept as it was unlikely that intervention would hit there.

Since then, it’s been a steady clawing back from bulls even after the NFP-fueled dip. The carry remains positive on the long side of the pair and while there’s now theoretically-capped upside, given that dual intervention, pullbacks to support can still offer attractive risk-reward opportunities. And that will likely remain as the case until something compels longer-term bulls to close positions.

The math can change at the prior 164 high, and perhaps even at 160, but this week will be telling as we finally get a piece of pertinent US data that could compel long-term bulls to pare positions.

I looked into this last week and this bears resemblance to a situation that showed back in 2022. At the time, the Fed was in a hawkish stance following a slew of rate hikes that year. The Bank of Japan tried intervening at 145, and that failed as buyers simply loaded up and pushed up to the 150.00 handle. But it was at 151.95 when the BoJ intervened again and put bulls on their back foot, and in that instance, a slowing in US CPI helped to prod bulls to close positions and that led to a decisive two-month string of weakness.

At this point, the BoJ has placed their line in the sand, with an assist from the US Treasury Department. Pullbacks have so far brought out buyers, similar to how 145 did back in October and November of 2022. But in that prior episode it was below-expected US CPI that ultimately provoked the reversal, and that’s what is possible at this Wednesday’s release.

USD/JPY Daily Chart 2022-2023 Chart prepared by James Stanley; data derived from Tradingview USD/JPY into CPI At this point we’ve seen sellers take their shot after last week’s below-expected NFP release but there’s still harboring probabilities for US rate hikes, which shows that the larger focus is on inflation. And given comments from Fed officials that makes sense. As we go into the Wednesday release bulls have control of short-term trends, but it’s that 160 area that looms large and, above that, the 164 level that has so far been defended.

At this point, it really seems as though larger USD flows and, in-turn, flows in other major currency pairs will drive on the basis of the long-term carry trade in USD/JPY.

USD/JPY Daily Chart Chart prepared by James Stanley; data derived from Tradingview US Dollar The DXY basket put in a strong break of the 100-level following the intervention after the FOMC meeting, and at this point, it has a similar short-term bullish but longer-term bearish backdrop, with that prior support of 100.21-100.40 as a spot for lower-high resistance potential.

US Dollar Daily Chart Chart prepared by James Stanley; data derived from Tradingview EUR/USD

In last week’s webinar I looked at EUR/USD with focus on 1.1500 as support and then 1.1576-1.1613 as resistance. Both areas have played a role as buyers have defended the big figure and the larger zone of prior resistance-turned-support has so far held the highs.

It does feel as though EUR/USD is still along for the ride, but at the least, there’s some important waypoints to track for directional plays in the pair.

EUR/USD Daily Chart Chart prepared by James Stanley; data derived from Tradingview GBP/USD For USD-weakness, there could be perhaps a brighter argument in GBP/USD which similarly broke out of a falling wedge around the FOMC meeting. The challenge here, however, is the 1.3500 psychological level that is back in to hold the highs. Shorter-term, that horizontal resistance coupled with the higher-lows in the pair make for an ascending triangle, which gives bulls some degree of hope for topside continuation scenarios.

Since the webinar in the attached video, the pair has ventured above that price so this now becomes a spot for shorter-term higher-low support for bullish continuation setups.

GBP/USD Four-Hour Chart Chart prepared by James Stanley; data derived from Tradingview AUD/USD After a decisive sell-off to finish Q2 AUD/USD has been recovering quickly and this sets the stage for the RBA meeting later tonight, with the wide-expectation that the bank will pose a hawkish hold.

This gives some context and if there is pullback, the .7000 handle remains a prime spot to look for pullbacks to work towards.

AUD/USD Daily Price Chart Chart prepared by James Stanley; data derived from Tradingview --- written by James Stanley, Senior Market Analyst, Global Macro

Gold prices we have been contained for much of the session so far today after a sharp rebound last week, climbing almost 7.5% after spending several weeks moving sideways around the $4,000 level. The strength of the move has put the precious metal firmly back on traders’ radar, but the key issue now is whether this breakout can develop into a more sustained uptrend or whether it ultimately proves to be another sharp rally within a broader consolidation phase. For now, I remain sceptical and think the near-term gold outlook remains murky at best.

US labour market weakness weighs on the dollar Some of the sharp gains from last week were at least partially attributed to weakness in US data. The latest catalyst for the move came from Friday’s US employment figures, which provided another setback for the dollar. Payrolls fell by 20,000, but the deterioration was even more pronounced once previous months’ figures were revised lower. More than 100,000 jobs were removed from earlier estimates, bringing average employment growth over the past three months down to roughly 20,000.

Unsurprisingly, gold prices rallied as a weaker growth backdrop reduces the case for tighter monetary policy, while a softer dollar lowers the cost of the metal for non-dollar buyers. But the key question now is whether there is much momentum left in that move.

Inflation becomes the next major market test Before the 16 September FOMC meeting, we have another employment report in early next month, plus two inflation releases and the Jackson Hole symposium. The significance of these events for the gold outlook will ultimately come down to how they reshape expectations for Fed policy. If the data continue to point towards a cooling economy without a meaningful resurgence in inflation, markets could further reduce expectations for tighter policy. That would likely leave the dollar vulnerable and provide another supportive backdrop for gold.

But the opposite scenario remains a clear risk: A stronger inflation print or sequence of economic data releases could quickly force investors to rethink their assumptions around monetary policy, potentially triggering a rebound in yields and the dollar.

The first major test arrives on Wednesday with the release of July’s US CPI report. The figures could be particularly important given Fed Chair Kevin Warsh’s focus on keeping inflation under control following previous policy missteps.

Economists are looking for headline CPI to rise 0.1% month-on-month, which would leave the annual rate at 3.4%. Core CPI is expected to increase by 0.2% on the month, keeping annual core inflation at 2.5%.

Higher oil prices keep the inflation risk alive A softer CPI reading would strengthen the argument for a more dovish Federal Reserve and could give gold another leg higher. However, there is still a meaningful inflation risk hanging over the market.

Oil prices have risen nearly 5% today and remain elevated, creating the potential for renewed pressure on consumer prices. A hotter-than-expected inflation report could therefore produce a rapid reversal in rate expectations. Treasury yields and the dollar have already rebounded and could extend their gains, while gold could give back part of last week’s gains.

Markets are currently pricing only around 11 basis points of rate hikes for the September meeting, leaving considerable scope for a hawkish repricing if the data surprise on the upside.

With no major US economic releases scheduled for today, some consolidation would not be surprising. The dollar could recover part of its recent losses ahead of Wednesday’s CPI report, potentially placing some near-term pressure on gold.

Gold now faces resistance after the breakout From a technical analysis point of view, the next major hurdle for gold sits around the $4,365-$4,425 region. The metal tested this area on Friday and was holding below this zone at the time of writing so far today. This area is particularly important because it brings together a previous swing low from February and an area that has shifted from support to resistance in the past.

