EUR/USD comes under selling pressure on Friday as the US Dollar (USD) strengthens following the release of the upbeat United States (US) employment report. At the time of writing, the pair trades around 1.1605, down roughly 0.18% on the day, after retreating from an intraday high of 1.1633.
US Nonfarm Payrolls (NFP) rose by 162K in August, comfortably beating expectations for a 56K increase. July’s reading was revised sharply higher to a gain of 21K from the previously reported 23K decline, while June payrolls were revised to 31K from 20K. The Unemployment Rate held steady at 4.1%, as expected.
The US Dollar strengthens following the employment report, while US Treasury yields also move higher across the curve. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.20 after falling to a more-than-one-week low of 98.83 on Thursday. Meanwhile, the benchmark 10-year Treasury yield retests 4.81%, its highest level since October 2023, touched earlier this week.
The stronger employment figures revive expectations that the Federal Reserve (Fed) could raise interest rates at its September 15-16 meeting. Still, the jobs report may not settle the September policy debate on its own. Next week’s Consumer Price Index (CPI) and Producer Price Index (PPI) data will give policymakers a clearer picture of inflation before the Fed announces its decision.
On the Euro (EUR) side, weaker-than-expected Eurozone Retail Sales add some pressure. However, expectations that the European Central Bank (ECB) will raise interest rates at its September 9-10 meeting could limit the Euro’s losses. The ECB is widely expected to deliver a second rate hike this year as higher Oil prices amid tensions in the Middle East keep inflation risks elevated.
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 Swiss Franc.
USDEURGBPJPYCADAUDNZDCHFUSD0.18%0.15%0.09%0.42%0.10%0.11%0.44%EUR-0.18%-0.03%-0.09%0.27%-0.09%-0.05%0.26%GBP-0.15%0.03%-0.04%0.29%-0.05%-0.02%0.28%JPY-0.09%0.09%0.04%0.34%-0.01%0.03%0.33%CAD-0.42%-0.27%-0.29%-0.34%-0.35%-0.32%-0.01%AUD-0.10%0.09%0.05%0.00%0.35%0.03%0.33%NZD-0.11%0.05%0.02%-0.03%0.32%-0.03%0.30%CHF-0.44%-0.26%-0.28%-0.33%0.00%-0.33%-0.30% 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).
AUD/NZD roste, protože australský HDP za 2. čtvrtletí překvapil výrazně nahoru a zvýšil sázky na zářijové zvýšení sazeb RBA. Na Novém Zélandu RBNZ zvedla sazby o 25 bazických bodů na 2,75 %.
The Aussie enters this week with genuine hawkish backing after Australia’s Q2 GDP surprised sharply to the upside, pushing the market-implied probability of a September RBA hike from 48% to 57%, with a November move now more than fully priced. Governor Bullock’s board has already flagged upside inflation risks tied to Middle East-driven energy costs, and rising Australian bond yields, which touched their highest level since April 2011 this week, are only reinforcing that hawkish backdrop.
Across the Tasman, the RBNZ delivered exactly what all five major New Zealand bank economists expected on Wednesday: a 25bp hike to 2.75%, the second consecutive increase after July’s tightening move. Headline inflation remains elevated at 4.1%, though the central bank’s own projections signal a likely pause in October before potentially resuming in December, leaving markets pricing roughly a 30% chance of another hike this year.
The result: two central banks now both firmly in tightening mode, though the RBA’s path still carries more near-term uncertainty than the RBNZ’s, whose next move already looks broadly telegraphed through year-end.
Technical Analysis of AUD/NZD
As the AUD/NZD chart shows, the pair staged a sharp rally from the 1.19633 low, riding a steep ascending trendline that has powered the entire late-August advance. That rally has since run into resistance near the 1.22897 high, the 0 Fibonacci level, where price is now consolidating just above the 0.236 retracement near 1.22127, caught between a shorter-term descending trendline from this week’s peak and the broader medium-term descending trendline that has capped the pair since late June.
Bullish Scenario
Should buyers defend the 0.236 retracement and the ascending trendline while breaking above the short-term descending trendline, the path would open towards a retest of the 1.22897 high. A confirmed break above that level would mark a genuine shift in the broader multi-month structure.
Bearish Scenario
Conversely, a break below the 0.236 level and the steep ascending trendline would expose the intermediate 1.213–1.215 support zone, coinciding with the 0.5 Fibonacci retracement. A deeper slide below that zone would risk a fuller retracement of the late-August rally, back towards the 0.618–0.786 area near 1.203–1.209.
With price squeezed between a reclaimed short-term trendline, a defended ascending trendline, and the long-term descending trendline, AUD/NZD looks poised for a decisive move. Will the RBA’s hawkish momentum push the pair through resistance, or will the broader downtrend since June reassert control?
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EUR/USD přitahuje kupce ve čtvrtek, protože prudký růst japonského jenu (JPY), slabší data z trhu práce v USA a pokles výnosů amerických státních dluhopisů tlačí na americký dolar (USD). V době psaní se pár obchoduje kolem 1,1622, zhruba 0,30 % nad úrovní dne.
EUR/USD attracts buyers on Thursday as a sharp rally in the Japanese Yen (JPY), softer United States labour-market data and a pullback in US Treasury yields weigh on the US Dollar (USD). At the time of writing, EUR/USD trades around 1.1622, up roughly 0.30% on the day.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.00, near a one-week low, after reaching 99.86 on Wednesday, its highest level since August 14. Meanwhile, the benchmark 10-year US Treasury yield falls for the second consecutive day to around 4.74%, retreating from 4.81%, its highest level since October 2023.
Dovish comments from Federal Reserve (Fed) Governor Christopher Waller prompt traders to scale back bets on a rate hike this month. Waller said he is “finally seeing some signs of disinflation in recent data” and that the “rate decision in September hinges on August inflation.” He added that he would support keeping interest rates unchanged if the August data confirm recent progress.
Waller also said the Fed’s mandate is to achieve “price stability and full employment, not financial conditions,” adding that the current interest-rate setting “could get us back to 2% inflation.”
According to the CME FedWatch Tool, the probability of a rate hike at the Fed’s September 15-16 meeting has fallen to around 48% from 63% a day earlier.
Meanwhile, mixed US economic data offers conflicting signals. Initial Jobless Claims increased to 206K in the week ending August 29, slightly above the market forecast of 205K and the previous reading of 204K. However, the ISM Services PMI rose to 55.4 in August from 54.1 in July, exceeding expectations of 54.3. The Prices Paid and Employment indices increased to 72.6 and 47.8, respectively. Traders now await Friday’s Nonfarm Payrolls (NFP) report for fresh clues on the Fed’s monetary policy outlook.
Across the Atlantic, the European Central Bank (ECB) is widely expected to raise interest rates at next week’s monetary policy meeting. The move would mark the second rate hike this year as the central bank seeks to curb inflation, which has been driven largely by elevated Oil prices linked to the war in the Middle East.
A Reuters poll showed that all 65 economists surveyed expect the ECB to raise its Deposit Facility Rate by 25 basis points to 2.50% on September 10. Around 91% expect the rate to stay at 2.50% through the end of the year, while 78% see it holding at that level through mid-2027.
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 British Pound.
USDEURGBPJPYCADAUDNZDCHFUSD-0.29%-0.18%-2.02%-0.31%-0.28%-0.32%-0.59%EUR0.29%0.10%-1.75%-0.08%0.01%-0.10%-0.31%GBP0.18%-0.10%-1.85%-0.16%-0.09%-0.18%-0.41%JPY2.02%1.75%1.85%1.72%1.78%1.67%1.45%CAD0.31%0.08%0.16%-1.72%0.04%-0.06%-0.27%AUD0.28%-0.01%0.09%-1.78%-0.04%-0.08%-0.30%NZD0.32%0.10%0.18%-1.67%0.06%0.08%-0.19%CHF0.59%0.31%0.41%-1.45%0.27%0.30%0.19% 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).
Why Brent’s break above $97 is failing to lift Dollar, and why Japan, not oil, is setting today’s currency direction What’s happening: USD/JPY broke decisively through 157.99 to around 156, bringing the 155 area back into range, as Yen’s rally gathers fresh momentum from speculation that Japan’s roughly $2 trillion GPIF could raise its domestic bond allocation, on top of an already-hawkish BoJ repricing. At the same time, Brent climbed to an intraday high around $97.62, its strongest level in six weeks, as the US-Iran conflict shows signs of extending well beyond 2026.
Why it matters: Brent above $97 and a conflict that could extend into 2027 would normally form a potent Dollar-supportive combination through inflation and rates. Instead, Dollar is broadly weaker because Japan has taken control of the FX narrative. Oil is still setting global inflation risk, but today, Japan is setting currency direction.
Yen Takes Over as GPIF Speculation Adds to BoJ Repricing Yen extended its powerful rally on Thursday, sending USD/JPY decisively through 157.99 to around 156 and putting the 155 area back within reach. Latest leg appears to have received fresh fuel from speculation surrounding Japan’s roughly $2 trillion Government Pension Investment Fund. GPIF held an unusual management committee meeting on August 21, its first August meeting since 2019, and revisited discussion around its basic portfolio only five months after a March assessment concluded that a review was unnecessary.
Market interest centers on whether GPIF could eventually raise its strategic allocation to domestic assets, particularly government bonds. Domestic bonds currently carry a 25% target allocation, alongside 25% each for domestic equities, foreign bonds and foreign equities. The timing is significant because Japan’s 10-year government bond yield has climbed roughly one percentage point since March and briefly reached 3.015% this week, highest since 1996. Higher domestic yields are already changing relative attractiveness of Japanese assets, with Japanese investors reducing overseas bond exposure this year. A larger GPIF domestic allocation would reinforce that repatriation theme and potentially relieve some upward pressure on JGB yields.
That speculation is adding to a much broader Yen-positive repricing already underway. BoJ officials have become increasingly explicit about further tightening, with markets now focused not only on a possible September hike but on a faster cycle over coming year. Japan’s top currency diplomat Atsushi Mimura added another layer of caution Thursday, saying he was “neither satisfied nor reassured” by recent Yen developments and that authorities remained on “a state of heightened alert.” He declined to confirm whether officials had conducted a rate check. Traders nevertheless continue to attribute Yen strength primarily to BoJ tightening expectations rather than fresh intervention.
The 155 level is critical. USD/JPY is approaching the same territory reached after July’s record intervention campaign, which cost Japan roughly $96.5bn and included rare US participation. The 155.22 area marks July’s post-intervention low, while 155.01 provides nearby technical support. This time, however, pair is approaching those levels organically rather than through any confirmed official Yen buying.
Why the 155 Level Matters Japan’s 10-year JGB yield: briefly reached 3.015% this week, highest since 1996. July’s record intervention: cost roughly $96.5bn, included rare US participation. 155.22: July’s post-intervention low. 155.01: nearby technical support. Mimura: “neither satisfied nor reassured,” authorities on “a state of heightened alert.” July’s Intervention-Driven Move vs. Today’s Organic Approach to 155 July’s Intervention Today How USD/JPY reached this territory Record intervention, cost roughly $96.5bn, included rare US participation Approaching organically, no confirmed official Yen buying Key levels 155.22 (post-intervention low), 155.01 (support) Same levels now back within reach Attributed driver Direct official Yen buying BoJ tightening expectations and GPIF speculation Dollar Weakens Even as Oil Sends a Normally Bullish Signal Yen’s surge has become dominant force in FX, with Dollar lower against all major counterparts despite a backdrop that would normally be considerably more supportive. In Dollar index specifically, Yen’s sizeable weighting means its appreciation directly pulls index lower. More broadly, modest easing in Treasury yields has allowed Dollar weakness to spread across EUR, GBP and CHF as traders focus on Japanese policy repricing rather than extending this week’s US rates trade.
That creates today’s most counterintuitive cross-asset signal. Brent has broken above $97 to fresh six-week highs as US-Iran conflict intensifies, yet Dollar is falling. Earlier this week, higher oil transmitted relatively cleanly through inflation fears into higher Treasury yields and firmer expectations for Fed tightening. That channel has not disappeared, but it is being overshadowed in FX by Yen’s much larger independent move and the pause in US yields.
Wednesday’s softer ADP report, with private payrolls rising only 38K, contributed to that pause in further hawkish repricing, but it is not the principal driver of Thursday’s Dollar move. Initial jobless claims subsequently matched expectations at 206K, offering little additional direction. Markets still attach substantial probability to September Fed hike, leaving Friday’s NFP as decisive test. For now, more revealing question is not simply why Dollar is weaker, but why Brent above $97 has failed to make Dollar stronger. Answer lies in Japan: Yen and BoJ repricing have become larger currency-market forces today.
Oil Story Shifts From Escalation to Duration Brent meanwhile climbed to an intraday high around $97.62, extending this week’s rally and reaching its strongest level in six weeks. But narrative is beginning to shift. Earlier phases of renewed fighting were dominated by immediate questions over each US strike, Iranian retaliation and potential disruption to Strait of Hormuz. Markets are now considering a more difficult possibility: conflict and impaired regional energy flows could persist into 2027. Recent market commentary has explicitly moved toward that longer time horizon, with Capital Economics expecting restoration of Middle East energy flows to be delayed until early next year and forecasting Brent around $100 by end-2026.
That matters more for inflation than another isolated military exchange. A conflict measured in additional months rather than days would prolong pressure on shipping, inventories and refined-product markets, increasing chances that energy inflation becomes persistent enough to influence central-bank decisions. Iranian retaliation has also widened geographically, while US officials continue to signal that military pressure could intensify again even as Washington tries to limit escalation ahead of November elections. Reuters reported that administration officials see possibility of more intense attacks after midterms, underscoring absence of a clear near-term exit from a war now in its seventh month.
The closing contradiction is therefore striking. Brent above $97 and rising concern that US-Iran conflict could extend into 2027 would normally form a potent Dollar-supportive combination through inflation and rates. Instead, Dollar is broadly weaker because Japan has taken control of FX narrative. Oil is still setting global inflation risk, but today, Japan is setting currency direction.
Related Coverage Yen & Precious Metals Deep Dives Read why Silver’s rebound from 63.27 still depends on holding 62.54-62.92 to keep its five-wave recovery from 54.77 alive ahead of Friday’s NFP: Silver’s Correction Has Reached Its Line in the Sand — What Happens Next?. See why Friday’s NFP creates an asymmetric setup for USD/JPY, with weak data opening a clearer path toward 155 than strong data does above 160: USD/JPY Tumbles Under the Shadow of Intervention, Faces Asymmetric NFP Test. US Data Deep Dive Read why jobless claims matching expectations at 206K still leaves Friday’s NFP as the clearer labor-market signal: US Initial Jobless Claims Rise from 204K to 206K. Global Inflation Deep Dives See why Eurozone PPI’s swing to +1.6% m/m was driven largely by a 5.6% jump in energy prices, with annual producer inflation accelerating to 5.8%: Eurozone PPI Surges 1.6% M/M as Energy Drives Renewed Producer Inflation (full Eurostat release). Read why Swiss CPI’s jump to 0.8% was driven mostly by energy and imported prices, with core inflation holding at 0.4%: Swiss CPI Jumps to 0.8%, but Energy Drives Much of Inflation Surprise. Global PMI Round-Up See why UK services hitting a four-month high still came with employment falling for a 23rd straight month: UK PMI Services Hits Four-Month High as Cost Pressures Reaccelerate. Read why Eurozone’s composite PMI holding at an eight-month high alongside stalled disinflation is strengthening the case for ECB tightening: Eurozone PMI Composite Holds Firm as Sticky Prices Strengthen ECB Tightening Case. See why Japan’s record composite selling-price inflation is adding to the case for another BoJ hike even as growth accelerates: Japan PMI Growth Accelerates as Record Selling Prices Strengthen BoJ Hike Case. Read why Australian services confidence hit a six-month high even as fuel and wage costs kept input inflation elevated: Australia PMI Services Holds Firm at 53.2 as Confidence Rises but Costs Stay High. See why China’s services and composite PMI gains reflect stronger domestic demand and sustained hiring: China RatingDog PMIs Strengthen as Services and Employment Gain Momentum. Frequently Asked Questions Q: Why is Dollar falling even though oil just broke above $97? A: Because Yen’s much larger, independent move is overwhelming the usual oil-to-Dollar transmission channel. Higher oil normally supports Dollar through inflation fears feeding into higher Treasury yields and firmer Fed tightening expectations, and that channel hasn’t disappeared. But Yen’s sizeable weighting in the Dollar index, combined with a pause in US yields, means Japanese policy repricing is currently the bigger force in FX. The real question today isn’t why Dollar is weaker, it’s why Brent above $97 hasn’t made it stronger, and the answer is Japan.