Source: TradingView.com On the downside, initial support is now located around $4,300-$4,305. Below that, the $4,200 area becomes the next level to watch, followed by the $4,100-$4,120 region, which represents the base of last week’s breakout.

A sustained move above the $4,365-$4,425 resistance zone would strengthen the case that the latest rally is more than simply a short-term recovery. Conversely, if we start to see gold bleed lower from here, then that will raise the risks of gold giving back its recent gains once again.

Gold’s next move depends on US data The fundamental backdrop has clearly become more supportive for gold in recent days following the publication of some weaker than expected US data. The bigger question is whether that momentum can be sustained. After such a powerful weekly advance, a period of consolidation would be perfectly normal. What matters more is whether incoming US data – and oil prices – continue to reinforce expectations of easier monetary policy.

For now, the balance of risks has arguably shifted slightly in gold’s favour. But Wednesday’s CPI report could prove decisive. A soft inflation reading may give the bulls another reason to push higher, while a hotter print could expose the metal to a sharp pullback.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

Interest Rates and Currency Influences Regardless, one thing that I’ll be watching is the interest rate market and seeing where rates go. They are kind of steady, and that at least gives some cover for silver to rise because rising rates, historically speaking, have been very negative for silver markets in general.

So, part of that is possibly due to the fact that silver’s non-yielding. It’s also the U.S. dollar strengthening. Silver is priced in U.S. dollars, after all, but it’s not a 100% correlation, so it’s just one of the factors here. As things stand right now, it looks like the buyers have been in control for 4 or 5 days for the most part. They are trying to make their presence known early on Monday.

Federal Reserve Outlook and Economic Data Rates are relatively flat. They are a little higher during the day, so that might have something to do with it. But that being said, rates are stubborn, and it seems at this point in time, the next 30 days could be very important as we try to determine what happens at the next Federal Reserve meeting in September.

There will be a lot of questions paid attention to when it comes to inflation, CPI, PPI numbers for example, and then, of course, the employment numbers will be more likely than not very big this time around. We’ll just have to wait and see because the Federal Reserve has not exactly come out and said that they’re looking to be dovish, so it’s a question of will they have to change their tune.

That has a major influence on gold. And then, of course, we have the entire problem in the Middle East that seemingly isn’t going anywhere, although it doesn’t seem to be getting worse, so I suppose that’s something. Gold quiet on Monday, but has been bullish for several days now.

USD/CAD stabilizes at 1.3948 near the 0.382 Fibonacci retracement at 1.3985, with 1.3950 as support and 1.4000 above. Source: TradingView The U.S. dollar is rising a bit against the Canadian dollar after forming a bit of a double bottom. This is a market that has been rounding from a huge move to the upside. We are currently at the 38.2% Fibonacci retracement level, followed by the 50% retracement level, trying to find some type of floor. Ultimately, this is a market that is an interest rate differential play as well. There are some traders out there that are off to the races when it comes to the idea of the U.S. employment situation dropping, but one errant report really doesn’t make a trend.

Furthermore, unfortunately, the Canadian jobs numbers, although really hot this month, are notorious for being horribly wrong and corrected the next time. So, we can’t read too much into one report, and I think we’re starting to see people question that. The interest rate differential pays traders to hold the U.S. dollar versus the Canadian dollar. I think eventually that comes back into play, especially with a 55% chance of the Federal Reserve raising rates in September.

TD Securities’ commodity strategists report that Gold is holding gains after weaker US jobs data reduced perceived Fed hike risks, but CTAs (Commodity Trading Advisors) are unwinding length. They argue that with energy prices rising again, the stagflation narrative must strengthen for Gold to rally further, and note that prices need to exceed $4,400/oz for CTAs to re-add length.

CTAs trim exposure despite support"Precious metals hit pause. The yellow metal is holding gains after the weaker jobs numbers further questioned the probability of coming Fed hikes."

"However, with energy prices grinding higher again, the stagflation narrative will need to solidify to see gold follow suit."

"For now, Asian appetite from top SHFE traders and continued ETF inflows offer support."

"CTAs on the other hand have begun unwinding length, with prices needing to top $4,400/oz to add back the length."

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

Rabıobank's Senior FX Strategist Jane Foley discusses recent EUR/USD strength, noting it was mainly driven by a softer Dollar after weak United States (US) labour data reduced Federal Reserve (Fed) rate hike expectations. Foley highlights resilient Eurozone data but also growth headwinds and limited appetite for strong Euro appreciation. Rabobank now expects EUR/USD to reach 1.16 in three months, assuming no major Eurozone growth surprises.

Euro gains on softer US outlook"At the end of last month EUR/USD lurched higher. On Friday, the currency pair traded at its highest levels since June 17. This may give the illusion of a buoyant EUR."

"The release of the surprisingly soft US July labour market report was the clear trigger for the move higher in EUR/USD on Friday. The softer data dealt a blow to expectations of Fed rate hikes which knocked US yields and the greenback lower."

"Indeed, it is RaboResearch’s view that the Fed will hold rates steady this year, which suggests scope for further softness in the USD."

"Given than another ECB rate hike is already in the price, a move is unlikely to provide much additional upside incentive for the EUR. We see scope for a modest upside bias in EUR/USD in the months ahead, mostly reflecting a reduction in Fed rate hike speculation and we have brought forward our forecast of a move to 1.16 from 6mths to 3mth."

"That said, in the absence of upside growth surprises in Q3, we are doubtful that the market will be keen to rebuild substantial EUR long positions in the coming months."

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

Friday’s US employment report was the first of four major pieces of economic data due before the Federal Reserve’s September meeting. The figures delivered a significant downside surprise, prompting markets to scale back expectations of a September rate hike to around 44%, from above 55% ahead of the release. Yet, the data hasn’t materially changed the USD/JPY forecast much. The pair has already recovered towards the levels seen before the payrolls release, trading close to 159.00. That leaves the pair once again within striking distance of the psychologically important 160.00 level. Unless upcoming US data deliver further negative surprises, or Japanese authorities step back into the market, USD/JPY could once again test that threshold.

The next major catalyst is US inflation, with CPI due later this week. At the same time, developments in oil markets remain important, particularly as uncertainty surrounding the Strait of Hormuz continues to complicate the inflation outlook.

Oil remains a key variable for the dollar outlook Crude oil prices continue to find support from the uncertainty surrounding shipping through the Strait of Hormuz. Although Donald Trump has indicated that Washington is “semi-negotiating” with Iran, the language suggests that economic pressure remains central to the strategy rather than an immediate move towards military escalation.

There have also been reports that Iran and Oman are edging towards an understanding over a shipping route through the Strait. However, any meaningful and sustained reopening of the waterway is likely to depend on wider progress in US-Iran negotiations.

A prolonged disruption to energy flows should keep inflationary pressures elevated. That could make it harder for the Fed to ease policy, even if we see further data weakness, potentially providing an underlying source of support for the greenback.

The Fed’s data-dependent approach puts CPI in the spotlight The latest market reaction reinforces just how important incoming economic data have become for the dollar. Rather than relying heavily on oil prices alone, markets are increasingly being forced to assess individual data release through the Fed’s evolving reaction function.

That shift follows Federal Reserve Chair Kevin Warsh’s decision to move away from providing firm forward guidance. His recent messaging has left greater room for incoming data to reshape expectations around monetary policy.

There are still several important data points to come before the September 16 FOMC meeting: another payrolls report and two further CPI releases, including this week’s figures.

Inflation is particularly important because of Warsh’s admission that the Fed has consistently gotten it wrong and is looking to address it. As a result, any surprises in CPI or other inflation data like PPI could generate much larger moves in the dollar than we have seen from Friday’s jobs report alone.

This also helps explain why the weak payrolls figures did not trigger a sustained collapse in USD/JPY. Markets still have several opportunities to reassess the Fed outlook before September.

What is expected from CPI data? US CPI is now arguably the most important event on this week’s calendar. The previous CPI report had certainly surprised to the downside. Headline inflation slowed more sharply than expected to 3.5% from 4.2%, while core CPI eased to 2.6%. This time, economists expect moderate weakness. Headline CPI is expected to rise 0.1% month-on-month, taking the annual rate to 3.4%. Core CPI is forecast to increase 0.2% on the month, leaving annual core inflation at 2.5%.

The question now is whether we will see that moderation, and if so, whether it is enough to trigger further dovish repricing in US dollar. But as mentioned, alongside data it is also the developments in oil prices which will determine whether expectations for a tighter Fed are rebuilt or continue to unwind.

Why the yen is struggling to capitalise on softer US data In theory, the yen should be among the clearest beneficiaries of weaker US economic data because USD/JPY remains highly sensitive to the interest-rate differential between the two economies.

Yet the yen continues to face selling pressure, even following intervention episodes. The USD/JPY sold of sharply in late July as both the US and Japanese authorities jointly intervened in the foreign exchange market to support the yen. Such coordinated action is unusual and suggests that the US Treasury may be taking a more active role in attempts to stabilise the currency.

However, intervention alone is unlikely to deliver a durable change in the direction of USD/JPY. Foreign exchange intervention can disrupt positioning, reduce excessive volatility and alter market psychology. What it generally cannot do is permanently overturn a powerful macroeconomic trend.

Even growing expectations of a September Bank of Japan rate increase have so far struggled to generate a sustained reversal in the pair.

This is partly because the interest-rate gap with the US remains wide enough to keep carry-trade demand for the dollar alive.

Softer US data may improve the fundamental case for a stronger yen, but positioning and yield differentials can continue to work in the opposite direction – especially if oil prices remain elevated for longer.

USD/JPY forecast: 160 remains firmly on the radar Technically and fundamentally, USD/JPY remains caught between competing forces. The pair has already recovered to above 158.50, effectively returning to the area where it traded before Friday’s payrolls shock.

That recovery suggests the market has not yet fully embraced a sustained dovish repricing of the Federal Reserve. With the USD/JPY now also back above the 200-day average, the near-term path of least resistance is no longer to the downside.

Source: TradingView.com The path ahead is therefore likely to remain volatile. A return towards 160.00 remains a realistic possibility, particularly if US inflation proves sticky or oil prices remain elevated. 160.50 is the next obvious resistance followed by 162.00.

Meanwhile, if support around 158.00 area gives way and price moves below the 200-day again, then in the case, a return to 157.00 and possibly 156.00 will become likely. For that to happen, you’d feel US CPI will have to be quite weak this week. 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

Weekly Spot Gold (XAU/USD) Spot Gold (XAUUSD) is edging lower early Monday after posting a strong rally last week. The market is currently testing the 52-week moving average at $4,349.82. Trader reaction to this indicator will likely set the tone for the week.

Last week’s rally was impressive and it may not have been a one-time event. A number of factors contributed to the rise, with the key being a solid support base across a long-term 50% level at $4,069.54. Additionally, it may have taken a while, but the base began building after a closing price reversal bottom at $3,942.10.

Traders will be watching the 52-week moving average this week because it can be both solid resistance or a potential trigger point for an acceleration to the upside.

If traders decide to sell into it, we could see a near-term pullback into the long-term 50% level at $4,069.54. Buyers could return on a pullback to this level, while defending against a breakdown under $3,942.10.

A breakout over the 52-week MA will indicate that the buying is getting stronger. The first target will be $4,481.78. This is an unusual target because it represents 20% down from the all-time high at $5,602.23. In other words, it’s the level that according to conventional analysis, turned the bull market into a bear market.

Overcoming $4,481.78 will indicate the buying is getting stronger. If this creates enough upside momentum then look for a surge into the retracement zone at $4,772.17 to $4,968.06. This is 50% to 61.8% of the break from $5,602.23 to $3,942.10.

Longer-term traders should keep an eye on the 52-week moving average this week.

Weekly Forecast Last week’s rally ran on one trade. Payrolls contracted, hike odds dropped and gold repriced the rate path in five sessions. CPI Wednesday and PPI Thursday decide whether that repricing holds or gets walked back.

A soft pair of inflation reports and gold has the momentum to clear the 52-week moving average at $4,349.82 and target the bear market threshold at $4,481.78. A hot CPI sends yields and the dollar higher and pulls the bid out from under a metal that just gained 7% on one data point.

Oil back above $79 is the complication. If crude keeps climbing on stalled Hormuz talks, inflation expectations rebuild and the Fed’s case for September gets harder to dismiss. Gold needs lower oil, lower yields and inflation data that cooperates. It got the first two last week. This week it finds out about the third.

If you’d like to know more about how to trade gold, please visit our educational area.

ING’s Ewa Manthey and Warren Patterson report that Gold extended its rally as the People’s Bank of China (PBoC) added 640koz to reserves, marking 21 consecutive months of accumulation. Spot Gold moved above $4,320/oz, supported by ongoing central bank buying and stronger Chinese ETF demand. Speculative net long positions in COMEX gold and silver also increased to multi-month highs.

PBoC buying drives Gold strength"Gold extended its rally last week after the People's Bank of China increased its gold reserves by 640koz (around 20 tonnes), the largest monthly addition since October 2023."

"Official reserves have now risen for 21 consecutive months as China continues to diversify reserves and strengthen its position in the global bullion market."

"Spot gold climbed above $4,320/oz on Friday, its highest level since mid-June, supported by ongoing central bank buying and stronger Chinese investment demand through gold-backed ETFs."

"Speculative sentiment remained supportive across metals."

"In precious metals, managed money increased net long positions in COMEX gold to the highest level since January, while net longs in COMEX silver rose for the first time in five weeks."