Q: What is GPIF and why does speculation about it matter for Yen? A: GPIF is Japan’s roughly $2 trillion Government Pension Investment Fund. It held an unusual management committee meeting on August 21, its first August meeting since 2019, revisiting its basic portfolio just five months after concluding in March that no review was needed. Markets are watching whether GPIF could raise its 25% target allocation to domestic bonds. A larger domestic allocation would reinforce the repatriation trend already underway as Japanese investors reduce overseas bond exposure, adding further support to Yen and potentially easing some upward pressure on JGB yields.
Q: How is this approach to 155 different from July’s intervention? A: July’s move to the 155 area came from a record, roughly $96.5bn intervention that included rare US participation. This time, USD/JPY is approaching the same 155.22 and 155.01 levels organically, with no confirmed official Yen buying. Traders are attributing the move to BoJ tightening expectations and GPIF speculation rather than direct intervention, even though currency diplomat Mimura says authorities remain on “a state of heightened alert.”
Key Takeaways USD/JPY broke through 157.99 to around 156: Bringing the 155 area back into range for the first time since July’s intervention. GPIF speculation is adding fresh fuel to Yen’s rally: Markets are watching whether Japan’s roughly $2 trillion pension fund raises its 25% domestic bond allocation after an unusual August 21 committee meeting. Japan’s 10-year JGB yield briefly hit 3.015% this week: The highest since 1996, up roughly one percentage point since March. Currency diplomat Mimura kept intervention rhetoric alive: Saying he’s “neither satisfied nor reassured,” though traders still attribute Yen strength to BoJ tightening expectations, not intervention. Brent climbed to a six-week high around $97.62: As the oil narrative shifts from immediate escalation questions to concern the conflict could extend into 2027. Reuters reported officials see possible intensified attacks after the US midterms: Underscoring no clear near-term exit from a conflict now in its seventh month. Dollar is broadly weaker despite a combination that would normally support it: Brent above $97 and extended conflict risk usually mean higher inflation and rates support for Dollar, but Japan has taken control of the FX narrative instead. Unlike July, today’s approach to 155 is organic: No confirmed official Yen buying, unlike July’s roughly $96.5bn intervention with rare US participation. What to Watch Next Friday’s US nonfarm payrolls report is the decisive near-term test for Dollar, following a softer ADP print and in-line jobless claims. Watch whether USD/JPY breaks below 155, further signals on GPIF’s portfolio review, and whether Brent extends toward $100 as Capital Economics and others push their Middle East normalization timelines further into 2027.
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USD/JPY has tumbled to 156.04, but JPMorgan's 164 year-end target survives because the pair remains inside its 155-165 central range. The US Dollar to Japanese Yen (USD/JPY) exchange rate has slumped to around 156.04 after a sudden Yen surge wiped more than four Yen from the pair in less than 48 hours.
The latest USD/JPY rate was down 1.81% on the day and 2.56% across 48 hours, trading only fractionally above the period's 156.00 low.
USD/JPY 48-Hour Price Chart
Image: USD/JPY 48h chart The fall looks severe on the short-term chart, but USD/JPY has not yet broken the range behind JPMorgan's year-end forecast.
JPMorgan expects the BoJ to raise rates roughly once per quarter, while assuming no substantial change in market expectations for Federal Reserve policy.
"If the BOJ continues to hike at roughly a quarterly pace while Fed hike expectations do not change materially, we think USD/JPY is likely to remain within the 155–165 range for the time being. This is our base case, and we maintain our USD/JPY targets of 160 at end-September and 164 at end-December."
At 156.04, USD/JPY is 1.04 Yen above the bottom of that range, while reaching 160 and 164 would require rebounds of approximately 2.5% and 5.1%, respectively.
JPMorgan said the OIS-implied probability of a September BoJ increase had already risen from 28% before the end-July intervention to 92%.
The latest surge therefore brings the market closer to the policy assumptions behind its central scenario rather than directly invalidating the 164 target.
USD/JPY Three-Month Chart
Image: USD to JPY rate three-month graph The three-month chart places USD/JPY much closer to its 155.27 low than July's 163.98 peak, with the pair also trading below its 20-day and 50-day moving averages.
Fed Pause Scenario Points to 157 JPMorgan's alternative scenario, in which the Fed pauses its rate increases, produces a lower USD/JPY range of 153-163.
"Based on the correlation between the 1y1y spread and USD/JPY observed at that time, the fair value of USD/JPY under a Fed pause scenario is around 157."
The current rate is already slightly below that estimate, although it remains inside the scenario range and near the 156-160 band discussed in our earlier Japanese Yen forecast.
JPMorgan accepts that an overshoot could temporarily push USD/JPY below 155, but adds: "In this scenario, however, we view the likelihood of a sharp yen appreciation—such as a move below 150—as low."
Near-Term US$/JPY Forecast: What Would Break the Range? A sustained move below 155 would require a stronger catalyst, with JPMorgan identifying Fed rate-cut expectations, an accelerated BoJ cycle that damages Japanese equities, a GPIF portfolio change or heavier official Yen buying.
Slower-than-priced BoJ tightening, stronger Fed hike expectations or renewed Japanese fiscal concerns could instead drive USD/JPY above 165.
US payrolls and the September Fed and BoJ decisions will now determine whether 156 becomes the starting point for a rebound or the first step towards JPMorgan's lower 153 boundary.
USD/INR has broken below Goldman's 95-97 range as RBI-linked inflows lift the Rupee, although importer demand and expensive oil threaten the rally. The US Dollar to Indian Rupee (USD/INR) exchange rate has rebounded to around 94.54 after the Rupee briefly drove the pair down to 94.24.
That move carried USD/INR decisively below the 95–97 range expected by Goldman Sachs.
The Indian Rupee has strengthened by almost 1% over the past week, although the US Dollar to Rupee exchange rate remains more than 5% higher since the beginning of 2026.
Near-Term: Goldman Expects USD/INR to Stay Between 95 and 97 Goldman expects Asian currencies to make further progress against the Dollar, but it sees important differences within the region.
“Year-to-date Asian currency performance can be neatly explained by exposure to tech exports. The KRW, SGD, MYR, and TWD have outperformed the less tech-exposed, high-yielding currencies in Asia: INR, IDR, and PHP. Going forward, we expect USD/Asia to grind lower.”
The bank favours currencies with greater exposure to the technology cycle.
“Tech-related currencies such as KRW, TWD, and MYR should outperform others.”
Its Indian Rupee view is considerably more restrained.
“Among the high-yielding currencies, we expect USDINR to remain range-bound between 95 and 97 now that the catalyst for the rally, namely FCNR, is behind us.”
The subsequent decline to 94.24 challenges both the bottom of that range and the assumption that the relevant inflows had already run their course.
The latest Rupee strength has been supported by flows associated with the Reserve Bank of India's temporary measures for attracting foreign-currency funding.
According to the RBI's provisional figures, the facilities generated total inflows of $136.38 billion by 31 August.
Foreign Currency Non-Resident deposits accounted for $127.23 billion of that total.
The FCNR window closed at the end of August, supporting Goldman's argument that this particular source of demand should now fade.
Even so, the scale and timing of the inflows were sufficient to drive USD/INR below 95 before the market could fully absorb them.
The move also carried the pair close to the 94 level highlighted in an earlier Indian Rupee forecast.
USD/INR Outlook: Oil Prices and Importer Demand Could Restore the Range The Indian Rupee's break below 95 may prove difficult to sustain if oil prices remain around $95 a barrel.
India imports most of its crude requirements, so expensive energy increases demand for Dollars and worsens the country's external balance.
Importer buying has already emerged near the recent USD/INR lows, helping the pair recover from 94.24 to approximately 94.54.
A return above 95 would bring the market back inside Goldman's projected range without requiring a broader reversal in the Rupee's trend.
Continued trading below 95, particularly after the FCNR window has closed, would present a more serious challenge to the forecast.
Investors will now watch crude-oil prices, importer Dollar demand, RBI liquidity operations and any further foreign-currency inflows.
US yields, payroll figures and Federal Reserve expectations will determine whether the Dollar regains enough support to restore Goldman's 95–97 range.
EUR/USD se vrátil na 1,1610 a UniCredit čeká, že střet měnové a fiskální politiky bude ve středním horizontu dolar brzdit. Krátkodobě ho ale dál podporují sázky na další zvýšení sazeb Fedu.
The EUR/USD rate has rebounded to 1.1610, while UniCredit sees a Fed-Treasury policy clash becoming a medium-term Dollar headwind. The Euro to Dollar (EUR/USD) exchange rate has climbed back to around 1.1610 after recovering from a 48-hour low of 1.1567.
The Euro is up roughly 0.2% on the day, although the prospect of another Federal Reserve rate hike continues to offer the Dollar near-term support.
Markets are assigning around a two-thirds probability to a September increase following Fed Chair Kevin Warsh's hawkish Jackson Hole speech.
UniCredit accepts that the repricing has helped the US currency, but strategist Roberto Mialich sees a more difficult medium-term picture.
Image: EUR/USD 48hr chart The 48-hour chart shows EUR/USD recovering steadily from below 1.1570, with the pair pushing towards the top of its recent range around 1.1610.
Fed Hike Expectations Support the Dollar UniCredit said: “The USD’s reaction has been exactly as expected, as Warsh’s speech has forced investors to reprice expectations regarding US monetary tightening – correcting the excessive optimism regarding limited rate-hike prospects following a series of weak US macro-data releases earlier this month.”
A rate increase by December was already fully priced when UniCredit published its assessment.
However, Mialich doubts that investors will price a much steeper tightening path without stronger US data or a further change in the Fed's language.
“That said, forward curves are unlikely to price in more aggressive monetary moves unless US data surprise sharply to the upside or the Fed signals an even more hawkish stance regarding the timing and magnitude of its tightening strategy.”
That gives the Dollar room to hold firm in the short term, but UniCredit's argument stretches beyond the next Fed meeting.
Treasury and Fed Objectives Could Collide The US Treasury is trying to contain borrowing costs as the budget deficit approaches 6.3% of GDP and public debt exceeds $40 trillion.
Its planned buyback operation will run from 9 September to 4 November, with purchases of longer-dated Treasuries financed through additional short-term bill issuance.
That strategy is intended to flatten the yield curve and reduce pressure at the long end.
A hawkish Fed would be pulling in the opposite direction by raising short-term rates and tightening financial conditions.
“Although the USD has gained from the repricing of overly dovish rate expectations, a collision between fiscal and monetary policy could emerge as a medium-term drag on the currency.”
Could “Sell America” Return? UniCredit argues that conflicting policy objectives could revive concerns about US fiscal credibility and encourage investors to reduce their Dollar exposure.
“However, the risk of a collision course between US fiscal and monetary policies may increase significantly if they were to pursue opposing goals on interest rates. This could act as a headwind for the USD in the medium term – regardless of signs of potential escalation in the Middle East – by further fuelling “sell America” trades and the de-dollarization process.”
The beneficiaries could include the Euro, precious metals, real estate and selected cryptocurrencies.
For EUR/USD, UniCredit offers a direction rather than a formal price target.
Its view also fits the longer-term bias in our latest bank forecast survey, which sees the pair rising towards 1.18 over the coming quarters.
The next tests will be US payroll and inflation data, the September Fed decision and the Treasury buyback beginning on 9 September.
Markets will also watch the shape of the US yield curve and whether fiscal concerns start to outweigh the Dollar's near-term interest-rate advantage.
USD/JPY klesl pod 200denní klouzavý průměr a za poslední dva dny oslabil o 0,91 % a 1,35 %. Tím se zhoršil jeho býčí trend a roste riziko dalšího poklesu.
Key takeaways JPY strength accelerates: USD/JPY fell 0.91% on 2 September and extended its decline by another 1.35% on 3 September, a move comparable with the sharp decline seen around the July US-Japan FX intervention.Fundamentals are turning more yen-supportive: US Treasury Secretary Scott Bessent’s support for decisive Japanese action, BoJ policymaker Hajime Takata’s discussion of larger or consecutive rate hikes, and renewed intervention risk have strengthened the bullish JPY narrative.200-day MA breakdown damages USD/JPY’s uptrend: The pair has broken below its 200-day MA and erased its gains since the 3 August low. Unless 158.04/50 is reclaimed, downside risk remains towards 155.03 and 153.84. In the past 40 hours, the Japanese yen has strengthened dramatically against the US dollar, a trend that began on Wednesday, 2 September 2026, when USD/JPY declined by 0.91%.
In follow-through today (Wednesday, 3 September 2026), USD/JPY has extended its losses by a further 1.35% at the time of writing (see Fig. 1).
The current decline of the USD/JPY is almost on par with the daily loss of 1.32% recorded on 31 July 2026, where Japan and the US confirmed their first joint FX intervention in around 28 years following the Japanese government’s sole intervention a day earlier on 30 July 2026, in bid to stall the steep pace of JPY weakening where USD/JPY soared to the 164 handle on 23 July 2026, its highest level in about 40 years.
Fig. 1: Daily rate of change (%) of USD/JPY with key events as of 3 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. Today’s swift decline in USD/JPY smells like FX intervention, with no clear catalyst in relevant economic data releases.
However, so far, there are no official press releases from Japan or the US confirming any form of intervention, and no “according to sources” reporting from media outlets.
What we know so far… Here are the three fundamental developments to reinforce the current bout of JPY strength:
US Treasury Secretary Scott Bessent expressed support for decisive Japanese action to address yen weakness to Bank of Japan (BoJ) Governor Ueda during the G-20 finance and central bank leaders meeting last weekend, according to a readout released by the US Treasury Department on Tuesday, 1 September 2026. This reduces the political constraint on further BoJ tightening and suggests Washington is increasingly comfortable with a stronger yen.BOJ board member Hajime Takata said policymakers should consider options beyond the conventional 25-basis-point rate increase, including larger or consecutive hikes, said in a news conference on Wednesday, 2 September 2026. While Takata remains one of the BoJ’s most hawkish members, his comments increase the risk that the central bank accelerates its tightening cycle.The speed of the yen’s appreciation placed traders on high alert for another round of intervention. Although there was no immediate confirmation of official yen buying, the threat of action creates an increasingly asymmetric risk around the psychologically important 160.00 region.Let’s now unpack the short-term trajectory (1 to 3 days) of the USD/JPY from a technical analysis perspective.
Major uptrend phase of USD/JPY has been damaged, bounce before a new drop Fig. 2: USD/JPY medium-term trend as of 3 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. Fig. 3: USD/JPY minor trend as of 3 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. Today’s swift bearish reaction in USD/JPY comes right after the retest of a key pullback resistance level at around 160.30, a former major ascending trendline support from the 22 April 2025 low (see Fig. 2).
Today’s decline in USD/JPY has sent it below the key 200-day moving average and erased all its gains from the prior one month, since the 3 August 2026 low of 155.23 (see Fig. 2).
The current steep intraday decline in USD/JPY has pushed the hourly RSI momentum indicator into oversold territory, but there is no clear bullish divergence at this juncture (see Fig. 3).
Hence, USD/JPY may now form a potential minor dead cat bounce at the near-term support of 156.32, towards the near-term resistance of 157.30.
Watch the 158.04/50 key short-term pivotal resistance (also the 200-day moving average). If this zone is not surpassed to the upside, the odds are skewed towards a new potential bearish impulsive down-move sequence next, which could expose the next intermediate supports at 155.03 and 153.84 in the first step (see Fig. 3).
On the other hand, a clearance and an hourly close above 158.50 would invalidate the bearish scenario, triggering a squeeze up to retest the next intermediate resistance at 159.18/54 (20-day moving average) (see Fig. 3).
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.
Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.
In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.
Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.
In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.
EUR/JPY ve čtvrtek klesl o 1,3 % a za dva dny už odepsal přes 2 %. Japonský jen posílil kvůli jestřábím komentářům o rychlejším zvyšování sazeb Bank of Japan (BoJ).
EUR/JPY extends steep fall into second consecutive day (down 1.3% durian Asian / European trading on Thursday), losing so far over 2%.
Fresh strength of Japanese yen was sparked by hawkish narrative of Japanese officials which points to faster pace of BOJ rate hikes against growing inflationary pressures, while analysts sidelined scenario about another intervention, after yen lost the most of gains from late July intervention.
Sharp drop that accelerated further on Thursday, has so far retraced the largest part of 179.36/186.02 recovery leg (over 61.8%), with target at 180.93 (Fibo 76.4%) being in focus.
Technical studies on daily chart turned to full bearish configuration, but oversold conditions suggest that bears may face increased headwinds.
Strong support provided by the top of ascending weekly Ichimoku cloud (181.70, which has already contained attack on early Aug) are expected to hold bears again for consolidation / limited correction.
Two large bearish daily candles weigh heavily on near-term action and contribute to scenario of positioning for fresh push lower, targeting 180 (psychological) and 179.36 Au 3 spike low).
Upticks should be ideally capped under 182.70 zone (broken Fibo 50%) to keep bears in play.
USD/JPY klesl z 160,38 pod 158, trh ale spíš zaceňuje obavy z další intervence než potvrzený zásah. Před pátečním NFP je obraz asymetrický: slabá data otevírají cestu k 155, silná mohou měnový pár zvednout zpět k 160.