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

Gold holds gains around $4,350, with two-month highs at $4,380 under pressure.

Lower US yields amid signs of a loosening labour market are underpinning support for Gold.

Gold (XAU/USD) holds moderate gains at the mid-range of the $4,300s on Monday, consolidating gains after a nearly 7.5% rally last week. The precious metal hovers just below the last two-month highs in the $4,380 area, buoyed by lower US Treasury yields, as traders cut back Federal Reserve (Fed) interest rate hikes following the negative surprise of last Friday’s Nonfarm Payrolls report.

The US Dollar remains on its back foot this week, in the aftermath of Friday's US Nonfarm Payrolls release, which showed a 23K decline in net employment in July, undershooting expectations of an 80K increase, and sharp downside revisions of the previous two months' job gains. Futures markets have scaled back hopes of a September rate hike to 44% from 67% in the previous week, sending the US Dollar lower across the board.

Technical Analysis: Gold remains steady despite overbought RSI levels

XAU/USD trades at $4,343, maintaining its bullish near-term bias intact. The 4-hour Relative Strength Index (14) has reached overbought levels, but downside attempts remain limited so far. The Moving Average Convergence Divergence (MACD) on the same timeframe hints that upside momentum is still constructive.

Bulls are likely to find significant resistance at the $4,380 area (June 17 high). Further up, the target is the late-May high at $4,595. On the downside, initial support is seen at the previous range top, above $4,200, ahead of the $4,000 psychological area, which halted bears in late July, and the bottom of July's trading range, around $3,950.

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

Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Well, good morning — and what a way to end the week!

Stocks pushed higher again on Friday, sending the S&P to yet another record high as ‘the players’ (investors, traders and the algo’s) digested a surprisingly weak July jobs report and immediately concluded that Kevy and the FOMC may have one less reason to raise rates in September.

Translation: Bad news is Good news for the markets. (But hold that thought).

As the bell rang to close out the week - The Dow had gained 151 pts, the S&P up 48 – closing at another new record high, the Nasdaq added 345 pts, the Russell up 33 pts, the Transports added 81pts, the Equal Weight S&P gained 62 pts while the Mag 7 added 260 pts.

And for the week? Well, let’s just say it was ‘fairly’ impressive too. The S&P gained 3.6%, the Dow added 3%, the Nasdaq surged 5.2% and the Russell gained 3.5%.

At 8:30 am – we got the much-anticipated July NFP report…. And this is where it gets interesting. July Non-Farm Payrolls came in at NEGATIVE 23,000 jobs versus the expectation for PLUS 80,000. – Yeah, that’s not a typo…Negative 23,000. And if that wasn’t a kick in the pants – They revised May and June DOWN by another 103,000 jobs combined.

May was revised from +129k to +63k, while June was revised from +57k to just +20k. So, over the last three months — May, June and July — the economy has created an average of just 20,000 jobs per month.

Now while THAT got everyone’s attention, it wasn’t over…. The unemployment rate FELL to 4.1% from 4.2%. And so, you ask - How does that happen? Simple – people left the labor force.

The labor-force participation rate fell to 61.4% from 61.5%.

So don’t look at the drop in the unemployment rate as positive. The labor market is cooling. And the algo’s went all in.

Why? Because suddenly the odds of a rate hike in September aren’t so grand anymore…. Before Friday’s mornings report, the market had been pricing in a 58.7% chance of a September rate hike, after the report, those odds fell to 42.9%. Just to put it in perspective — two weeks ago, those market-implied odds were closer to 70%.

But here’s something else that should make you smile. The prediction markets — Kalshi and Polymarket — were already ahead of Friday’s NFP report. They had the odds of a September rate hike sitting in the low-40% range BEFORE the jobs number hit. Now? They’re down to about a 34% chance of a hike.

And notice what NO ONE is pricing in — a rate cut. Something I have been saying for weeks.

Recall what we discussed last week: the bond market is already doing some of the Fed’s work for it. Long-end rates have moved higher, financial conditions have tightened and the Fed hasn’t had to do a damn thing — other than jawbone.

And that sent bonds higher and yields lower. The TLT and TLH rose by 0.3% and 0.2% respectively. The 2-yr treasury ended Friday yielding about 4.19%, down from 4.25% on Thursday. The 10-yr ended at 4.65%, down from 4.69% while the 30-yr ended at 5.19%, down from 5.22%.

Even after Friday’s rally, a 10-year yielding 4.65% and a 30-year yielding 5.19% are NOT necessarily what you would consider ‘accommodative’. 30 yr Mortgage rates are at 6.7%, for a fico score of 740 or better – higher if you score is lower, commercial real estate loans, corporate borrowing costs, auto loans — all of those remain elevated.

But let’s not get carried away...Because there is another side to this story. On Friday investors interpreted weaker economic data as GOOD news, because weaker data means less pressure on the Fed.

But there is a line and at some point, bad news stops being good news and becomes...well...BAD NEWS.

Right now, investors believe the economy is slowing — NOT collapsing – that’s the good news…. That’s the sweet spot.

Slower growth + strong corporate earnings + less Fed pressure = higher stock prices.

But if the next NFP report continues to deteriorate, then investors will stop asking ‘When is Kevy is going to raise rates?’ and start asking ‘When will he cut rates?’ (think weakening economy). And if that happens, then investors will ask whether corporate earnings estimates are too high.

That is when BAD NEWS becomes BAD NEWS.

We aren’t there yet, but this is not the time to take a nap!

Now let’s talk about GOLD — because THAT just got even more interesting. Gold exploded higher on Friday – up 2.4% or $102/oz – to end the day at $4,340.

And yes — the weak jobs report helped. Lower Treasury yields helped. Lowered expectations for another Fed hike helped never mind the ongoing geopolitical uncertainty that also provides some support (think the safety trade).

Now while all that helped…. I still think Friday’s move was much more TECHNICAL and MOMENTUM driven than anything else – something we discussed on Friday morning.

Recall how gold spent roughly 7 weeks trapped in that $4,000/$4,200 trading range. Then last week it pierced trendline resistance around $4,160 and broke up and through the upper end of the range at $4,200 and BOOM!

The algo’s got fired up, the Momo guys piled on, shorts were forced to cover and chased it higher. So, Friday’s jobs report didn’t CREATE the gold breakout, it validated it and that’s an important distinction.

The weak jobs number gave an already bullish technical setup the catalyst it needed to accelerate. That’s why I would say the move was 70% technical/momentum and 30% fundamental.

We’re in the $4,160/$4,500 trading range. On any pullback, watch $4,160 ish level - if gold holds it, then the breakout remains intact. Now if we pierce $4,500 with conviction? Then we will have another conversation. This morning gold is trading unchanged.

Now oil remains a problem. WTI closed Friday at $77.08 and this morning it is back on the move, up about $1.20 or 1.3% as traders digest the latest headlines out of Iran – that have raised the ante….

Over the weekend, Iran laid out a ‘new’ list of demands that it says must be met before the Strait of Hormuz fully reopens. So, the idea that Scotty thinks we ‘have a deal’ - well, think again.

They want the US to:

End military threats and insults against its national and religious values.

Permanently halt attacks against Iran and its regional allies in Lebanon, Palestine, Yemen and Iraq. All places that harbor their terrorist proxies.

Lift the U.S. naval blockade and withdraw U.S. naval and air forces from around Iran.

Pay financial compensation and war reparations.

Lift U.S. economic sanctions.

Unconditionally release frozen Iranian financial assets.

OK – what this tells me is that we are not even close to being over.

And that is exactly why oil remains a problem for the markets. Because as long as the Strait remains closed, oil is going to carry a geopolitical risk premium. The see/saw back and forth - One headline suggesting progress, the next suggesting a stalemate will continue to cause market angst. Trendline resistance is at $81.40, if we break up and thru – then I suspect we could see $90 oil again fairly quickly. Should we get a deal, then yes, oil will decline, but that seems more unlikely right now.

Remember – Higher oil feeds directly into the inflation conversation, inflation feeds into the bond market and the bond market feeds directly into equity valuations. So, if crude starts making another run, then the conversation about easing financial conditions becomes more complicated.

Now, Tehran is clearly playing for leverage. They know Americans are tired of a conflict that has dragged on far longer than anyone originally expected, and they know the midterm elections are now less than three months away. So, they have every incentive to test Trump’s willingness to stay the course.

Because until we get a real agreement, the geopolitical premium isn’t going away – and neither is the volatility in crude.

There is not eco data today – but we will get the July CPI and PPI on Wednesday and Thursday – both are expected to lower. Friday will give us the latest Retail Sales numbers along with the U of Mich sentiment surveys.

While earnings season has slowed, there are several reports worth paying attention to this week - particularly around Quantum Computing - QUBT, AI infrastructure - CRWV, networking - CSCO, Semi Equipment – AMAT and fintech - NU.

European markets are flat.

US futures are mixed as the week begins. Dow futures are down 15 pts, S&P’s up 12, Nasdaq up 135 pts while the Russell is down 5 pts.

The S&P 500 closed at 7,757 – up 47 pts. This morning – European market action and US futures action suggests the mkt will churn. We are now in the middle of August and are truly in the Dog Days of summer…Much of Europe is on vacation, and in the US – many families are also on vacation. Volumes are lower and so moves can be exaggerated (in both directions).

Technically – trendline support is way down at 7500. Resistance is somewhere between 7,900/ 8,000.

Orzo saladThis is a great summer dish just to have in the fridge. It is simple to make – no longer than 12 mins max.

For this you need: 1 lb. of Orzo pasta, garlic, olive oil, fresh chopped spinach, Ricotta Salata Cheese and s&p.

Bring a pot of salted water to a boil and add in the Orzo. Let it cook until aldente – maybe 6 mins.

While this is cooking – heat some olive oil in a pan and sauté the sliced garlic…. allowing the oil to take on the garlic flavor – do not burn the garlic…. Now remove from heat and set aside. Cut the Ricotta Salata into small bite size cubes – set aside.

When the Orzo is cooked – strain – always keeping a mug of pasta water.

Now return the Orzo to the pot and add back a bit of the water – mix to re-moisten – do not let it puddle – let it absorb…. Err on the side of less- b/c you can always add more…..…. now toss in the fresh spinach leaves, and the oil and garlic – mix well to coat. (You want just enough oil to coat the pasta – you do not want the pasta bathing in the oil).

Now add in the Ricotta Salata and mix again. Put it in a bowl and refrigerate.

Done. It is a perfect side dish to any summer BBQ meal or is even good to just eat right from the bowl.

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Societe Generale strategists highlight that EUR/USD has squeezed above key resistance as Dollar weakness follows softer United States (US) employment data and reduced odds of a September Fed hike. The pair is seen slightly expensive versus nat gas but near fair value on 2-year spreads. They note that if the European Central Bank (ECB) hikes again while the Federal Reserve (Fed) pauses, EUR/USD could gain further, with the next resistance zone identified around 1.1610/1.1625.

Euro prospects improve as Fed bets are repriced"Clouds first appeared on the horizon for the dollar two weeks ago after the coordinated FX intervention in USD/JPY and the squeeze in EUR/USD above key resistance at 1.1475/1.15."

"The pricing for a hike in September has been whittled back to less than 50% vs 72% at the end of July. "

"After months of obsessing about above target CPI and PCE inflation, and levelling accusations of being behind the curve, the employment situation put the Fed outlook in a different daylight and raises questions for the direction of the bond and FX markets in 2H."

"The pair trades close to fair value based on 2y spreads but is a smidgen expensive relative to nat gas."

"If the ECB hikes again and the Fed stands pat because of the deteriorating labour market, perspectives will emerge for a stronger EUR/USD ahead."

"We identify the next hurdle at 1.1610/1.1625."

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

Summary:

A 2.50% US-Japan rate gap drove USD/JPY back toward 158.50 as traders rebuilt yield-generating carry trade positions Unprecedented US-Japan coordinated yen purchases established a firm psychological ceiling for the pair around the 160.00 to 164.00 resistance zone Long-term yen strength hinges on Bank of Japan rate hikes, prompting range-trading strategies with strict stop-losses near key resistance levels The USD/JPY currency pair recently saw a big drop, falling from highs not seen in decades, near 164.00, all the way down to 155.20. But in the last few trading days, the pair has been slowly climbing back up, making small but steady gains and heading towards the 158.50 area.

So what changed, and does it undo the intervention story?

Why the Momentum Shifted The intervention bought Japan some time, but it didn’t reverse the trend. The Bank of Japan (BoJ) reportedly spent about ¥5.33 trillion defending the yen on a single day. That followed an even bigger single-day operation, roughly ¥8.45 trillion, the day before. By early August, the yen had already given back nearly half of those gains.

It’s a familiar pattern. Intervention can interrupt a trend by forcing a wave of position-covering, but it won’t change the underlying forces unless policy itself shifts.

Those underlying forces still favor the dollar. The Federal Reserve’s target range holds at 3.50-3.75%, while the BoJ has kept its policy rate at 1.00%. And that’s even though they’ve flagged that inflation might run clearly above their 2% target later this fiscal year.

This leaves a significant interest rate difference of about 250 to 275 basis points. This gap makes the yen carry trade, where investors borrow in a low-interest currency to invest in a higher-interest one, still attractive. Since Japanese monetary authorities haven’t made any major policy changes, buyers looking for better yields quickly returned.

A soft July US payrolls report briefly helped the yen. But as long as that gap stays this wide, the dollar usually regains strength once the initial shock wears off.