TL;DR: USD/JPY has tumbled from 160.38 through 158, not because of actual intervention but because fear of a repeat is shaping trader psychology near 160 — a fear reinforced by rapidly repricing BoJ tightening expectations, setting up an asymmetric test for Friday’s NFP.
Not Intervention, but July Changed the Risk Calculus USD/JPY has fallen sharply from 160.38 yesterday, and the selloff extends through 158 today. But latest move bears little resemblance to confirmed intervention seen at end of July. That operation drove pair almost vertically from 163.97 to 155.22, a drop of roughly 8.75 Yen, or more than 5%, as Japan intervened with US participation. By comparison, latest decline has been much smaller, more orderly and spread over hours rather than minutes.
There is therefore little in price action itself to suggest authorities have stepped back into market. But July intervention still matters because it changed how traders behave when USD/JPY approaches 160. With pair again testing familiar territory ahead of another US payroll report, market is facing a pre-NFP repeat in positioning psychology, even without a repeat of official action.
That leaves an important distinction: intervention is not driving USD/JPY lower directly, but fear of intervention is shaping risk-reward around 160. Traders carrying short-Yen positions now have recent evidence that official action can produce a sudden multi-Yen reversal. That makes position reduction more likely before authorities actually intervene.
Intervention Fear Explains Timing; BoJ Repricing Explains Durability Intervention anxiety alone would make latest move vulnerable to reversal. What gives Yen strength a more durable foundation is rapid repricing of BoJ tightening path.
Markets are no longer simply debating whether BoJ raises rates at September 17–18 meeting. OIS pricing points to roughly 96.5bp of cumulative tightening over the coming 12 months, close to four quarter-point hikes. September itself is priced at around an 84% probability, but more important development is how much additional tightening is being built beyond that meeting.
BoJ board member Hajime Takata reinforced that shift in his Wednesday speech in Sapporo. He described “2026 [as] a regime change” in monetary policy, argued rate hikes should become “nimble and data-dependent,” and said BoJ should not be “bound by particular intervals or ranges anticipated in the markets.”
That directly challenges old assumption of roughly semiannual tightening. If BoJ is moving from two carefully spaced hikes a year toward a genuinely data-dependent cycle, Yen becomes less attractive as a cheap and predictable funding currency.
Washington Is Reinforcing, Not Creating, the BoJ Story US pressure adds another layer. Treasury Secretary Scott Bessent has repeatedly encouraged Japan to normalize policy, while reports following his G20 meetings with Japanese officials said he argued that Japan’s next step should be higher rates.
That matters because Washington and Tokyo increasingly appear aligned on the direction of adjustment: less Yen weakness and tighter Japanese monetary conditions. It also reduces market confidence that renewed USD/JPY gains well through 160 would be passively tolerated.
Still, BoJ tightening case should not be reduced to US pressure. Takata’s argument is domestic: Japan’s inflation regime has changed, price stability target is close to being achieved, and policy should increasingly guard against an inflation overshoot. Bessent amplifies that backdrop; he does not create it.
The distinction reinforces central thesis. Intervention fear explains why traders are nervous near 160. BoJ repricing explains why buying back Yen can continue even without intervention.
ActionForex’s Technical View on USD/JPY Technical picture has deteriorated quickly. USD/JPY’s decline from 160.38 has now extended through 157.99 support, confirming that the rebound from 155.22 has completed as a three-wave corrective move. Immediate focus is now on 61.8% retracement of 155.22 to 160.38 at 157.19.
Firm break of 157.19 will pave the way toward the 154.76–155.01 medium-term support zone, which includes the 38.2% retracement of 139.87 to 163.97 at 154.76. The recent 155.22 intervention low sits just above that area.
Momentum is already stretched. 4H RSI has dropped into deeply oversold territory around low-20s, while MACD has turned sharply lower. That creates room for a near-term bounce, but an oversold rebound would not repair technical damage by itself. On upside, 159.00 is first minor resistance. A break there would stabilize near-term picture and reopen 160. But that is where technical recovery runs into a much less measurable obstacle: intervention risk.
NFP Makes the Setup Asymmetric Friday’s US payroll report is therefore unusually important.
Current Fed pricing still favors another September hike, but softer ADP employment has reminded markets that labor data remain one of clearest ways to challenge hawkish path. A weak NFP would attack USD/JPY through US side of rate differential: Treasury yields could fall, Fed hike expectations could ease and the break of 157.99 could extend toward 157.19.
That creates a relatively clean downside sequence: 157.19 → 154.76–155.22 support zone
There is no equivalent policy barrier preventing Yen from strengthening through those levels.
A strong NFP creates a different setup. It would likely support US yields, and allow USD/JPY to recover through 159.00 toward 160. But a move materially above 160 must overcome two additional hurdles that did not exist in same form earlier this year: fresh intervention memory and a much more aggressive BoJ tightening path.
That does not make 160 an official ceiling. It does mean upside becomes progressively harder to price with conviction.
Strong Payrolls Need to Do More Than Save September This is where NFP asymmetry becomes clearest.
A merely solid jobs report may be enough to preserve September Fed hike expectations. But that may only produce another test of 160.
For USD/JPY to establish a more durable move higher, NFP probably needs to push markets toward a more aggressive Fed path beyond September, not just validate one hike already substantially priced. In other words, US rates would need to become more hawkish faster than Japanese rates are being repriced.
By contrast, a weak NFP does not face that higher threshold. It would simultaneously reduce US rate support, reinforce Fed-BoJ convergence and encourage more short-Yen covering.
That leaves USD/JPY with an asymmetric pre-NFP setup. Weak jobs have a relatively unobstructed route toward 155 levels. Strong jobs can drive a rebound, but a convincing break above 160 must overcome both intervention risk and a BoJ tightening cycle that markets increasingly expect to accelerate.
Key Takeaways USD/JPY’s fall from 160.38 toward 158 is far more orderly than July’s confirmed intervention, suggesting fear of a repeat, not actual official action, is driving the move. OIS pricing points to roughly 96.5bp of cumulative BoJ tightening over the next 12 months, with September priced at an 84% probability but more tightening expected beyond it. BoJ’s Takata described 2026 as a “regime change” toward nimble, data-dependent hikes, directly challenging the old assumption of roughly semiannual BoJ moves. A weak NFP has a relatively clear path toward the 154.76-155.22 support zone, while a strong NFP faces two extra hurdles above 160: intervention memory and accelerating BoJ tightening. 157.19 is the key near-term level; a break opens the 154.76-155.01 zone, while 159.00 is the first resistance on any oversold bounce.
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/USD se drží poblíž 0,7165, ale rostoucí šance na zvýšení sazeb RBA i Fedu už tento měsíc tlačí pár pod tlak. Trh navíc počítá se silnými australskými daty a vyššími cenami ropy. Pár se přitom pohybuje jen mírně pod srpnovým maximem 0,7207.
Sell AUD/USD. Higher odds of both RBA and Fed hikes push the market toward tighter USD policy and less room for AUD to rally; strong Aussie data is already “priced,” while the article flags elevated inflation and renewed oil/energy pressure that can keep both central banks hawkish. Technicals also point to a bearish reversal (rising wedge convergence, PPO bearish crossover, RSI rolling over). Target 0.700 support.
Key Risk: A sharp risk-off move that weakens the USD (or a surprise dovish Fed/RBA shift) that drives AUD/USD back above 0.7207.
Brent-linked AUD
Sell AUD exposure via AUD/JPY (or AUD futures). The news ties the hawkish rate repricing to higher oil after US-Iran activity; that supports global growth but also keeps inflation sticky, which tends to keep JPY relatively supported versus high-beta AUD when rates are uncertain. With AUD/USD set up to break lower, AUD/JPY should follow on the same rate-and-risk repricing.
Key Risk: Oil spikes further and triggers a broad commodity/risk rally that lifts AUD/JPY despite the wedge/oscillator bearish setup.
The Australian dollar held firm today, September 3rd, as investors adjusted their RBA and Federal Reserve expectations for the year. The AUD/USD pair was trading at 0.7165, a few points below the August high of 0.7207.
Traders are bracing for interest rate hikes from the Federal Reserve and the Reserve Bank of Australia (RBA) happening as soon as this month.
Polymarket gives the odds of RBA’s rate hike happening in September rose to 67%. These odds jumped after the US and Iran resumed their kinetic activity, which led to higher oil prices.
Australia has also published strong macro numbers this week. An S&P Global report showed that the services PMI came in at 53.2 in August, higher than the expected 52.9. A PMI reading of 50 and above is usually a sign that a sector is growing. The composite PMI came in at 52.7, also higher than the expected 52.50.
Another report released on Wednesday showed that the Australian economy expanded by 2.1% in the second quarter, higher than the expected 1.8%. It grew by 0.4% in Q2 after growing by 0.3% in Q1 on a QoQ basis.
This growth happened even as the Reserve Bank of Australia (RBA) became the most hawkish central banks this year. It has already delivered three rate hikes this year, with officials leaving the door open for more hikes.
A key concern is that Australia’s inflation has remained at an elevated level in the past few months. This trend will likely continue now that the US and Iran have restarted their kinetic activity, leading to higher energy prices. Brent, the global benchmark, rose to $95.68, while the West Texas Intermediate (WTI) rose to $91.
The same situation is happening in the US, where odds that the Fed will hike rates this month have jumped to 55% on Polymarket. These odds soared after Kevin Warsh delivered a highly hawkish statement at the Jackson Hole Symposium.
In it, he hinted that the bank was concerned about the state of inflation, which has remained above the 2% target in the past five years.
Focus now shifts to the upcoming US nonfarm payrolls (NFP) report that will provide color on the labor market. Economists expect the data to show that the economy created over 80k jobs in August this year.
AUDUSD chart | Source: TradingView
The daily chart shows that the AUD/USD pair may be on the verge of a bearish reversal in the coming days. For one, it has formed a rising wedge pattern whose two lines are about to converge.
Also, the two lines of the Percentage Price Oscillator (PPO) have made a bearish crossover, while the Relative Strength Index is pointing downwards.
Therefore, the most likely scenario is where the AUD/USD pair falls, potentially to the key support of 0.700.
USD/JPY za poslední dvě obchodní seance klesl téměř o 1 % a jen posiluje díky rostoucím očekáváním, že BoJ zrychlí tempo zvyšování sazeb. Trh nyní dává více než 80% šanci na alespoň 0,25% zvýšení na příštím zasedání.
A significant shift has begun to emerge around the strength of the Japanese yen in the short term. Over the last two trading sessions, USD/JPY has declined by nearly 1.00%, reflecting a notable recovery in the Japanese currency. For now, this selling pressure is primarily being driven by growing expectations that the Bank of Japan could accelerate the pace of interest rate hikes. As long as these expectations continue gaining traction in the market, it is possible that downside pressure on USD/JPY remains relevant during the coming sessions.
Is the Bank of Japan Turning More Aggressive?
Expectations surrounding the Bank of Japan have changed considerably in recent weeks. This shift has been largely driven by increasing expectations of a rate hike at the September meeting following recent comments from Kazuo Ueda, who emphasized that inflation is once again moving closer to the bank's 2.00% target.
In addition, several policymakers have suggested that not only could a rate hike be justified in September, but that further adjustments may also be necessary in the months ahead. As a result, markets are currently assigning more than an 80% probability to at least a 0.25% rate increase at the next meeting.
This development comes as a relative surprise because Japan still maintains one of the lowest interest rates among major central banks, currently around 1.00%. Until recently, the dominant view was that the Bank of Japan would remain focused on maintaining monetary stability. However, the latest narrative suggests the institution could become one of the more aggressive central banks over the coming months.
Over the longer term, this shift could also improve the relative attractiveness of yen-denominated assets compared with international alternatives, a dynamic that has been largely absent during the years of ultra-low interest rates in Japan.
This change is already being reflected in the Japanese bond market. 10-year government bond yields have shown a consistent recovery following recent comments and now trade above the 3.00% level, helping strengthen the appeal of yen-denominated investments.
However, it is important to note that this is occurring alongside rising U.S. Treasury yields, which have already climbed above 4.8%. As a result, while Japanese bonds are becoming more attractive, U.S. yields continue to provide a favorable differential for the dollar that could limit part of the yen's recent advance.
Source: TradingEconomics
It is also noteworthy that the yen's recovery is taking place despite the relative stability of the U.S. dollar. The DXY Index, which measures the dollar's performance against its major peers, continues to trade near the 100-point area without showing any meaningful loss of momentum.
This suggests that markets are placing significant importance on recent comments from the Bank of Japan and that, for now, expectations of a more restrictive monetary policy in Japan are having a greater impact than the stability currently observed in the dollar. Nevertheless, it remains important to consider that a stronger recovery in the U.S. currency could continue to limit part of the yen's recent gains.
Source: TradingEconomics
Taking all of this into account, it appears that the Bank of Japan's shift in tone has been enough to support a recovery in the Japanese currency over the short term. This dynamic could continue to favor downside pressure on USD/JPY as long as the dollar and U.S. bond yields do not accelerate their recovery more aggressively.
At the same time, it is important to recognize that a more hawkish stance from the Federal Reserve could once again increase the appeal of dollar-denominated assets. Under that scenario, part of the yen's recent strength could begin to moderate and the market could return to a more balanced phase around USD/JPY.
USD/JPY Technical Outlook
Source: StoneX, Tradingview
Lack of Direction Remains Relevant: After USD/JPY moved away from the major bullish trendline that dominated much of the price action over recent months, the market entered a more balanced phase. Despite the recent strengthening of the yen, a sufficiently strong directional structure has yet to emerge on the chart. Unless price manages to break through important technical levels, this lack of direction may continue to dominate and could even open the door to a more defined period of range-bound trading.
RSI: The RSI remains slightly below the neutral 50 level. However, this behavior does not yet indicate aggressive selling pressure. Instead, it continues to reflect a relatively balanced environment between buyers and sellers over the last fourteen sessions. This reading supports the possibility that a period of indecision remains relevant for price action.
MACD: A similar picture can be observed in the MACD, where the histogram continues to fluctuate around the neutral 0 line. This behavior reflects balance in the average strength of short-term moving averages and reinforces the possibility that a neutral market environment remains an important feature of the chart in the coming sessions.
Key Levels to Watch:
160.889 – Key Resistance: This level coincides with the most relevant 61.8% Fibonacci retracement on the chart as well as the 50-period moving average. Price action that manages to establish itself above this area could favor the emergence of a stronger bullish bias and restore the relevance of the previous bullish structure that dominated months ago.
159.676 – Nearby Barrier: This level represents one of the main equilibrium zones on the chart and aligns with several important retracement areas from previous sessions. It could become the key reference to monitor should bullish corrective moves begin to emerge in the short term.
157.280 – Key Support: This area corresponds to recent lows and also aligns with the 200-period Simple Moving Average and the 23.6% Fibonacci retracement of the most relevant move on the chart. A sustained break below this level could reinforce a more dominant bearish bias and potentially pave the way for a broader downtrend over the coming weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
NZD/JPY klesl o více než 1 %, i když RBNZ podruhé za sebou zvýšila sazby. Trh ale zklamaly její pozvolné výhledové pokyny a jen posílil kvůli jestřábí rétorice BoJ.
TL;DR: NZD/JPY fell over 1% despite the RBNZ’s second consecutive hike, as an Iran-driven oil shock reduced carry appetite, increasingly hawkish BoJ rhetoric strengthened the Yen, and the RBNZ’s own gradual guidance disappointed markets pricing a faster path.
Four Forces Are Hitting NZD/JPY at Once NZD/JPY fell more than -1% on Wednesday, even after the RBNZ delivered a second consecutive 25bp rate hike to 2.75%. At first glance, that looks contradictory — higher New Zealand rates should normally support NZD. But the current decline is being driven by several forces pointing in the same direction: an Iran-driven oil shock has weakened risk appetite and encouraged carry reduction; BoJ rhetoric is reinforcing expectations for faster Japanese tightening; US pressure is adding urgency to the Yen story; and the RBNZ’s own guidance disappointed markets looking for a more aggressive hiking path.
That distinction matters for durability. Geopolitical risk and equity weakness can reverse quickly if oil retreats or US-Iran tensions ease. But BoJ-RBNZ policy divergence could persist even after risk sentiment stabilizes. In other words, oil triggered the broad move, while central-bank divergence amplified it.
Iran and Oil Trigger the Risk-Off Layer Fresh Middle East escalation pushed Brent as high as around $97 earlier Wednesday, reviving concern over the Strait of Hormuz, inflation, and another round of US-Iran retaliation. Asian equities reflected the deterioration in risk appetite, with the Nikkei down around -2.5% and the KOSPI falling almost -4%.
For NZD/JPY, this matters through carry rather than a simple safe-haven mechanism. NZD is highly sensitive to global risk appetite, while the Yen has historically served as a funding currency for positions in higher-yielding assets. When volatility rises and investors reduce leverage, those trades are unwound by selling higher-beta currencies and buying back the Yen.
That gives Middle East escalation a clear transmission channel into NZD/JPY. But it’s only the first layer. Wednesday’s selloff is larger because the Yen itself is also receiving increasingly hawkish policy support.
The BoJ Debate Is Moving Beyond September Markets are already close to fully pricing a BoJ hike at the September 17–18 meeting, so simply expecting a move from 1.00% to 1.25% is no longer especially new. The more important question is whether September marks the start of a faster tightening cadence.
US Treasury Secretary Scott Bessent has added pressure from Washington. NHK reported that Bessent told Finance Minister Satsuki Katayama and BoJ Governor Kazuo Ueda at the G20 meeting that Japan’s “next step should be to raise interest rates.” Nomura’s Mari Iwashita highlighted the credibility of that signal, saying: “Whenever Bessent made comments on Japanese monetary policy, the BOJ followed through with rate hikes.”
BoJ board member Hajime Takata then sharpened that message on Wednesday in Sapporo. He described “2026 [as] a regime change” and argued policy should become “nimble and data-dependent,” rather than being “bound by particular intervals or ranges anticipated in the markets.” Takata was already the sole dissenter in July, proposing an immediate hike from 1.00% to 1.25%.
That makes the current Yen story less about one September move and more about the possibility that the BoJ abandons its twice-yearly tightening rhythm. If markets begin pricing another hike substantially sooner than previously expected, Yen-funded carry becomes structurally less attractive.
RBNZ Delivered the Hike but Not the Hawkish Path The New Zealand side produced the opposite surprise. The RBNZ raised the OCR from 2.50% to 2.75% by consensus, but NZD sold off sharply because markets were trading the future path rather than Wednesday’s decision itself. The RBNZ characterized tightening as gradual and stressed that policy isn’t on a preset course.
Its quarterly-average OCR projections rise only gradually from 2.8% in December 2026 to 3.0% in March 2027, 3.1% in June and September, and 3.2% by December 2027. Governor Anna Breman also emphasized the need to assess how rate increases already delivered are transmitting through the economy before deciding the next step.
Inflation risks aren’t viewed uniformly either. Hayley Gourley, Karen Silk, Prasanna Gai, and Breman saw risks tilted to the upside, while Paul Conway and Carl Hansen judged them balanced. That 4–2 split matters because it shows the Committee agrees on the current hike but not on the need for an aggressively hawkish future path.
So the RBNZ delivered hawkish action but a dovish reaction. Rates rose, but the policy message didn’t validate expectations for rapid tightening.
BoJ and RBNZ Are Moving in Opposite Directions at the Margin This is what makes NZD/JPY particularly useful. The BoJ is telling markets not to assume rate hikes will remain six months apart. The RBNZ is telling markets not to assume further hikes will come quickly.
That doesn’t mean the RBNZ is turning dovish outright — it’s still tightening and sees inflation risks. But relative monetary-policy surprise is what matters for FX. Japan is challenging expectations for gradualism just as New Zealand is reinforcing them.
The pair therefore captures more than generic risk aversion. It combines:
Higher geopolitical risk → lower carry appetite. Faster BoJ normalization risk → stronger Yen. Slower-than-hoped RBNZ tightening → weaker NZD. That three-way alignment explains why NZD/JPY is moving more aggressively than either central-bank headline might imply in isolation.
ActionForex’s Technical View on NZD/JPY: Break of the 55-Day EMA Shifts Focus to 91.02 The technical picture has deteriorated sharply. NZD/JPY’s fall through the 55-day EMA around 93.78 confirms the rebound from 91.64 completed at 95.18. The decline from 95.18 is now viewed as another falling leg within the broader consolidation from 95.41.
The near-term bias stays lower while 94.21 minor resistance holds, with focus turning to 91.02 support. Strong support could emerge around that zone and trigger a rebound.
However, downside risk becomes more serious if carry unwind intensifies alongside further equity weakness and higher oil. A break of 91.02 would expose 89.44, the 38.2% retracement of the larger rise from 79.79 to 95.41.
One caution is that the 4H RSI has already fallen close to 20, leaving the pair deeply oversold in the short term. A rebound would therefore not be surprising. But the technical damage would remain intact unless NZD/JPY can recover above 94.21 and, more importantly, regain the lost 55-day EMA.
What Determines Whether the Selloff Lasts? There are two separate questions. The first is whether the geopolitical catalyst persists. Brent’s move toward $102 is key — if oil continues higher and Asian equities remain under pressure, carry reduction can extend and accelerate downside in NZD/JPY. If US-Iran tensions ease and Brent retreats, that part of Wednesday’s move could reverse quickly.
The second is whether policy divergence survives beyond the current risk shock. The BoJ’s Sept. 17–18 decision and guidance will test whether Takata’s call for more nimble tightening is gaining broader support. In New Zealand, upcoming data will determine whether the RBNZ stays in wait-and-assess mode or shifts toward a faster path. Friday’s US payrolls also matter indirectly through global yields and risk appetite.
For now, NZD/JPY isn’t falling because of one headline. Iran escalation triggered carry reduction, the BoJ’s increasingly hawkish message strengthened the Yen side, and the RBNZ’s gradual guidance weakened the Kiwi side. That combination makes the current decline more than a simple geopolitical trade.
Key Takeaways NZD/JPY fell over 1% despite the RBNZ’s second straight hike, because markets traded the future path (gradual, disappointing) rather than the decision itself. Bessent’s public pressure on the BoJ and Takata’s “2026 regime change” comments suggest Japan may abandon its twice-yearly tightening rhythm for something faster. The RBNZ’s 4–2 committee split on inflation risk and quarterly-average OCR path (only reaching 3.2% by December 2027) confirm hawkish action but dovish forward guidance. Iran-driven oil moving toward $102 is the reversible layer of this selloff; BoJ-RBNZ policy divergence is the layer that could persist even if geopolitical risk eases. NZD/JPY has broken its 55-day EMA, opening a path toward 91.02 and then 89.44, though a 4H RSI near 20 leaves the pair deeply oversold and due for a possible bounce.
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.
Volatilita USD/JPY prudce vzrostla poté, co komentáře člena Bank of Japan Hajimeho Takaty znovu otevřely sázky na další zvýšení sazeb. Trh teď sleduje také ISM služeb a payrolls, které mohou změnit očekávání pro Fed.
USD/JPY volatility has returned to the spotlight after a sharp yen move late in the Asian session initially raised questions over whether Japanese authorities had stepped back into the market.
The move followed comments from Bank of Japan policymaker Hajime Takata, who argued for a more nimble approach to adjusting interest rates as policymakers respond to inflation. That potentially increases the importance of each BOJ meeting and puts the path for Japanese rates firmly back into focus.
USD/JPY Faces BOJ and US Data Risk The latest move comes at an important point for USD/JPY. Volatility has increased, trading volume has picked up and price is approaching an area where the reaction could provide useful clues about the next directional move.
But traders also have a significant US data hurdle ahead. ISM services and nonfarm payrolls could materially shift expectations for the Federal Reserve and therefore the US-Japan rate differential that remains central to USD/JPY.
In the video, I look at the latest price action, the levels that could matter from here and whether the sudden increase in yen volatility should be treated as the start of something larger or simply another short-term move.
I also examine USD/JPY behaviour around previous NFP reports and what futures positioning tells us about speculative exposure to the Japanese yen.
Watch the video for the full USD/JPY analysis, NFP volatility study and yen positioning outlook.
View related analysis:
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USD/INR se přiblížil cíli MUFG na úrovni 94,00 a ve středu klesl na 94,9523. Dražší ropa a vyšší výnosy amerických dluhopisů ale ohrožují další zisky rupie.
MUFG's 94.00 USD/INR target is close, but oil near $96 and higher Treasury yields threaten further Indian Rupee gains. The US Dollar to Indian Rupee (USD/INR) exchange rate slipped to 94.9523 early on Wednesday, placing MUFG's 94.00 third-quarter forecast within roughly 1% of spot.
The pair has dropped from 95.6044 at Friday's close and touched 94.7304 in early September.
When we last examined MUFG's call, USD/INR was trading near 95.75.
Spot has since moved much closer to the target, although the external backdrop has become less friendly for the Rupee.
MUFG said: “We are currently forecasting USD/INR to move towards 94.00 over the next three to six months, before rebounding towards 96.00 next year as structural portfolio outflows, corporate repatriation and import demand reassert themselves.”
Its quarterly table puts USD/INR at 94.00 in Q3 2026, 94.50 in Q4, 95.50 in Q1 2027 and 96.50 by Q2 2027.
That path points to further near-term Rupee gains, followed by a gradual reversal next year.
Image: USD/INR performance chart over 2026 - year-to-date graph The year-to-date chart shows USD/INR below its 20-day and 50-day moving averages after repeatedly failing to hold above 96, although the pair is still 5.53% higher in 2026.
RBI support has brought 94 closer MUFG attributed the Rupee's firmer footing to fading Dollar momentum and RBI foreign-currency mobilisation measures.
Foreign investors also bought around $470 million of Indian equities in the week ending 28 August, following roughly $500 million of inflows the previous week.
The bank added: “Existing foreign-currency inflows have enlarged India’s external buffer and curtailed the risk of sharp INR depreciation, but the removal of incremental liquidity support, accelerating credit growth and the lagged inflationary effects of earlier oil-price increases point towards higher INR rates.”
India's economy subsequently expanded by a stronger-than-expected 7.8% in the April-June quarter, reinforcing the case for tighter domestic policy.
MUFG said: “We continue to expect 50bp of RBI tightening beginning in December, with the central bank focused on limiting excessive FX volatility rather than engineering sustained rupee appreciation.”
Oil and US yields threaten the Rupee rally There is a catch, though.
Since MUFG published its forecast, Brent crude has climbed to $95.68 a barrel as renewed US-Iran strikes revived supply concerns.
That raises India's import bill and inflation risk, while higher US yields make emerging-market assets less attractive.
The US 10-year Treasury yield closed at 4.79% on Tuesday, up from 4.73% on Friday.
MUFG's 94.00 target has plainly come into view, but a smooth decline is no longer assured.
A break below September's 94.7304 low would strengthen the case for another push towards 94, while oil, US yields and Friday's employment report could quickly put 95.50 back in play.
Westpac analysts expect USD/JPY to test 162 in September before retreating to 154 by end-2027 and 146 by the end of 2028. The US Dollar to Japanese Yen (USD/JPY) exchange rate slipped to 159.6004 on Wednesday, leaving Westpac's September forecast target of 162 around 1.5% above spot.
USD/JPY had climbed as high as 160.3872 during the previous 48 hours before reversing sharply, while the daily decline reached 0.37%.
Image: USD/JPY 48h chart The chart above shows the pair giving back its advance through 160.30 and finishing near the bottom of its 159.4938-160.3872 range.
Westpac's September call is effectively for one more test higher rather than an unprecedented breakout.
The pair traded as high as 163.9798 in July, so 162 has already proved reachable this summer.
What follows in Westpac's forecast curve is far more interesting.
The bank sees USD/JPY easing to 160 in December and remaining there in March 2027, before falling to 158 in June, 156 in September and 154 at the end of next year.
The decline then continues at a remarkably steady pace: 152 in March 2028, 150 in June, 148 in September and 146 in December.
From the forecast peak of 162 to the final 146 target, that would be a 9.9% fall in USD/JPY and an appreciation of almost 11% for the Yen against the Dollar.
The Yen recovery is not built on aggressive Fed cuts Westpac's accompanying interest-rate forecasts make the currency path more striking.
The bank keeps the Federal Funds rate at 3.625% throughout the forecast period, rather than relying on a sizeable US easing cycle to pull USD/JPY lower.
It also expects the US 10-year Treasury yield to ease only modestly, from 4.65% in September to 4.55% in the first half of 2027.
The yield then rises gradually to 4.85% by December 2028, precisely when USD/JPY reaches 146.
In other words, Westpac is forecasting a major Yen recovery without a lasting collapse in US yields.
The published figures do not include a separate Japanese interest-rate path or written explanation for the move, so it would be wrong to assign the decline to one specific catalyst.
Still, the curve fits a market increasingly focused on whether Japanese policy can take over from direct currency support.
As we noted in our recent Yen analysis, intervention can deliver an abrupt move but has struggled to overcome the interest-rate gap for long.
Westpac's numbers instead describe a slow adjustment lasting more than two years.
These are dated forecast points rather than promised trading stops, but the message is unusually clear: 162 may come first, while the bigger move is eventually lower.
Friday's Japanese household-spending figures and US employment report provide the next test, with Westpac forecasting a 70,000 rise in payrolls against a market estimate of 55,000.
The EUR/USD remains vulnerable below 1.1621 as USD strength still remains despite Monday's pullback move to the upside. Current Setup Current sentiment: cautiously bearish EUR/USD.
The pair is up 0.33% on the day and trading around 1.1616. The modest intraday recovery comes as traders who were long USD take profits. However, sentiment still favors USD strength, and that is why this bias for EUR/USD is cautiously bearish. The Euro is getting some support from expectations of a potential rate hike by the European Central Bank in September, especially as renewed tensions between the US and Iran have driven oil prices higher and raised concerns about imported inflation in the Eurozone.
Macro Drivers for the EUR/USD 1) Fed Hawkish Expectations
After the Fed Chair’s hawkish comments at the Jackson Hole symposium on Friday, 28 August, markets are now pricing in a much higher probability of a September Fed hike. US bond yields rose sharply, which continues to support the dollar while limiting the EUR/USD’s upside. This upside retracement was capped at 1.1621 on 31 August.
2) The ECB Policy Meeting
The ECB is also expected to raise rates in September in direct response to the hike in oil prices following the renewed tensions in the Middle East. Eurozone yields have also risen sharply, which should be ok to ward off a major euro sell-off unless the ECB disappoints and the Fed’s monetary policy expectations are repriced more hawkishly.
3) Geopolitics
Renewed US-Iran military tensions are keeping Brent crude above $90/barrel. This supports defensive positioning into the dollar, even as the risk of imported inflation makes an ECB rate hike more likely. Geopolitics is clouding the EUR/USD outlook, and the next two weeks should provide additional clarity on the situation.
Price Catalysts This Week 1. Non-Farm Payrolls: The major price catalyst this week is the Non-Farm Payrolls report. A weak payrolls report undermines any September Fed-hike expectations. This could strongly support EUR/USD amid ECB rate-hike expectations. However, a better-than-expected US jobs report favors additional dollar strength.
2. Other Macroeconomic Data: Other price catalysts include the US ISM Manufacturing PMI data and the Eurozone Core CPI Flash Estimates YoY (2.5% consensus vs 2.5% prior).
3. Brent crude prices: This is important to establish the level of defensive positioning into the US Dollars, and also the extent to which any ECB rate hike bets are repriced.
EUR/USD Weekly Forecast Scenarios Base case: EUR/USD remains under pressure below 1.1640.
Bull case: Euro gets support from hawkish ECB expectations. Additionally, weak US jobs data → fall in Fed hike expectations → weaker USD → allows EUR/USD to rebound toward 1.17.
Bear case: strong US jobs data + higher oil prices + hawkish Fed → reinforces USD strength. EUR/USD breaks 1.1570 and targets 1.1550.
EUR/USD Technical Outlook Technically, 1.1621 (31 August intraday high) is the next important resistance. Below it, EUR/USD remains vulnerable to 1.1577, followed by the 8 June and 4 August lows at 1.1506. A breakdown of 1.1577 support unlocks the downward path to a retest of the uncapped neckline of the completed double bottom at 1.1506.
On the flip side, a break of 1.1621 clears the pathway to 1.1682. A further move north brings in 1.1743, a potential pitstop before 1.1813 comes into the picture.
Bank of Canada má ve středu ponechat úrokovou sazbu na 2,25 %, ale trh už započítává dřívější zvýšení než konsenzus Reuters. Pro USD/CAD bude klíčový tón prohlášení a tiskové konference Macklema.
TL;DR: The Bank of Canada’s Wednesday hold at 2.25% is fully priced, but economist consensus (first hike in Q4 2027) and market pricing (roughly 1.76 hikes by March 2027) disagree sharply on what comes next — making the statement’s tone, not the decision itself, the real driver for USD/CAD.
Everyone Expects a Hold. Almost Nobody Agrees on What Happens Next The Bank of Canada is expected to leave its rate at 2.25% on Wednesday. All 35 economists surveyed by Reuters forecast a hold, and market pricing agrees. If that’s all traders cared about, this would be a low-drama meeting. But the agreement ends almost immediately after Wednesday.
The Reuters consensus sees the first BoC hike only in Q4 2027. Among economists who provided a forecast, fewer than half expect even one increase by the end of Q2 2027. CIBC’s Avery Shenfeld describes the Bank as being in a “watchful-waiting stance,” with inflation concerns roughly balanced by growth risks from the Canada-US trade conflict.