What Does the U.S. Purchase of Yen Tell Us About the Outlook? The recent fall in USD/JPY was prompted by a rare, coordinated currency action where the U.S. Treasury actively bought Japanese yen along with Japan. This was the first time they did this together in 15 years.

U.S. Treasury Secretary Scott Bessent clearly expressed concern about the yen weakening too much. This reinforced the market’s belief that Washington is willing to help prevent the USD/JPY from going too high, near 160.00–164.00.

Markets can take two messages from this. First, both governments now see the yen’s weakness, which pushed the pair to 40-year lows near 163.99 in late July, as a real financial stability concern, not just routine volatility.

Second, officials have directly said they’re ready to intervene again. This puts an informal cap on how much further the dollar can climb before prompting new action.

The interest rate difference still favors the dollar, and the credibility of Japan’s fiscal and monetary policies remains a key focus for the market. In the short term, USD/JPY is likely to trade within a range. The risk of intervention will prevent the dollar from rising too sharply, while economic data will determine if the recent gains continue or fade.

What Investors Should Consider For now, it’s wise to consider both these factors. Most analysts expect the pair to gradually move higher over time, with some forecasts suggesting it could reach the ¥162–¥166 range this summer and potentially higher by the end of the year if the dollar stays strong. This suggests it might not be a good idea to bet on the yen’s recent recovery as if it signals a new downward trend for the dollar.

Investors should treat the current environment as transitional. Aggressive long-dollar positions against the yen carry the risk of renewed official buying. Short-term tactical longs may find support from technical recovery and mixed Japanese data, but position sizes should remain measured given the elevated intervention threat.

Why did USD/JPY drop sharply in late July?

Coordinated US-Japan yen buying intervened, triggering rapid speculative short covering and a decline

Why is the U.S. dollar resuming its rise against the Japanese yen despite recent intervention efforts?

The persistent 2.50% rate differential between the Fed and BOJ continues to encourage traders to rebuild profitable carry trades.

Does the intervention mean yen weakness is over?

No. Intervention addresses the symptoms, and not the rate differential. Without policy changes, the US dollar’s strength tends to reassert itself.

TL;DR: A weak jobs report already made the case for a Fed hold, but only Wednesday’s CPI can confirm inflation is cooling too — and if it comes in soft without reviving growth fears, Silver’s dual identity as both a monetary and industrial metal could let it outrun Gold.

Why Payrolls Only Told Half the Story Last week’s payroll shock was enough to send Gold and Silver sharply higher, but it wasn’t enough to make the rest of markets comfortable. That difference is important. Weak employment made another Fed hike much harder to defend, yet it did nothing to prove the inflation problem has disappeared. Markets are therefore left with only half of the dovish case confirmed: the labor market is weakening, but the Fed still needs evidence that price pressures are cooling. Wednesday’s US CPI report could provide that missing half — and if it does, Silver may have more to gain than Gold.

Why Silver Has a Second Route Higher That Gold Doesn’t Both metals would benefit from the same first-order reaction to softer inflation. Reduced Fed tightening risk should weigh on Treasury yields and the Dollar, improving the monetary backdrop for precious metals. Silver, however, has another route higher. If softer CPI allows investors to price a Fed hold without simultaneously increasing recession fears, equities and broader risk sentiment should also strengthen. That matters because Silver sits between a monetary metal and an industrial commodity — Gold benefits when yields and the Dollar fall, while Silver can benefit from those same forces and from a stronger cyclical outlook.

That second channel was largely missing after payrolls. Negative NFP and heavy downward revisions were dovish for Fed expectations, but they were also bad news for growth. Gold could respond directly to falling tightening risk, while broader risk markets had to decide whether weaker labor demand was becoming something more serious.

A benign CPI surprise would be different. If inflation slows while growth fears don’t intensify, markets move closer to a disinflationary soft-landing interpretation. Under that scenario, Silver’s industrial exposure becomes an advantage rather than a complication, giving it scope to outrun Gold even if both continue higher.

What the Gold/Silver Ratio Is Already Signaling The Gold/Silver ratio suggests that shift may already be starting. On the 4-hour chart, the ratio can be read as having completed a near-term head-and-shoulders top, with shoulders at roughly 71.33 and 71.14 around a 72.55 head. Attempts to recover after the neckline break have been capped by the falling 55 4H EMA near 68.91, while MACD carries bearish divergence. As long as 69.40 caps rebounds, risk stays on the downside toward the 38.2% retracement of 89.36 to 54.77, at 67.99.

That doesn’t say Silver must rise outright. It says that, on a relative basis, market structure favors Silver over Gold.

ActionForex’s Technical View on Silver Silver’s chart itself is also becoming more constructive at exactly the point CPI is approaching. Bullish divergence in the 4H MACD preceded a break above the 55-day EMA and medium-term falling trendline, shifting the near-term bias higher while 60.85 holds.

The next test is much tougher: the 66.5–68.0 zone, containing the 161.8% projection of 54.77 to 60.54 from 56.53 at 66.54, and the 38.2% retracement of 89.36 to 54.77 at 67.99. With momentum already stretched, an initial rejection there wouldn’t be surprising. But a decisive break would signal the recovery is evolving into something larger, targeting the 261.8% projection at 72.73, or even further to the 61.8% retracement at 76.15.

Why Wednesday Is About the Macro Regime, Not Just the Number That makes Wednesday less about whether Silver is simply “bullish” and more about whether CPI supplies the right macro regime for its relative advantage to matter. Soft inflation plus resilient risk sentiment is the ideal combination: lower yields and a softer Dollar support both metals, while stronger equities and reflation expectations tilt the balance toward Silver.

Hot CPI would do almost the exact opposite — reviving Fed tightening risk and removing Silver’s cyclical edge. Payrolls opened the door to a September hold; CPI now decides whether markets can walk through it with confidence. If they can, Silver may be the better trade than Gold.

Key Takeaways Weak payrolls made the case for a Fed hold but didn’t confirm inflation is cooling — Wednesday’s CPI is needed to complete the dovish case. Silver benefits from two channels softer CPI could open: lower yields/Dollar (shared with Gold) and stronger risk sentiment via its industrial demand exposure (Gold doesn’t have this). The Gold/Silver ratio has formed a bearish head-and-shoulders top, capped below 69.40, pointing toward 67.99 next — a signal already favoring Silver on a relative basis. Silver’s own chart shows bullish MACD divergence and a break above its 55-day EMA, with 60.85 as near-term support and 66.5-68.0 as the next major resistance zone. A soft CPI print without rising growth fears is the ideal setup for Silver to outperform Gold; a hot print would revive Fed tightening risk and erase that edge.

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.

USD/JPY finds itself at the center of one of the most dramatic currency stories this summer. Having weakened to a four-decade low near ¥164, the yen was pulled back sharply after Japan and the US carried out a coordinated intervention, with Tokyo reportedly spending around $34 billion in a single session to defend its currency. The move briefly pushed the pair toward ¥155, though the yen has since given back some of those gains, trading back near ¥158 as doubts persist over how long intervention alone can hold.