Markets aren’t waiting nearly that long. OIS pricing as of Sept. 1 embeds roughly 1.76 quarter-point hikes by March 3, 2027, with that meeting carrying around 76.8% marginal probability of an increase. In other words, the market’s center of gravity for tighter policy sits several quarters ahead of economist consensus.
That’s the real story heading into Wednesday: the hold is priced; the timing of the next hike is not.
Survey Says Late 2027. Some Banks Say October. There’s an important reason not to treat the survey-market gap as a simple contest over who has the better forecast. Each economist in a Reuters poll submits a single path they consider most likely. Markets have to price every plausible path at once. A smaller probability of something much more hawkish can therefore drag OIS pricing forward even if most forecasters still expect a long pause.
National Bank and Scotiabank show exactly what that hawkish scenario looks like. Both expect the BoC to hike to 2.50% in October and again to 2.75% in December — more than a year ahead of the Reuters consensus.
OIS doesn’t say those banks are right. October remains a minority outcome. But it says the possibility is real enough to matter. So there are really three positions rather than two: most economists expect the BoC to wait until late 2027, National Bank and Scotia see tightening beginning this autumn, and markets sit somewhere in between — pricing an earlier move than consensus without fully embracing the aggressive 2026 path.
Two New Forces May Be Pulling Pricing Forward The difference between probability-weighted market pricing and single-path forecasts is the most defensible explanation for the gap. But the timing also raises two interesting questions.
The Reuters poll closed on Aug. 28, before renewed US-Iran fighting pushed Brent back above $90. Canada is an oil exporter, so higher crude can support CAD directly, while persistent energy inflation could also make the BoC less comfortable leaving rates unchanged for an extended period. It’s plausible this week’s oil shock has pushed Canadian rate expectations higher — we can’t prove that without a comparable OIS snapshot from before the escalation, so it should remain a hypothesis rather than a conclusion.
US rates are another possibility. Treasury yields have surged after Warsh’s Jackson Hole speech, and the US 10-year is now challenging 4.8%. Canadian OIS could be participating in a broader North American rates repricing rather than reflecting a purely domestic rethink. That distinction will become clearer if Canadian pricing starts moving independently after Wednesday.
With No New Forecasts, Watch Every Change in Tone There’s no new Monetary Policy Report this week — the next MPR comes Oct. 28. That strips away one of the usual numerical signals and leaves statement language and Governor Macklem’s press conference with more work to do.
A more hawkish Bank would give OIS pricing greater credibility. Markets will listen for less concern about trade-related downside risk, greater emphasis on inflation near the top of the 1–3% target band, or any suggestion that recent economic resilience has reduced the need for caution.
A more dovish tone would strengthen economist consensus. If the BoC continues emphasizing weak demand, trade uncertainty, and temporary or externally driven price pressure, the argument for waiting well into 2027 would become easier to defend.
Governor Macklem and Senior Deputy Governor Rogers speak at 10:30 ET, and with the rate itself almost predetermined, changes in emphasis — or conspicuous omissions from July’s message — could drive the Canadian Dollar reaction.
Friday Tests Both Sides of USD/CAD Wednesday may not even be the most important day for the pair this week. Canada and the US both release employment reports Friday, Sept. 4.
Canada enters the report with a surprisingly constructive recent trend. Employment has risen for three consecutive months, with roughly 181,000 jobs added since April, while unemployment fell to 6.4% in July, the lowest in two years. If that continues, the market’s earlier BoC-hike pricing gains another argument. If the labor market rolls over, the watchful-waiting camp gets stronger evidence that the Bank should stay patient.
Then there’s US NFP. Strong US jobs could reinforce Warsh-driven Fed repricing and support the Dollar even if Canadian data are solid. Weak NFP could undercut the USD side of the pair. Wednesday tests BoC expectations. Friday tests both sides of USD/CAD.
Oil Could Reinforce CAD, or Complicate the Whole Trade Brent around $92 adds another variable. Oil is pressing toward the upper side of a multi-week triangle, with descending resistance around $94.83 and rising support near $84.56. Renewed US-Iran confrontation means either boundary could become vulnerable to a headline-driven break.
A sustained rise in crude would normally favor CAD through Canada’s terms of trade. In the current cycle, though, it could also feed inflation concerns and strengthen the case for earlier BoC tightening, giving the Canadian Dollar a second channel of support. But geopolitical oil shocks also feed US inflation and Treasury yields, so oil isn’t a one-directional USD/CAD signal — it’s another reason to avoid treating the current OIS-survey gap as settled before this week’s events play out.
ActionForex’s Technical View on USD/CAD: Bounced, But Not Reversed The charts tell a similarly unresolved story. USD/CAD has recovered from 1.3730, but the bounce still looks corrective against the decline from 1.4247. Last week’s broad Dollar strength wasn’t enough to push the pair through 1.3927, the 38.2% retracement of that fall, and price remains below descending near-term resistance.
Momentum is neutral. The 4H RSI is around 50 and the MACD is hovering close to zero — neither supports the claim that a new bullish trend has begun.
As long as 1.3927 caps upside, another move lower remains favored. A break of 1.3823 would be the first sign the rebound is ending and put 1.3730 back in focus. A break of 1.3730 would resume bearish pressure and reopen the larger downside.
The alternative is clear too. A firm move above 1.3927 would invalidate the immediate bearish setup and target 1.4002, where former support has turned into resistance.
1.4002 Separates Correction From a Bigger Reassessment The daily chart puts that near-term battle into broader context. The recovery from 1.3480 is still treated as corrective within the medium-term downtrend. It may already have completed as a three-wave rise to 1.4247, or that move may represent the first leg of a larger correction. Either interpretation still allows another test of 1.3480 while 1.4002 holds.
This creates a clean fundamental-technical bridge for Wednesday. If the BoC sounds comfortable waiting well into 2027, USD/CAD could finally push through 1.3927 and test whether 1.4002 can hold. If Macklem sounds closer to the market’s earlier tightening timeline, the rebound from 1.3730 could fail before those levels and the broader bearish structure would stay intact.
Either way, Wednesday’s answer is unlikely to come from the 2.25% printed at the top of the decision. It will come from how the Bank talks about what happens next — and whether that sounds more like economist consensus, market pricing, or the increasingly hawkish minority already calling for an October hike.
Key Takeaways Wednesday’s BoC hold at 2.25% is fully priced by both economists and markets, but the two diverge sharply on timing: Q4 2027 (Reuters consensus) versus roughly 1.76 hikes priced by March 2027 (OIS). National Bank and Scotiabank represent the hawkish tail, expecting hikes to 2.50% in October and 2.75% in December, more than a year ahead of consensus. With no new Monetary Policy Report this week, statement language and Macklem’s press conference tone carry more weight than usual for gauging which camp is right. Friday’s dual Canada-US employment reports may matter more than Wednesday’s decision, testing both the BoC repricing story and the Warsh-driven Fed repricing simultaneously. USD/CAD stays capped below 1.3927 resistance for now; a hawkish BoC tone could push through toward 1.4002, while a dovish tone risks a break of 1.3823 and a retest of 1.3730.
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/USD se drží kolem 1,35, zatímco trh čeká na páteční americká data z trhu práce, která rozhodnou o dalším směru dolaru. Slabé payrolls by mohly měnový pár vrátit k 1,3650.
The Pound to Dollar (GBP/USD) exchange rate traded around 1.3547 on Monday after last week's Dollar rebound knocked Sterling back from six-month highs.
Friday's US employment report should determine whether that correction extends.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.355175 (+0.13%)
Euro to Dollar (EUR/USD): 1.161853 (+0.31%)
Dollar to Yen (USD/JPY): 159.75691 (-0.22%)
WEEKLY RECAP:
GBP/USD climbed above 1.3640 early last week before coming under sustained pressure, ending Friday at 1.3534.
The Dollar strengthened after Federal Reserve Chair Kevin Warsh used his Jackson Hole speech to underline continued concern over underlying inflation.
Markets subsequently raised the probability of a September rate increase, while Barclays switched its forecast to two further Fed hikes this year.
MUFG economists described Warsh's message as hawkish, but added: “Overall, the speech was hawkish, but this is not new for Warsh.”
There remains disagreement over whether the Fed will actually deliver.
ING's Francesco Pesole said: “we remain reasonably confident in our call for the Fed to hold on 16 September and, by extension, in a weaker dollar.”
The Dollar edged lower again on Monday as traders looked towards this week's data.
Sterling has its own policy uncertainty.
BoE hike expectations softened last week, but recovering UK-US yield spreads have helped limit Pound selling.
Scotiabank noted that the recovery was “offering fundamental support” to Sterling, while its strategists continue to see the broader Dollar trend as lower.
Near-Term GBP/USD Forecast: US Payrolls Hold the Key Tuesday brings UK manufacturing PMI and mortgage approvals, while US ISM manufacturing and JOLTS vacancies should provide the first important Dollar tests.
Wednesday's ADP employment report is followed on Thursday by UK services PMI, US jobless claims and ISM services.
Friday combines UK construction PMI and a speech from BoE Governor Andrew Bailey with the crucial US payroll report.
Non-farm employment is forecast to increase by 55,000, unemployment to remain at 4.1% and hourly earnings to rise 0.3%.
Weak payrolls could return GBP/USD towards 1.3650.
Stronger hiring and hawkish Bailey caution would expose 1.3450.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
RBNZ má ve středu zvednout OCR o 25 bb na 2,75 %, ale trh to už téměř plně započítal. Pro NZD/USD bude klíčový hlavně výhled sazeb: ASB čeká růst na 3,25 % do konce roku, zatímco Westpac považuje stejný výsledek jen za nízkopravděpodobný scénář a v základním výhledu spíš čeká pauzu.
TL;DR: The RBNZ’s Wednesday 25bp hike to 2.75% is already priced in, so NZD/USD’s real reaction will hinge on the accompanying rate forecast — ASB expects the OCR to keep climbing to 3.25%, while Westpac sees that same outcome as only a 10-15% probability tail case.
September Hike Looks Like the Low-Drama Part of the Meeting The RBNZ is widely expected to raise the OCR by 25bp from 2.50% to 2.75% when it announces its decision on Wednesday, September 2 at 2pm NZT. Markets are already close to fully pricing that outcome, leaving relatively little room for the headline hike itself to move NZD materially unless the Bank surprises.
The RBNZ’s key interest rate, the Official Cash Rate (OCR), currently sits at 2.50%. Two major New Zealand banks — ASB and Westpac — published detailed previews on August 26, and both arrive at the same headline call: a 25-basis-point hike to 2.75%, agreed by consensus among all six members of the Bank’s rate-setting committee.
ASB’s Senior Economist Mark Smith put it plainly: with the hike “close to fully priced in by financial markets,” the RBNZ is expected to “take the path of least resistance.” Westpac’s Chief Economist Kelly Eckhold reached the identical call independently, also describing it as a likely consensus decision.
When two competing banks agree this closely on the immediate outcome, the actual rate decision becomes low-drama. That’s exactly why this preview focuses less on Wednesday’s number and more on what comes wrapped around it.
A “Sure Thing” That Isn’t Universally Agreed Even so, it’s worth being honest that “priced in” doesn’t mean everyone thinks it’s the right call. The NZIER Monetary Policy Shadow Board — an independent panel of economists surveyed ahead of each decision — published its latest read on August 31, and only just over half of its members actually recommend the hike.
Those in favour, including BNZ’s Stephen Toplis and economist Viv Hall, point to inflation still running above the Bank’s comfort zone. Those preferring to hold, including Dennis Wesselbaum and Kerry Gupwell, note that much of the recent inflation pickup looks supply-driven rather than demand-driven, and that the case for another hike isn’t yet airtight. One panel member, Jarrod Kerr, goes further and argues New Zealand doesn’t have much of an inflation problem left to fight.
ASB and Westpac Agree on Wednesday, Then Diverge Sharply This is where it gets interesting. Both ASB and Westpac agree on Wednesday’s hike — but they disagree meaningfully on what happens for the rest of the year, and that disagreement is worth explaining plainly:
ASB’s view: the OCR keeps rising in a straight line — a hike in September, another in October, another in December — ending the year at 3.25%, a level ASB considers roughly “neutral” (neither stimulating nor restraining the economy). Westpac’s view: September’s hike happens, and then the path becomes genuinely uncertain. Westpac actually treats “two more hikes bringing the OCR to 3.25% by year-end” as its less likely, more hawkish scenario — assigning it only a 10–15% probability. Westpac’s more central expectation is that the RBNZ pauses to assess the data before committing to anything further. In plain terms: what one bank calls its most probable outcome, the other bank calls a low-probability tail case. That’s a real disagreement between two serious economics teams looking at the same numbers — not just a rounding difference — and it’s the single most useful thing to watch for as Wednesday’s statement and press conference unfold.
Both banks do agree on one thing: the RBNZ is very likely to avoid committing to an October move either way, preferring to say future decisions depend on incoming data. That means the accompanying rate forecast the Bank publishes alongside its decision — not the hike itself — is the thing markets will actually trade off on Wednesday.
The Committee Has Become More Unified, but the Risk Debate Isn’t Settled The RBNZ’s own voting history shows how the policy debate has shifted. In May, the committee split 3–3 between holding and hiking, with Governor Anna Breman’s tie-breaking vote favoring no change. By July, the same six-member committee had moved to unanimous support for raising the OCR to 2.50%.
That progression suggests the direction of travel has become clearer. But July minutes also showed disagreement had moved from the immediate decision to assessment of what comes next. Two members saw inflation risks tilted to the upside, while four judged risks broadly balanced.
A unanimous September hike would therefore not necessarily mean the committee has reached consensus over the full tightening path. The more important signal will be whether the forecasts and statement imply September is another step toward neutral, or whether the RBNZ is preparing to pause after delivering it.
Oil Has So Far Been Kinder Than the RBNZ Feared Energy remains central to the inflation backdrop. In May, the RBNZ based forecasts on Dubai crude gradually falling toward roughly US$96 a barrel by year-end and published alternative scenarios showing how different oil outcomes could affect rates.
Under a scenario where oil remained near $120 and firms passed higher costs through aggressively, the RBNZ estimated the OCR could ultimately need to rise as high as 4.30%. If oil remained elevated but firms absorbed more of the shock, the projected peak was closer to 3.60%. If oil fell broadly as expected and weaker spending became the dominant force, the Bank indicated rates could simply remain on hold.
Actual oil prices have so far developed more favorably. Dubai crude stood at $88.72 on August 28, below the RBNZ’s baseline assumption rather than above it. That helps explain why current rate expectations are far removed from the Bank’s most hawkish oil scenario.
The risk hasn’t disappeared. Renewed Middle East escalation on August 30 pushed Brent back above $90, raising the possibility of another inflation shock if disruption becomes persistent. But for now, oil hasn’t delivered the kind of sustained upside surprise that would by itself justify moving toward the RBNZ’s aggressive tightening scenarios.
Domestic Data Give the RBNZ Reasons for Both Action and Caution Inflation peaked at 3.9% in the June quarter, slightly below the RBNZ’s earlier forecast, and is projected to ease toward 3.3% in the September quarter. Inflation expectations across households, businesses, and professional forecasters also softened in September-quarter surveys, broadly reversing part of the increase associated with the earlier oil shock.
The labor market is less supportive of aggressive tightening. Unemployment reached 5.6% in the June quarter, a little weaker than the RBNZ had expected. That argues against assuming September automatically begins a rapid sequence of hikes.
Financial conditions have meanwhile moved in both directions. The New Zealand Dollar and market interest rates tightened in May, eased in July, and tightened again through August. Broader US Dollar strength following Fed Chair Warsh’s hawkish Jackson Hole speech has added another external tightening force. That matters because the RBNZ is deciding how much domestic policy restraint is still required in an environment where some tightening is already arriving through markets.
What to Actually Watch on Wednesday The published interest rate forecast, not the hike. Look specifically at where the RBNZ projects rates will end the year and where they’ll peak. If that number lands notably below what markets are currently expecting, it could actually weigh on the New Zealand Dollar even though the Bank is hiking. Any hint about an October move. Both major banks expect the RBNZ to avoid committing either way. A clearer signal in either direction — more hawkish or more dovish than expected — would be the real surprise of the day. Governor Breman’s tone in the press conference. Given her deciding role in May’s tied vote, her communication style carries extra weight even now that the committee has converged. ActionForex’s Technical View on NZD/USD Despite last week’s notable retreat on broad USD strength, downside remains relatively contained. The rising channel off the 0.5625 low remains intact, keeping the case for a resumed rally in force. A break above 0.5987 remains favoured at a later stage as the next bullish trigger.
There’s nevertheless a warning from momentum. Bearish divergence is visible in the 4H MACD, while the recent decline has pushed the pair back toward channel support. A firm break of that floor would confirm a short-term top, opening a deeper corrective decline toward the 38.2% retracement of the 0.5625–0.5987 leg, at 0.5849.
The daily picture puts 0.6000 into better perspective. A break above the nearby 0.5993 swing high would open the way toward the 0.6092/0.6119 resistance cluster. That area sits inside a much larger range that has contained NZD/USD for more than a year and is likely to cap upside on the first attempt.
Wednesday therefore presents two technical tests. Near term, the question is whether RBNZ communication is strong enough to keep the rising 4H channel intact and push the pair through the psychological 0.6000 area. Medium term, clearing 0.6092/0.6119 on anything more than a temporary basis would likely require a genuine repricing of the RBNZ-Fed policy differential rather than the expected 25bp hike alone.
The OCR Track Is Where Surprise Risk Lives With September’s hike already heavily discounted, NZD’s reaction is likely to depend on where the RBNZ sees rates at year-end and at the eventual peak. A track consistent with continued tightening toward 3.25% would lean toward ASB’s view and give NZD a better chance of challenging 0.6000 and beyond. A flatter path implying a pause after September would align more closely with Westpac’s central case and could leave the Kiwi vulnerable despite the higher OCR.
That’s why Wednesday is less about whether the RBNZ hikes and more about whether the Bank validates the tightening markets expect after it. The headline decision may be largely priced. The OCR track is not.
Key Takeaways Wednesday’s 25bp RBNZ hike to 2.75% is already close to fully priced in, meaning the accompanying rate forecast will drive NZD’s reaction, not the decision itself. ASB expects the OCR to keep climbing to 3.25% by year-end, while Westpac treats that same outcome as only a 10-15% probability, favoring a pause instead. Even a unanimous hike wouldn’t confirm committee consensus on the full tightening path, since July minutes already showed a split over how upside inflation risks are assessed. Oil has stayed below the RBNZ’s baseline assumption so far, keeping current rate expectations well short of the Bank’s most hawkish tightening scenarios. NZD/USD holds a bullish bias above the rising channel floor, with 0.5987 the next trigger and 0.6092/0.6119 the bigger medium-term test that likely needs more than a 25bp hike to clear.
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.
USDJPY poprvé za měsíc otestoval hranici 160, protože jestřábí rétorika Kevina Warsha podpořila dolar. Trh zároveň zvýšil pravděpodobnost zářijového zvýšení sazeb Fedu z 38 % na 60 %.
USDJPY tested the 160 mark for the first time in a month. Kevin Warsh’s ‘hawkish’ rhetoric provided support for the US dollar. The US dollar reacted enthusiastically to Kevin Warsh’s ‘hawkish’ rhetoric, strengthening against the world’s major currencies. The recent slowdown in inflation did not mislead the Fed Chair. He considers the current monetary policy to be insufficiently restrictive and maintains that the central bank still has a lot of work to do. Such rhetoric led to a rise in Treasury bond yields, put the brakes on stock indices and gave the greenback a boost.
The futures market has raised the probability of a Fed rate hike in September from 38% to 60%. CME derivatives put the probability of two federal funds rate hikes in 2026 at 49%. Prior to Kevin Warsh’s speech at Jackson Hole, the figure stood at 21%.
The escalation of the conflict in the Middle East is adding fuel to the fire of rising economic indicators. For the first time since 29 July, the US resorted to bombing Iran, to which Tehran responded with attacks on American bases in Jordan. As a result, Brent crude has risen back above $90 per barrel, heightening the risk of accelerating inflation and prompting the Federal Reserve to tighten monetary policy.
The strengthening of the US dollar enabled the ‘bulls’ on USDJPY to push the exchange rate above the critical 160 mark. It did not manage to hold that level on the first attempt. However, the fact that speculators have been building up short positions on the yen for the second week running suggests that further ones will follow this initial attempt. The pair recouped half of its losses due to currency intervention, which totalled a record $98.7 billion.
Scott Bessent was forced to explain to Congress Washington’s involvement in the coordinated intervention in the forex market. According to the Treasury Secretary, Japan is the largest holder of Treasuries, and erratic movements in the yen could destabilise financial markets and increase the cost of borrowing in the US.
Scott Bessent has no intention of telling the Bank of Japan what to do. However, the Bank must have a clear understanding of the situation. Japan has reached the end of Abenomics, which was essentially a reflationary programme. This is a clear hint at the need to raise the overnight rate at the BoJ’s next meeting in September. The futures market puts the probability of monetary policy tightening at over 80%. Without this, currency interventions make no sense.
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The AUD/JPY cross trades in negative territory around 114.50 during the early European session on Monday. The Japanese Yen (JPY) strengthens against the Australian Dollar (AUD) as Japan’s annual core Consumer Price Index (CPI) inflation in Tokyo rose for a third consecutive month in August, reinforcing expectations that the Bank of Japan (BOJ) could raise interest rates as early as September.
Hotter inflation data came after BoJ Deputy Governor Ryozo Himino delivered hawkish remarks and highlighted growing inflation risks. Most market participants currently expect the Japanese central bank to raise its policy rate to 1.25% at its upcoming policy meeting.
On the other hand, upbeat China’s Manufacturing Purchasing Managers' Index (PMI) data could provide some support to the China-proxy Aussie as China is a major trading partner to Australia.
Data released by the National Bureau of Statistics (NBS) on Monday showed that China’s Manufacturing PMI climbed to 49.8 in August from 49.2 in July. This figure came in stronger than the 49.7 expected. The NBS Non-Manufacturing PMI steadied at 49.0 in August, compared to July’s 49.0 figure.
BoJ stance seen remaining hawkish as inflation dynamics evolveAnalysts at Societe Generale argue that the latest inflation dynamics, including the mix of softer non-fresh food prices and firmer services costs, “continue to support the BoJ’s hawkish path,” reinforcing expectations that the central bank will maintain its tightening bias despite temporary downward pressure from renewed energy subsidies.
Technical Analysis: AUD/JPY keeps a constructive tone above the 100-day SMAIn the daily chart, AUD/JPY retains a bullish near-term bias as spot holds above the 100-day simple moving average (SMA) and the Bollinger middle band. Price action is pressing into the upper half of the Bollinger envelope, with the upper band acting as immediate overhead supply, while the 14-day Relative Strength Index at 63.27 stays in positive territory, hinting at sustained buying pressure rather than outright overbought conditions.
On the downside, initial demand is seen at the August 26 low of 113.66. The next contention level is located at the 100-day SMA at 113.25, followed by the the Bollinger middle band at 113.00.
On the topside, any follow-though buying above the August 26 high of 114.96 would open the door for the Bollinger upper band at 115.20. The next hurdle to watch is the 116.00 psychological level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Canadian Dollar FAQs The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
The Pound-Dollar rate has fallen back to 1.3534 after Jackson Hole, but UBS still sees Sterling at 1.40 by December and 1.41 through much of 2027. The Pound to Dollar (GBP/USD) exchange rate ended Friday at 1.3534, down 0.46% after Kevin Warsh revived expectations for another Federal Reserve rate increase.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.3534 (-0.46%)
Euro to Dollar (EUR/USD): 1.158209 (-0.61%)
Dollar to Yen (USD/JPY): 160.10118 (+0.50%)
That leaves Cable well below its August high at 1.3675, but UBS has made no retreat from its bullish medium-term Sterling path.
Its updated forecast table reads: “GBP/USD: 1.40 Dec 2026, 1.41 Mar 2027, 1.41 Jun 2027, 1.41 Sep 2027.”
The rationale was set out more fully by UBS strategists Constantin Bolz and Dominic Schnider earlier this month.
“UK politics have shifted from a headwind to a potential tailwind,” they said, while “[Pound] Sterling remains relatively under-owned.”
That under-ownership matters if investors return after Friday's Dollar-driven correction.
UBS has also argued that “long-dollar positioning remains vulnerable to a reversal”, creating scope for “existing long-dollar positions [to] be unwound” if Fed expectations soften again.
Friday went the other way.
Warsh pushed the implied probability of a September Fed hike from around 35% before his speech to 57.5%, while Sterling suffered its first weekly decline against the Dollar in more than a month.
We previously examined UBS's increasingly positive Sterling view before the Jackson Hole reversal.
The forecast now has a cleaner test: holding around 1.35 would leave the 1.40 year-end scenario plausible, while renewed Fed tightening pressure would make the first hurdle, around 1.38, considerably harder to clear.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Goldman nyní čeká, že RBA v listopadu zvýší sazby o 25 bazických bodů na 4,60 % po červencovém inflačním překvapení. AUD/USD v srpnu stále zůstává o 1,7 % výše.
Goldman now expects an RBA hike to 4.60% in November after a broad July inflation surprise, adding fresh rate support to the Australian Dollar. The Australian Dollar to US Dollar (AUD/USD) exchange rate ended Friday at 0.7163, still 1.7% higher in August despite losing 0.45% after Warsh's Jackson Hole speech.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.889531 (-0.01%)
Euro to Australian Dollar (EUR/AUD): 1.617018 (-0.15%)
Goldman Sachs has made a more important change underneath that price action.
“Australia's headline CPI increased 1.0%mom in July, with year-over-year growth easing 30bp to 3.5%yoy – above our and market expectations,” economists Andrew Boak, Will Maher and Oscar To said.
Underlying inflation was stronger as well.
“The ABS monthly trimmed mean measure increased by 0.5%mom in July,” while annual trimmed-mean inflation remained at 3.6%, “also above expectations”.
More troubling for the Reserve Bank was the breadth.
“Price pressures also broadened in July: market services inflation accelerated, and consumer durables… rose by more than we expected.”
Goldman consequently raised its third-quarter trimmed-mean forecast to 0.93% quarter-on-quarter and concluded that the surprise “takes further tightening from ‘quite possible’ to most probable”.
The policy call changed with it.
“We now expect the RBA to hike 25bp in November to 4.60%,” Goldman said, while stressing “a material risk of an earlier RBA rate hike in September.”
Reuters data show the inflation release initially drove AUD/USD to a 12-week high around 0.7183 and lifted the market-implied probability of a September move to 38% from 17%.
Friday's Dollar surge subsequently knocked AUD/USD lower, but it does not alter Goldman's domestic argument.
The next decisive releases are Australia's labour-market report and August CPI.
A second broad inflation surprise would make November increasingly difficult for the RBA to avoid and could revive the Australian Dollar's yield advantage.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Canada’s 3.3% Q2 rebound supports the Loonie, but Scotiabank sees USD/CAD wrestling with 1.39 as the broader Dollar regains momentum. The US Dollar to Canadian Dollar (USD/CAD) exchange rate ended Friday around 1.3903, extending its late-August rebound despite another strong batch of Canadian economic data.
USD/CAD has still fallen around 0.8% during August and almost 1.5% over the past month, but the pair has recovered sharply from the 1.3733 low reached on 22 August.
Scotiabank analysts had expected the Canadian economy to confirm a solid rebound after the weakness around the turn of the year.
“The Canadian economy appears to have rebounded firmly after the weak period around the turn of the year and Q2 growth seems to be tracking a little above 3%,” the bank said.
That call proved accurate.
Statistics Canada reported that real GDP expanded 0.8% quarter-on-quarter in Q2, equivalent to an annualised 3.3%, the fastest pace since 2023.
Exports rose 3.6%, household consumption gained 0.8% and business investment increased 2.3%, while June GDP also beat Scotiabank’s 0.2% expectation with a 0.3% increase.
The Canadian Dollar barely moved.
USD/CAD climbed towards 1.3908 instead as Kevin Warsh’s Jackson Hole comments drove the broader US Dollar higher and lifted expectations for a September Fed rate increase.
Image: USD to CAD rate 1-month chart Scotiabank Outlook: CAD Fundamentals Have Improved Scotiabank had already warned that good Canadian numbers were becoming less capable of surprising the FX market.
“Solid data is perhaps already priced in to the CAD to a degree, given that domestic data have generally outperformed expectations in recent weeks,” it said, although stronger GDP could “add modestly to CAD tailwinds in the short run.”
The bank’s fair-value work also suggested the USD/CAD exchange rate had little reason to move dramatically away from the high-1.38s.
“Spot continues to track our fair value estimate closely,” Scotiabank said, with its equilibrium estimate falling to 1.3865 before the GDP release.
Friday’s close at 1.3903 therefore leaves the pair only modestly above that estimate.
The more interesting question is whether the Dollar’s post-Warsh rally can overpower the improving Canadian backdrop.
A Reuters poll published Friday found all 35 economists surveyed expect the Bank of Canada to leave rates unchanged at 2.25% next week, with most also expecting no policy change for at least another year.
That removes the prospect of an immediate BoC catalyst, leaving US rates and the worsening Canada-US trade dispute unusually important for the cross.
USD/CAD Technical Forecast: 1.3900 Is Becoming a Useful Pivot Scotiabank’s technical assessment remains officially neutral, but there are bearish signals underneath.
“The USD is maintaining, just about, its push above the 200-day MA (1.3840),” the bank said, while warning that the previous soft close could be a “heads up” that the Dollar rebound was beginning to stall.
“Daily and weekly trend oscillators remain bearish,” with intraday momentum also looking soft.
The levels are relatively clean.
Scotiabank places minor resistance around 1.3895/1.3900, followed by firmer resistance in the mid-to-upper 1.39s.
Support stands at 1.3825/30, with a stronger floor around 1.3775/85.
Friday’s close just above 1.3900 means that first resistance zone is already under pressure.
That contrasts with our recent UBS USD/CAD forecast, where the bank saw scope for near-term support before an eventual decline towards 1.36 during 2027.
Scotiabank is more tactical here.
Canada’s economy is performing well enough to support the Loonie, and its fair-value model sits below spot, but USD/CAD needs to get back under 1.3840 before the technical picture starts looking convincingly bearish again.
For the immediate outlook, 1.3900 is the battleground, 1.3825 the first downside target and the upper 1.39s the level that would signal the Dollar rebound has more room to run.
AUD/USD téměř nereagoval na zápis z RBA, který potvrdil debatu o dalším zvýšení sazeb, ale označil 4,35 % za dostatečně restriktivní úroveň. Pro zářijové rozhodnutí bude klíčovější středeční červencová CPI.
TL;DR: AUD/USD barely moved on RBA minutes that confirmed, but didn’t change, the existing hawkish-hold debate — the real signal was the Board’s openness to pre-emptive tightening based on monthly data alone, which keeps a September hike live even without the Q3 quarterly CPI, making Wednesday’s July print the more consequential test.
Minutes Confirm Debate, but Give Aussie Little New to Trade AUD/USD barely moved after minutes of RBA’s Aug. 10–11 meeting, slipping only modestly from recent 0.71790 high. Muted reaction made sense. Minutes confirmed what markets already understood from August’s hawkish hold: Board genuinely considered a 25bp hike, but ultimately judged policy at 4.35% “appeared sufficiently restrictive” and that there was still time to gather more evidence. Governor Michele Bullock has already said further tightening is “quite possible,” while Deputy Governor Andrew Hauser struck a somewhat more assertive tone last week. Minutes added detail to that debate without materially changing it.
More important was language around acting before inflation risks are fully confirmed. Members explicitly discussed whether it “may be appropriate to mitigate those risks somewhat by tightening monetary policy pre-emptively,” while several judged it “quite possible” that upside risks would crystallise and require further tightening. That leaves RBA with two live arguments: current policy may already be restrictive enough, but waiting becomes harder to justify if incoming inflation data suggest upside risks are beginning to materialise.
Wednesday’s CPI Is Where Repricing Risk Begins That makes Wednesday’s July CPI much more consequential than Tuesday’s minutes. It is the only monthly inflation report RBA will receive before Sept. 28–29 meeting, with August CPI not due until Sept. 30. Board itself specifically highlighted incoming monthly inflation and labour-market reports as important inputs before its next decision. There will therefore be no second inflation print available to confirm—or offset—whatever signal July data deliver.
That reference to monthly inflation data is important in its own right. Combined with Board’s willingness to consider pre-emptive tightening, it implicitly suggests policymakers do not necessarily need to wait for full Q3 quarterly CPI before acting. If monthly data show inflation risks strengthening, September meeting can remain live even though complete quarterly inflation picture will not yet be available. In other words, RBA has left itself room to respond to emerging evidence rather than requiring confirmation from traditional quarterly CPI cycle.
Labor side already points in a softer direction. July employment fell 15.8K, while unemployment rose from 4.4% to 4.5%. Another labour report is due only days before September meeting, giving Board a fresh employment read. Inflation calendar is less forgiving. A hot CPI would not guarantee a September hike, but it would raise cost of waiting and strengthen case for acting before Q3 CPI is available. A softer reading would reinforce argument that 4.35% is already doing enough and give policymakers more reason to use time rather than another rate increase.
ActionForex’s Technical View on AUD/USD: Hot CPI Could Put 0.72770 Back in Sight AUD/USD technical setup reflects that policy tension. Recovery from 0.68640 remains constructive, with a higher low at 0.69210 followed by a break above 0.70260 and an advance to 0.71790. Pair is now consolidating just below nearby 161.8% projection of 0.6864 to 0.7026 from 0.6921 at 0.7183, while daily momentum remains positive.