The underlying driver remains the wide gap between US and Japanese interest rates, made worse by rebounding oil prices following renewed tensions in the Strait of Hormuz. Markets are now watching for a possible BoJ hike in September, encouraged by six straight months of rising real wages, while the Fed’s own July dissents—three policymakers pushed for a hike over a hold—keep US rates firmly in the driver’s seat too.

With both central banks now genuinely in play, USD/JPY’s next move looks set to hinge on which side moves first: Tokyo’s rate decision, or Washington’s next data-driven signal.

Technical Analysis of USD/JPY

As the USD/JPY chart shows, the pair collapsed sharply after the coordinated intervention, dropping from the 163.76 highs to a low near 155.21 before staging a steady recovery. Price is now testing the 0.382 Fibonacci retracement near 158.48, supported by an ascending trendline off the intervention low, with the RSI showing a bullish divergence as it prints higher lows even as price briefly retested the range.

Bullish Scenario Should buyers hold the ascending trendline and break decisively above the 0.382 retracement, the path would open toward the 0.5 level near 159.49, with a stronger move targeting the 0.618 retracement around 160.50, where deeper resistance likely awaits.

Bearish Scenario Conversely, a break below the ascending trendline would invalidate the current recovery structure, exposing a retest of the intervention low near 155.21-156.00, with the RSI divergence losing credibility if price fails to hold this zone.

With price coiled right at the 0.382 confluence, and both the trendline and RSI hinting at renewed strength, USD/JPY looks set for a decisive move—will the recovery from intervention extend, or does Tokyo’s defense prove only temporary?

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Risk Warning: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. There is a possibility that you may sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Orbex Global does not offer its services to residents of certain jurisdictions such as Mauritius, USA, and North Korea.

Dollar Index Price Chart – Source: Tradingview Currently, the U.S. Dollar Index is showing a quotation of $99.63. After the most recent sharp sell-off, it has been able to defend a long-term rising trendline and the key support zone of $99.42. The price is under both the 50-day EMA at $100.33 and the 100-day EMA at $99.91. This is keeping the broader short-term structure at risk, even after the most recent consolidation.

The most recent price action has shown smaller bodies of the candlesticks with respect to support, showing the momentum for selling is diminishing, but with no signs of a reversal. The RSI is currently at 37. It is close to the oversold region, meaning that there is a possibility of a technical rebound.

The first line of resistance is at $100.36, with subsequent resistance at $100.82 and $101.62. If the trendline holds, the move will reach towards those levels. If support at $99.42 is broken, the new targets will be $98.76 and $98.18.

GBP/USD Technical Analysis: Sterling Holds Rising Trendline Below $1.3510 Resistance

EUR/JPY rises after registering losses in the previous day, trading around 183.10 during the European hours on Monday. The currency cross is holding a capped tone as it sits below the 50-day Exponential moving average (EMA) while clinging to short-term support at the nine-day EMA. This configuration suggests a corrective phase within the broader uptrend, with sellers retaining the upper hand while the 14-day Relative Strength Index (RSI) around 44 hints at still-soft but stabilizing bearish momentum after the recent slide.

Yen positioning shift seen as response to Japan interventionStrategists at Societe Generale argue that the recent positioning adjustment in the Yen futures market is being driven primarily by official action rather than a genuine change in sentiment. They highlight that the sharp drop in speculative exposure, with the “collapse in Short Yen CFTC positions to 10.8%,” is “a reflection of MoF intervention, not a reflection of greater optimism that the currency has fundamentally turned.”

A pullback below the nine-day EMA at 183.06 would reinforce the bearish bias and put downward pressure on the EUR/JPY cross to navigate the region around the eight-month low of 179.37, reached on August 3, followed by the nine-month low of 175.70.

On the upside, the EUR/JPY cross could find initial resistance at the 50-day EMA at 184.57. Further advances above the medium-term moving average would cause a bullish emergence and support the currency cross to explore the region around the all-time high of 187.95, which was recorded on April 17.

EUR/JPY: Daily Chart(The technical analysis of this story was written with the help of an AI tool. Know more.)

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

USDEURGBPJPYCADAUDNZDCHFUSD0.01%-0.00%0.43%0.07%0.00%0.06%0.02%EUR-0.01%-0.02%0.40%0.04%-0.01%0.03%0.00%GBP0.00%0.02%0.43%0.06%0.03%0.05%0.02%JPY-0.43%-0.40%-0.43%-0.39%-0.46%-0.44%-0.43%CAD-0.07%-0.04%-0.06%0.39%-0.13%0.00%-0.07%AUD-0.00%0.01%-0.03%0.46%0.13%0.03%0.02%NZD-0.06%-0.03%-0.05%0.44%-0.00%-0.03%-0.02%CHF-0.02%-0.01%-0.02%0.43%0.07%-0.02%0.02% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

Summary:

USD/INR has shown limited movement over the last five sessions, hovering near the 95.00 support with narrow daily ranges and low volatility overall The pattern signals consolidation as markets await clearer cues from dollar strength, RBI liquidity management, oil prices, and capital flows Oil price, US-India trade relations RBI and Federal Reserve comments and policy decisions hold key sway on the USD/INR forex pair's long and medium-term momentum The USD/INR pair moved quite a bit in July 2026, driven by outside forces and local policy responses. The exchange rate began July around 94.7-95.2, climbed to nearly 96.9, and then settled near 95.35-95.40 by month’s end.

According to a Bank of Baroda research note, the rupee depreciated by only about 0.8% for the month, even as global crude oil prices surged more than 20% amid escalating tensions in West Asia. For a currency as sensitive to oil as the rupee, that’s a genuinely soft landing.

Come August and the USD/INR exchange rate hasn’t really moved much in the first week. It’s been stuck around the 95.00 support level, with small daily price changes and not much happening in terms of volatility.

This pattern points to a period of consolidation, and markets appear to be waiting for clearer signals. Both the strength of the US dollar globally and things happening in India are affecting the rate. The Reserve Bank of India is still managing money supply carefully. Oil prices and how much money is flowing into or out of India also have an impact.

For the immediate future, expect the exchange rate to stay in a range. If it drops below 95.00, it might go down to 94.50. If it goes above 95.50, it could try to reach 96.00 again. Most predictions say the rate will likely stay between 94 and 96 for the next few weeks.

Keep an eye on US economic news and any statements from the RBI, as these can change market feelings quickly. For now, the pair shows limited momentum and patience remains key while the market digests recent moves. Traders may find better opportunities once a clearer trend emerges.

This article was originally written in December 2024 and updated on August 10, 2026, to reflect recent developments, including US-Israel/Iran war and ensuing Strait of Hormuz blockade, USD/INR price movements, and the impact of oil price spike. All technical levels and market commentary are based on the latest data available at the time of writing.