A hotter-than-expected CPI would strengthen case for another RBA hike and, crucially, keep September tightening firmly in play without waiting for Q3 CPI. That could drive AUD/USD through 0.71790 toward 0.72770 cycle high. But a sustained break of 0.72770 would probably require cooperation from Dollar side as well. DXY has spent the past two sessions consolidating rather than extending its broader decline, so cleanest bullish combination would be sticky Australian inflation alongside renewed USD weakness.
By contrast, an in-line or softer CPI could trigger a deeper pullback toward 0.70650. As long as that support holds, broader recovery from 0.68640 would remain intact and weakness would look more like consolidation than trend reversal. Minutes told markets RBA can afford to wait, but they also suggested it does not have to wait for quarterly CPI if monthly evidence becomes convincing. Wednesday’s CPI will show whether September stays merely possible—or becomes a much more immediate policy risk.
Key Takeaways RBA minutes confirmed the Board seriously considered a hike but judged 4.35% sufficiently restrictive for now, adding detail to the existing debate without shifting it. The Board explicitly discussed pre-emptive tightening, meaning it may act on monthly CPI data alone without waiting for the full Q3 quarterly print. Wednesday’s July CPI is the only monthly inflation read before the September 28-29 meeting, making it more consequential for policy than the minutes themselves. Weaker labor data (July employment -15.8K, unemployment up to 4.5%) already points dovish, leaving the inflation print as the clearer swing factor for September. AUD/USD holds a positive bias above 0.7183 resistance toward 0.7277, but a sustained break likely needs both a hot CPI and renewed Dollar weakness; a soft print risks a pullback toward 0.7065.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
EUR/USD podporuje slabší dolar po zdvojnásobení programu zpětných odkupů dluhopisů americkým ministerstvem financí na nejméně 4 miliardy dolarů na operaci. Tento týden budou klíčové Jackson Hole a výnosy amerických dluhopisů.
This week's Jackson-Hole symposium and the US Treasury's bond buyback program are the defining factors for this week's EUR/USD forecasts. Current Setup and Live Chart The EUR/USD enters the new week with a moderately bullish bias due to last week’s developments in the US Treasury market.
The previous week began with US long-term Treasury yields spiking to levels not seen in decades. The 30-year Treasury Note hit a 19-year high, and the 10-year Treasury Note also topped 4.24%, a high not seen in a long while. The sharp spike in bond yields caused an accelerated selloff in the US bond market, forcing the US Treasury Department to double its bond-buying program to $4 billion per operation to stabilize the market. The corresponding drop in bond yields reduced the appeal of the US Dollar and USD-denominated assets, weighing on the greenback vs. its peers.
The FX implication of doubling the bond-buying program is that the US Treasury is trying to set a floor under the bond market. This is creating an unusual dynamic:
Treasury buys long-term (10-yr and 30-yr) bonds → drop in long-term yields → Narrowing of US yield advantage → USD loses appeal → EUR/USD gains.
Simultaneously, geopolitical developments in the Middle East remain relevant to price action on USD pairs. Uncertainty around the Strait of Hormuz and the prospect of stiffer US sanctions against Iran keep geopolitical risks elevated. This means that oil prices will remain high, which brings on inflationary pressures. This is a risk-off event that generates some USD safe-haven appeal. This is the factor limiting the upside in the EUR/USD.
EUR/USD is therefore trading amid the interaction of US fiscal policy (Treasury-market intervention), geopolitics, and central bank expectations, which will come back under the spotlight at this week’s annual Jackson-Hole Symposium.
Macro Drivers for EUR/USD Forecasts 1) The Treasury Buyback Program
The US Treasury announced last Tuesday that it will double the maximum size of its long-end liquidity support operations from two billion dollars to at least four billion dollars per operational cycle. This bond buyback program will cover the 10- to 20-year and 20- to 30-year bond yields. The program is due to commence on 9th of September. However, this is not the same as quantitative easing by the US Federal Reserve. This distinction matters because Treasury buybacks primarily aim to boost liquidity by removing less-liquid bonds from the market. In other words, the Treasury is effectively redefining the maturity profile of US government debt and is not creating new money. The US Treasury documentation describing this new initiative explicitly calls them liquidity-support buybacks. For FX market traders, the policy is clear: It aims to contain long-term borrowing costs and reduce the US Dollar’s yield advantage, making USD and USD-dominated assets less appealing. The move has sent the US dollar lower, where it is now trading at multi-month lows versus the euro and many of its other G10 currency pairs.
2) US Fiscal Concerns
Concerns about the US fiscal position are growing. The US Treasury’s intervention reflects these concerns. The surge in the 30-year Treasury yield above 5% indicates investors want higher premiums to buy and hold US government debt for longer. The sentiment is that investors increasingly see attempts to suppress long-term yields as artificial, which indicates that the US government is now uncomfortable with rising borrowing costs. The latter sentiment reduces fiscal credibility and ultimately scares investors away from US government bonds to other destinations. The decline in the US Dollar is evidence of this sentiment currently.
3) Geopolitical Risk Premium Still Generates USD Appeal
The US-Iran conflict is a risk-off event that still generates demand for the USD via safe-haven appeal. If there is severe geopolitical escalation beyond the current situation, safe-haven demand for the dollar will rise, curtailing EUR/USD upside. Furthermore, the Eurozone is an energy-import-dependent region. Higher oil prices will create imported Eurozone inflation, which could stifle Eurozone growth (a key ECB concern). The ECB is likely to turn dovish if Eurozone growth is suppressed.
EUR/USD Price Catalysts This Week 1) Jackson Hole and Fed expectations: This week’s annual Jackson-Hole Symposium is the most important catalyst for price action this week on monetary policy. The market will look for clues on the direction of Fed policy and how ECB policymakers handle the battle between imported inflation and growth.
2) Treasury yields: the intervention of the US Treasury in the bond market has made the direction of the 10-year and 30-year bond yields of prime importance. Typically, rising bond yields are USD-supportive, while falling bond yields are USD-negative, which favors a EUR/USD upside.
3) US-Iran developments and oil prices: A further deterioration in the conflict raises the geopolitical premium and introduces risk-off sentiment, which favors the USD via safe-haven appeal. However, US fiscal concerns and lower US bond yields will reduce USD demand and further weaken the USD. The energy shock also introduces Eurozone inflationary pressures and stifles growth prospects, limiting the Euro’s upside. View the geopolitical situation as fluid, as the dominant factor will determine which way the pair swings.
EUR/USD Technical Outlook The presence of the two pinbar candles at the 1.1671 resistance is indicative of a stall in the uptrend. If the price declines from this resistance, the 15 June high at 1.1621 becomes the immediate downside pivot. If this pivot fails to hold, 1.1577 (19 January and 21 May lows) forms the next downside target. Further below, the double bottom’s neckline at 1.1506 assumes importance.
Fig 1: EUR/USD daily chart showing key price levels (snapshot: 24 August 2026) On the flip side, if 1.1671 holds firm against downward pressure, we could see a bounce targeting 1.1813 resistance as the major upside target. Before then, there is the potential for a pit stop at 1.1743, which served as the 19 February support level.
EUR/USD has regained ground in recent sessions, with the pair trading near 1.17 as broad-based weakness in the US dollar continues to dominate the foreign-exchange market. The main driver remains the changing monetary-policy outlook, with investors focused on whether the Federal Reserve can maintain a restrictive stance while the US economy shows signs of slowing.
The dollar faces a key test this week as Fed Chair Kevin Warsh prepares to deliver his first speech at Jackson Hole on Friday. Persistent inflation and rising long-term Treasury yields could encourage a hawkish tone, particularly if Warsh signals that rate cuts in September are far from guaranteed. Conversely, weaker US growth or softer inflation data would reinforce expectations of easier monetary policy and could extend the dollar’s decline.
In Europe, euro-area inflation rose to 2.9% in July, keeping price pressures above the ECB’s 2% target. The ECB has kept interest rates unchanged since June, but higher energy prices and renewed inflation risks could limit the scope for further easing.
With EUR/USD trading near multi-month highs, the Jackson Hole symposium and upcoming US PCE inflation data could determine whether the euro can extend its advance or whether a hawkish Fed response triggers a renewed recovery in the dollar.
Technical Analysis of EUR/USD
As the daily EUR/USD chart shows, the pair has broken decisively above the descending trendline that had capped price action since the February highs, marking a significant shift in the medium-term structure.
The pair is now trading around 1.1665, comfortably above both the 100-period EMA at 1.1546 and the 0.382 Fibonacci retracement at 1.1579. The breakout has also lifted EUR/USD away from the 1.1537–1.1495 support area, leaving the 1.1714 Fibonacci resistance level as the next major test.
Bullish Scenario If buyers can maintain control above the 1.1579 Fibonacci level and the 100-period EMA, the bullish structure remains intact.
A break above 1.1714 would open the way towards the 1.1775–1.1800 resistance zone, where previous price action has repeatedly stalled. A sustained move above this area would strengthen the case for a broader recovery and suggest that the longer-term downtrend may have been decisively reversed.
Bearish Scenario Conversely, a rejection at 1.1714 followed by a break below 1.1579 would weaken the current setup and expose the 100-period EMA around 1.1546, which is closely aligned with the 0.5 Fibonacci level at 1.1537.
A deeper decline through this confluence would bring the 0.618 retracement at 1.1495 into focus, followed by 1.1435 and the 0.786 Fibonacci level as the next downside references.
With EUR/USD testing major Fibonacci resistance after breaking above its descending trendline, the key question is whether buyers can turn the breakout into a sustained advance towards 1.1800, or whether resistance will once again send the pair back towards its key support zone.
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Rabobank posunula cíl pro EUR/USD na 1,18 už na příští jaro a krátkodobý výhled zvedla na 1,16. Dolar tlačí dolů obavy o americký dluhopisový trh a slabší dolarové prognózy.
Currency analysts lift their near-term EUR/USD view and bring forward a 1.18 target as US debt-market worries put the US Dollar back on the defensive. The Euro to Dollar (EUR/USD) exchange rate ended the week around 1.1677 after a sharp mid-week jump carried the pair as high as 1.1711.
EUR/USD is now up roughly 1.15% in August, while the Dollar has lost ground against the Pound, Euro, Australian Dollar, New Zealand Dollar and Canadian Dollar over the past month. Rabobank has responded by softening its Dollar forecasts and raising its one-to-three-month EUR/USD projection to 1.16 from 1.15.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.16767 (-0.09%)
Pound to Dollar (GBP/USD): 1.36445 (+0.01%)
Dollar to Yen (USD/JPY): 158.98453 (+0.05%)
At first glance, that looks odd. Spot is already above 1.16.
The more important change sits further out: Rabobank has brought forward its 1.18 EUR/USD target to next spring, rather than leaving it on a 12-month horizon.
“We have softened our USD forecasts moderately and, given also resilient Eurozone economic data, increased our 1-to-3-month EUR/USD forecasts to 1.16 from 1.15,” said Rabobank's Jane Foley.
Image: Euro-to-Dollar exchange rate chart for last week EUR/USD climbed from below 1.1570 to above 1.17 during the week before giving back some of the advance, leaving the pair comfortably above its recent range lows.
The bigger Dollar problem, in Rabobank's view, is no longer simply Fed policy.
Concerns over the US Treasury market have “stormed back into the limelight” amid a large budget deficit, rising national debt, above-target inflation and stronger competition for buyers of fixed-income assets.
There is a slightly uncomfortable twist here.
US government bonds used to become more attractive when markets became nervous. Rabobank argues that last year's Treasury sell-off raised questions over whether that automatic safe-haven relationship can still be taken for granted.
Foley warns that fears of greater government intervention in the Treasury market could add “debasement pressure on the USD”, potentially encouraging some investors to accelerate de-dollarisation.
She is careful not to overplay it.
The bank still argues that “the USD's dominance in the global payments system is still unchallenged” and expects that status to preserve a floor under Dollar demand and its safe-haven role.
EUR/USD Outlook: 1.18 Comes Forward The Euro side has improved too.
Rabobank highlights stronger-than-expected Eurozone second-quarter GDP and a robust August PMI round, including Germany's strongest manufacturing performance in more than four years.
“Despite the June rate hike from the ECB and the expectation of one more rate hike next month, potential growth headwinds have undermined confidence in the single currency,” the bank said.
But the latest data are “consistent with an improved position for the EUR”.
There is still an obvious risk. Europe remains an energy importer, so another escalation in the Iran conflict would revive the same growth and inflation concerns that hurt the Euro earlier in the year.
Image: USD crosses over one-month The Dollar's weakness has become broad rather than confined to EUR/USD, with all five major USD crosses in the chart below their levels from a month earlier.
Rabobank's forecast path reflects that tension rather well: 1.16 at one and three months, 1.17 at six months and 1.18 at nine and twelve months.
So this is not a call for EUR/USD to sprint higher from 1.17.
Quite the opposite. Rabobank still expects some near-term consolidation.
What has changed is the destination.
The bank now thinks 1.18 can arrive sooner, with the Dollar's fiscal and Treasury-market vulnerabilities becoming harder to ignore.
GBP/USD testoval rezistenci 1,3650/60; Scotiabank vidí po jejím proražení prostor k 1,41 po zbytek roku. V průběhu dne pár vystoupal na 1,3675 a poté se vrátil k 1,3645.
Scotiabank’s conditional GBP/USD objective sits above consensus after Pound Sterling tests the 1.3650/60 resistance area The Pound to US Dollar (GBP/USD) exchange rate has tested the mid-1.36s, putting Scotiabank’s conditional route towards 1.41 into focus.
ERUK market data show GBP/USD reached an intraday high near 1.3675 before slipping back towards 1.3645, so the sustained push required by Scotiabank has not yet occurred.
The bank’s scenario depends on a durable advance beyond the 1.3650/60 area, which has contained Sterling near its early-May peak.
It is a notably bullish technical case: ERUK’s Research Currency Forecast Sentiment Survey places the median fourth-quarter forecast at 1.3446 and the top of the surveyed range at 1.40.
Scotiabank analysts noted the recent move reflected broad US Dollar weakness more than a sudden improvement in UK fundamentals.
Nevertheless, the bank judged the technical structure to be firmly positive after GBP/USD twice defended the 1.3150 area during April and June.
The strategists said “a sustained push above 1.3650/60 implies potential for an extension towards the 1.41 zone over the balance of the year”.
That makes 1.41 a possible extension rather than a guaranteed year-end destination, with Sterling still needing to establish former resistance as support.
1.3848 as the intermediate test Sucden Financial analysts highlighted 1.3650/60 as the breakout zone and said the next broader objective was 1.3848.
Sucden described the set-up as one “with the January high around 1.3848 representing a broader upside target”.
The level therefore offers an intermediate test of whether Scotiabank’s larger scenario is gaining traction.
The two institutions reach a similar bullish conclusion but on different horizons.
Sucden’s 1.3848 is the first substantial obstacle above the trigger, while Scotiabank’s conditional 1.41 objective extends through the balance of 2026.
Sucden placed initial support near 1.3600 and a deeper cushion around 1.3500, where the 20-day average and 30-day volume-weighted average price reinforce the technical floor.
A daily close below 1.3600 would weaken the breakout case and expose 1.3500, while a sustained hold above 1.3650/60 would strengthen the route towards 1.3848 and 1.41.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/CHF se drží u 0,9350 a ING vidí návrat k 0,9400 díky nízké volatilitě a poptávce po carry trades financovaných frankem. Měsíčně pár vzrostl o 0,9 %.
The EUR/CHF rate could be set to return to 0.9400 as low volatility favours franc-funded carry trades, while its quarterly path points to 0.93. The Euro to Swiss Franc (EUR/CHF) exchange rate held close to 0.9350 on Friday as ING argued that subdued volatility could renew demand for franc-funded carry trades.
The pair traded at 0.9349 in the afternoon, little changed on the day after gaining 0.9% over the preceding month.
EUR/CHF one-month exchange rate performance to 21 August 2026.
ING's latest FX Daily treated 0.9400 as a tactical destination rather than a dated quarter-end target.
Chris Turner, the bank's global head of markets and regional head of research for the UK and CEE, said the franc could become the market's "preferred funding currency", sending EUR/CHF back to 0.9400.
That level is a retest only around 0.5% above Friday's 0.9349 reference, not a distant or dated destination.
The argument rests on low volatility and a risk-friendly backdrop sustaining demand for higher-yielding assets financed in francs.
That would leave the yen less attractive as the market's main funding currency; OCBC separately linked the shift to potential Japanese intervention risk.
Tactical EUR/CHF Level Differs From Quarterly Path ING's current forecast table, updated separately on 11 August, places EUR/CHF at 0.93 for both the third and fourth quarters of 2026.
It then points to 0.92 at the ends of the first and second quarters of 2027, before a recovery to 0.94 by late 2027.