USDINR Outlook For the Third Quarter of 2026 Looking ahead to the third quarter, I expect the pair to trade within a fairly tight range. Most market participants expect it to stay between 94 and 97. We might even see it test the lower end of that range if oil prices drop more and capital flows pick up. Some analysts think it’ll gradually stabilize around 95-96 by September’s end, assuming no major external shocks.

The Reserve Bank of India’s (RBI) monetary policy will continue to influence the currency. The central bank is anticipated to maintain the repo rate at its early August review, keeping a neutral monetary stance while closely monitoring inflation.

Factors such as elevated oil prices and potential food price volatility due to monsoon patterns could contribute to sustained inflation, limiting the possibility of any interest rate cuts in the near term. The RBI’s capacity to intervene in the foreign exchange market, supported by robust foreign exchange reserves, is expected to help manage any sharp currency movements.

Global economic conditions will also play a role. A sustained decrease in crude oil prices, de-escalation of tensions in the Middle East, or a weaker US dollar could benefit the Indian rupee. Conversely, increased geopolitical instability or stronger-than-expected economic data from the United States might support the dollar, leading to continued upward pressure on the USD/INR pair.

Impacts of Interest Rates The interest rate story of the first quarter of 2026 didn’t help the rupee. The RBI kept rates steady at its February 2026 meeting, despite the rupee getting weaker and bond yields going up.  The RBI had cut its repo rate by 25 basis points to 5.25% in December 2025.

April brought fresh pressure from rising tensions in Iran, weighing on economic forecasts while pushing prices upward. Still, the central bank held its ground, keeping borrowing costs steady to guard against wider imbalances. 

Meanwhile, US monetary policymakers showed little hurry to adjust their own rates downward. Because of this divergence, investors kept leaning toward American securities, drawn by stronger returns in dollar-based investments.

The Risks Worth Watching India is the world’s third-largest imported of crude oil, and the product’s price oscillations have a significant impact on the rupee. Dollar-denominated crude oil has experienced a slowdown in demand for the last year, as China’s economic growth declined.

The single biggest wildcard remains the unresolved US-India trade relationship. Tariffs on Indian products have made them less competitive abroad. Whether the two countries can agree on something to ease this is probably the most significant factor for the rupee’s performance over the next few years. If they reach a deal, it would strongly suggest the rupee will get stronger. If they don’t, the pressure on it will likely continue.

Oil is another clear risk. The conflict in the Middle East has calmed down a bit, with news of a US-Iran negotiation period and tanker traffic through the Strait of Hormuz slowly returning to normal. However, this could change fast if tensions rise again.

Foreign portfolio flows bring another layer of uncertainty. They’ve seen both heavy outflows and supportive inflows over the past year. Another round of selling in Indian stocks or bonds would quickly test the rupee’s current stability.

USD/INR Historical Chart USD to INR trading dates back to 1973 when the pair was floated in the forex market at an opening price of $1 to 7.98 rupees. By late 1983, the currency pair rose past the psychological level of 10 rupees to the US Dollar. Between then and April 2002, it rallied by 376.41% to 48.76 rupees.

After retracing to 39.9 rupees in November 2007, the USD/INR has been on an uptrend since then. The pair surged to an all-time high of 95.23 in March 2026.

USDINR Historical Chart on the monthly time frame As the US Federal Reserve started to hike rates, Indian rupee started to slide against the US Dollar. In October 2022, the pair surged to a new all-time high of 83.28. This ATH was refreshed in 2023. However, the dollar’s rally in 2024 saw it hit a new ATH on March 22. That’s not all, the upward momentum strengthened through 2025 to peak at 91.05 in December. Rising oil prices and uncertainty in US-India trade relations have added fuel to the pair, pushing it to all-time highs of 96.97 seen in May 2026.

Strain on Indian Equities Markets Indian equity markets influenced USD/INR movements since early July. Foreign portfolio investors became net buyers again. Data from CDSL showed inflows exceeding ₹15,000 crore that month, while NSDL figures put it even higher, close to ₹20,200 crore.

This influx brought fresh dollar supply into the market, offering timely support to the rupee. Stronger equities boosted investor confidence, and a steadier rupee then encouraged more equity buying. The two markets reinforced each other.

During late July and into early August, continued strength in equities provided a buffer against significant declines in the rupee. Domestic institutional investors also played a role by purchasing assets, which helped absorb market fluctuations. This activity mitigated the impact of external pressures on the currency.

The recovery observed in the equity market contributed to a stabilizing effect, assisting the rupee in maintaining firmer positions around the 95.3–95.4 level. However, this positive development does not entirely resolve the challenges. Foreign portfolio investors (FPIs) have recorded net selling activity for the year overall. Year-to-date outflows have reached approximately ₹2.6 trillion.

So while July’s buying offered some relief, it hasn’t reversed the larger trend. Equities have recently provided stability, but they aren’t a game-changer just yet.

USD/INR Quarterly Outlook: Rupee Faces Next Key Resistance At 96.00 in Q3 On the weekly chart, the USD/INR is trading close to 95.30. The overall trend remains upward, supported by its major long-term exponential moving averages.

The price is above the 20-week EMA, which is around 94.80. It’s also well above the 50-week EMA at about 93.50 and the 100-week EMA near 91.80.

This shows that the upward trend is still strong. The Relative Strength Index (RSI) is around 45–50, which suggests a neutral or balanced market sentiment, not showing signs of being overbought.

The main support level is at the 95.00 mark, which is a key psychological level and aligns with the 20-week EMA. After that, the next support is around 94.20, near the 50-week EMA. The key resistance is at 96.20, which is near the recent swing high. If it breaks that, the next resistance would be the all-time record high of 96.96

USDINR chart analysis on August 3, 2026, showing key levels of resistance and support for Q3. Created on TradingView What will be USD to INR Rate in 2027? Long Forecast’s USD to INR forecast 2027 suggests the start of the year around 97.69 rupees. It expects the currency pair to average 98.53 by mid-year before rallying further to 102.82 by the end of the year. The prices can go much higher if the global economy enters a prolonged recession after the ongoing deflationary measures.

USD to INR forecast. Source: longforecast.com USD to INR Forecast 2030 A feasible USD to INR forecast for 2030 is informed by the economic health of India and the US, Fed and RBI’s monetary policy, and the demand for the US dollar as a safe haven. Hence, a strong dollar will likely push USD to INR to a new record high, depending on the key drivers.

However, as an emerging market, India’s currency has the potential to strengthen further in the coming years. From that perspective, USD to INR forecast 2030 will be for the pair to remain within a range for several years.

How to trade USDINR To trade USDINR, one needs to open an account with a reputable forex broker. When researching the best broker, it is helpful to consider their spreads, commissions, and other fees. It is also possible to trade the currency’s derivatives in the form of USDINR futures.