The distinction matters: Friday's analysis identifies a tradable move towards 0.9400, while the maintained quarterly path implies that any rebound may not be sustained into year-end.
OCBC offered a firmer medium-term comparison on 13 August, placing its year-end target at 0.94 against ING's 0.93 fourth-quarter level.
Strategists Sim Moh Siong and Christopher Wong said the franc had moved "closer to our year-end EUR/CHF target of 0.94" and described it as a "preferred funding currency for carry trades."
Policy settings reinforce the funding case.
The Swiss National Bank kept its rate at 0% in June and said: "If necessary, we have an increased willingness to intervene in the foreign exchange market. We thereby counter a rapid and excessive appreciation of the franc."
The European Central Bank meanwhile held its deposit rate at 2.25% in July, preserving a positive euro-franc rate gap.
That rate gap favours the euro, but ING's 0.92 levels for the first half of 2027 show that the tactical carry argument is not the same as a lasting bearish-franc call.
For EUR/CHF, 0.9400 is therefore the immediate test, with 0.93 remaining ING's separate quarter-end reference.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
GBP/USD vyskočil intradenně na 1,3675 po nečekaně silném britském PMI služeb. Data ukázala nejrychlejší růst za šest měsíců a zmírnila tlak na brzké uvolnění politiky BoE.
Pound Sterling jumped to $1.3675 after UK services activity unexpectedly accelerated, adding to signs that the economy is holding up better than feared. The Pound to Dollar (GBP/USD) exchange rate surged to an intraday high of 1.3675 on Friday after a much stronger-than-expected UK services survey delivered a fresh positive surprise for Sterling.
The S&P Global flash PMI survey showed the UK Services PMI rising to 52.8 in August from 52.1 in July, its strongest reading for six months and well above the 51.8 consensus in a Reuters poll.
The composite PMI also strengthened to 52.5 from 52.2, compared with expectations for 51.6, while manufacturing eased to 51.5 from 51.9.
GBP/USD later eased back to around 1.3656 by late morning, still 0.09% higher on the day and 0.91% stronger over the previous five sessions.
Pound Sterling reaction around the 09:30 BST UK Services PMI release, showing GBP/USD and GBP/EUR. Services Surprise Strengthens the UK Resilience Story S&P Global said the survey was consistent with UK GDP growth of around 0.3% in the third quarter, with services benefiting from better domestic conditions, favourable weather and technology investment.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said: “The expansion is being helped by sunny weather and tech investment”.
There were still reasons for the Bank of England to remain cautious. Employment continued to fall and price pressures picked up again as higher energy costs fed into business expenses.
The combination leaves the BoE facing stronger activity alongside persistent inflation risks, reducing the urgency for any near-term policy easing.
For GBP/USD, the fresh 1.3675 high is now the immediate resistance point. A sustained break above that area would put the 1.3700 level in focus, while a retreat below 1.3600 would suggest the post-PMI momentum is beginning to fade.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/USD prorazil nad 200denní klouzavý průměr a obchodoval se kolem 1,1700, když Goldman Sachs uvedla, že podpora ze strany Treasury může více tlačit na dolar než na výnosy. Pár je za posledních pět seancí výše o 1,12 %.
EUR/USD has broken above its 200-day average as Goldman Sachs argues Treasury support may force the Dollar to absorb more of the adjustment. The Euro to Dollar (EUR/USD) exchange rate traded around 1.1700 on Friday morning, up 0.11% on the day and 1.12% higher over the previous five sessions.
The pair has gained 2.61% over the past month, with the latest leg higher following Washington's decision to increase long-dated Treasury buybacks.
Goldman Sachs believes the policy shift matters more for the Dollar than for the underlying rates outlook.
The Treasury said it would at least double liquidity-support buybacks for longer-dated bonds to $4bn per operation, a move that initially drove the 30-year yield almost 10 basis points lower and knocked around 0.7% from the Dollar index.
Goldman's Treasury desk estimates the larger programme could amount to at least $18bn of additional long-end purchases per quarter, or $72bn annualised, with total long-end buybacks potentially reaching around $144bn a year.
Supporting Bonds Could Shift the Pressure into FX Goldman Sachs G10 FX options trader Praneet Shah argued that the move should not be read simply as a rates story.
“I do however think this is more meaningful for the USD,” Shah wrote, noting that Washington had shown it was willing to become more inventive when supporting the long end of the Treasury market.
The key risk for the currency is that policy support for bonds changes where the adjustment takes place.
“Supporting bonds may come at the expense of letting the USD become the adjustment valve,” Shah said, framing the trade-off as one between restraining yields and allowing more of the pressure to show up through the exchange rate.
That interpretation is important because the bond-market move itself may not be large enough to generate a lasting decline in yields.
Goldman's rates team expects buybacks to help cap the long end rather than drive a major repricing lower, while fiscal deficits and heavy supply remain persistent upward pressures.
For foreign exchange, however, a credible perception that the Treasury is willing to lean against long-end stress could be enough to keep the Dollar under pressure even if yields stop falling.
The EUR/USD technical picture has also shifted.
Goldman's 20 August chart showed EUR/USD around 1.1693 against a 200-day moving average near 1.1630, leaving the pair clearly above that long-term trend measure.
Shah said the break was “interesting” and highlighted the possibility of a sustained move if positioning and low volatility continue to support the Euro.
Image: ERUK's EUR/USD sentiment survey poll results for next 4 quarters 2026, into 2027 The Exchange Rates UK Research Currency Forecast Sentiment Survey currently places the median EUR/USD forecast at 1.1650 for the fourth quarter of 2026 and 1.18 for the first quarter of 2027.
That means spot is already trading above the near-term consensus median.
In our view, holding above the 1.1630-1.1650 area would keep the Goldman technical signal intact, while a clean move through 1.1710 would strengthen the case for a further advance towards the upper 1.17s.
The wider implication is more significant than a single technical break: if the Treasury increasingly tries to suppress stress in the bond market, the Dollar itself may become the release valve.
AUD/USD vystoupal na nové maximum od začátku června a za den přidává téměř 0,50 %. Dolar slábne poblíž tříměsíčního minima kvůli nižším sázkám na bezprostřední zvýšení sazeb Fedu.
The AUD/USD pair regains positive traction following the previous day's dismal Aussie jobs data-led modest fall and climbs to a fresh high since early June during the first half of the European session. Spot prices currently trade just below mid-0.7100s, up nearly 0.50% for the day, and remain on track to register gains for the seventh week in a row amid a supportive fundamental backdrop.
The US Dollar (USD) languishes near a three-month low, touched on Thursday, amid receding bets for an immediate rate hike by the Federal Reserve (Fed), which, in turn, is seen as a key factor supporting the AUD/USD pair. Bulls, meanwhile, seem rather unaffected by geopolitical uncertainties stemming from the US-Iran standoff over the Strait of Hormuz, suggesting that the path of least resistance for spot prices remains to the upside.
From a technical perspective, the latest leg up confirms a fresh breakout above the 61.8% Fibonacci retracement level of the May-June decline. Moreover, the Relative Strength Index (14) near 67 suggests stretched but still constructive momentum and is backed by a mildly positive Moving Average Convergence Divergence (MACD) reading above zero. The set-up, in turn, further validates the near-term positive outlook for the AUD/USD pair.
Meanwhile, the 78.6% Fibo. retracement at 0.7188, which might cap the advance for now. A sustained move beyond the said hurdle is needed to open the way toward higher recovery targets. On the downside, initial support is located at the 61.8% retracement at 0.7119, ahead of a stronger structural floor formed by the 50.0% retracement at 0.7070 and the nearby 100-day SMA at 0.7069. A break below this cluster would likely trigger a deeper pullback toward the 38.2% level at 0.7021 and the 23.6% retracement at 0.6961, if selling accelerates.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/USD daily 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-1.12%-0.91%-0.25%-0.80%-0.81%-1.27%-1.48%EUR1.12%0.36%0.87%0.32%0.27%-0.16%-0.36%GBP0.91%-0.36%0.59%-0.01%-0.09%-0.52%-0.77%JPY0.25%-0.87%-0.59%-0.53%-0.61%-1.03%-1.25%CAD0.80%-0.32%0.01%0.53%-0.07%-0.50%-0.74%AUD0.81%-0.27%0.09%0.61%0.07%-0.43%-0.68%NZD1.27%0.16%0.52%1.03%0.50%0.43%-0.26%CHF1.48%0.36%0.77%1.25%0.74%0.68%0.26% 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).
GBP/USD se dostal na nejlepší úrovně od poloviny února díky slabšímu dolaru a lepšímu než očekávanému indexu průmyslových trendů objednávek CBI. Trh ale čeká britské maloobchodní tržby a PMI.
Pound-Dollar can hold above $1.36 if pressure on the US Dollar from fiscal concerns and softer Fed bets offsets any drag from weaker UK retail sales and PMI data. The Pound US Dollar (GBP/USD) exchange rate maintained a positive trajectory on Thursday, with the pairing being propelled to its best levels since mid-February.
At the time of writing, GBP/USD was trading at around $1.3646. Up around 0.3% from Thursday’s opening levels.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.362643 (+0.20%)
Euro to Dollar (EUR/USD): 1.167162 (-0.02%)
Dollar to Yen (USD/JPY): 159.0647 (+0.51%)
DAILY RECAP:
The US Dollar (USD) remained under pressure on Thursday, slipping to fresh multi-month lows as concerns over the US fiscal outlook continued to weigh on sentiment towards the ‘Greenback’.
The latest warning sign came as America’s national debt surpassed the $40tn mark for the first time, reinforcing concerns over the sustainability of the country’s finances and the growing cost of servicing its debt.
The milestone came alongside ongoing volatility in the US bond market, where long-term borrowing costs had climbed sharply, forcing the US Treasury to step in and announce it would at least double the size of its planned buybacks of longer-dated government debt.
The Pound (GBP) traded with modest support on Thursday, firming on the back of the Confederation of British Industry's (CBI) latest industrial trends orders index.
The index printed at -25 this month, marking a continued contraction in order books, but a marked improvement from the -45 recorded in July and striking its best levels since late 2024.
The data points to surprising resilience in the UK manufacturing sector, despite headwinds posed by the war in the Middle East and rising energy prices.
Near-Term GBP/USD Forecast: UK retail sales and PMIs could test Sterling strength Turning to Friday's session, the Pound to US Dollar (GBP/USD) exchange rate may be pressured by the final UK economic releases of the week.
Friday's European session opens with the release of the UK's latest retail sales data, which is forecast to report a contraction in consumer spending and sap Sterling sentiment.
The subsequent publication of the UK's latest PMIs could then drag the Pound even lower, as economists forecast that growth in the UK's dominant services sector is likely to have slowed this month.
Closing out the session will be the publication of the latest US S&P PMIs. While not as influential as the ISM indexes, they could still lend the US Dollar support if they point to further resilience in the US private sector.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
TL;DR: Japan’s data is strengthening and Australia’s is weakening, yet AUD/JPY keeps rising — because the cross is trading on the global yield backdrop and carry differential, not on either country’s local fundamentals.
Domestic Data Point Clearly Lower for AUD/JPY AUD/JPY has rebounded strongly even though this week’s data from both sides of the cross argue for the opposite move. Japan delivered firmer inflation and stronger business activity. Australia produced a weak jobs report and softer PMIs. On domestic fundamentals alone, that combination should favor the Yen over the Aussie.
Japan’s July core CPI rose from 1.6% to 1.8% y/y, while core-core CPI accelerated from 1.7% to 1.9% — a broadening that ActionForex covered in detail here, noting firmer services inflation and renewed energy pressure ahead of the BoJ’s September meeting. August PMIs strengthened as well: PMI Manufacturing rose from 54.5 to 55.1, while PMI Services climbed from 51.2 to 52.3 — part of a broader acceleration where overseas demand posted its strongest growth in more than eight-and-a-half years, led by semiconductor and AI-related industries. Those readings reinforce expectations the BoJ could raise rates again at its September meeting.
Australia moved in the opposite direction. Employment fell -15.8K in July, against expectations for an increase, while unemployment rose from 4.4% to 4.5%. August PMI Composite Output then eased from 53.2 to 52.5, while PMI Services Business Activity fell from 53.6 to 52.9. PMI Manufacturing Output slipped from 50.3 to 49.7, moving back into contraction, even as manufacturing orders improved and cost pressures accelerated.
Global Yields Are Overriding Local Fundamentals That AUD/JPY is rising anyway is the more important signal. The cross is currently trading less on Australian and Japanese data than on the global yield backdrop.
The Yen briefly benefited after the US Treasury’s August 19 buyback announcement drove long-dated US yields sharply lower. That compressed yield differentials globally and temporarily reduced pressure on low-yield funding currencies. But the move didn’t last — US yields rebounded quickly on Thursday, with the 10-year Treasury yield returning toward 4.70% and the 30-year yield moving back above 5.20%. Other major sovereign yields also rose. As carry conditions improved again, the Yen returned to underperformance.
That mechanism matters more for AUD/JPY than the latest local data. When global yields rise, the opportunity cost of holding a low-yielding currency such as the Yen increases. Carry demand then tends to favor currencies offering substantially higher policy rates, including the Aussie.
BoJ Hike Bets Are Rising, But the Carry Gap Is Still Wide Japan’s stronger CPI and PMI data still matter because they reinforce September BoJ hike expectations. But even another 25bp increase wouldn’t transform the relative-rate picture.
The RBA cash rate stands at 4.35%, compared with the BoJ policy rate at 1.00% — a gap of roughly 335bp. A BoJ hike to 1.25% would narrow it to around 310bp, still a substantial spread.
That helps explain why the Yen can weaken even as BoJ normalization expectations strengthen. Markets may be becoming more confident that Japan will hike, but the expected adjustment is still small relative to the existing carry advantage. Australia’s softer data could eventually narrow that gap from the other side if markets become convinced the RBA’s tightening bias won’t survive. But this week’s releases haven’t been enough to overpower the global yield move.
ActionForex’s Technical View on AUD/JPY Technically, the current rebound supports the view that the correction from 114.91 completed with three waves down to 109.25. That decline held above 108.77, the bottom of wave four of a lesser degree. Support from the 55-day EMA also strengthens the bullish interpretation.
The near-term outlook stays bullish while 112.21 support holds. The next target is the 114.65–114.91 resistance zone.
A decisive break of 114.91 would be much more important. It would confirm resumption of the larger uptrend from 86.03, the 2025 low. The next upside target would then be the 38.2% projection of 86.03 to 114.91 from 109.25, at 120.28, putting the psychological 120 level directly into focus.
A move below 112.21 would delay the bullish case and suggest the correction from 114.91 is still unfolding, with another near-term decline possible before the broader uptrend resumes.
AUD/JPY Is Sending a Global, Not Domestic, Signal The key takeaway isn’t that Australian fundamentals suddenly improved or that Japanese data failed to matter. It’s that both local stories are being overwhelmed by a larger market force. Japan is getting stronger. Australia is getting softer. Yet AUD/JPY is rising because global yields have reasserted the carry advantage over the Yen.
That makes the next move in US and global bond yields more important for this cross than another small change in local data. As long as carry pressure stays elevated and 112.21 holds, AUD/JPY can keep pressing toward 114.91 despite a domestic macro backdrop that, on paper, argues for the opposite.
Key Takeaways Japan’s core-core CPI accelerated to 1.9% and PMIs strengthened broadly, while Australia’s jobs report contracted and PMIs softened — a combination that should favor Yen, not Aussie. AUD/JPY’s rise despite this divergence signals the cross is trading on global yields and carry conditions, not local fundamentals, right now. The RBA-BoJ rate gap stands at roughly 335bp; even a September BoJ hike to 1.25% would only narrow it to around 310bp, preserving a substantial carry advantage for AUD. US yields briefly fell on the Treasury buyback announcement but rebounded quickly, restoring carry pressure on the Yen within days. AUD/JPY holds a bullish bias above 112.21 support, targeting 114.65-114.91; a break above 114.91 would open a path toward 120.28.
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.
Švýcarský frank znovu posílil jako bezpečný přístav po oznámení amerického ministerstva financí o zdvojnásobení objemu zpětných odkupů dlouhodobých Treasury. USD/CHF tak zůstává pod medvědím tlakem.
Treasury intervention raises questions over dollar haven status
Swiss franc outperforms as safe-haven demand builds
Switzerland’s balance sheet reinforces haven case
USD/CHF technicals favour bearish bias
Swiss franc’s haven credentials strengthened
The Swiss franc’s credentials as the last true bastion of safe-haven status in the FX universe have been reinforced by events this week.
On Wednesday, the franc was the best-performing G10 currency by some distance following the US Treasury’s announcement that it would double the size of long-dated Treasury buybacks.
While USD/CHF bounced modestly on Thursday as we saw a retracement in the move in long-end Treasury yields, the broader message is pretty obvious. If policymakers in the US are becoming more willing to actively combat market forces when it doesn’t politically suit, the franc stands out as the one true developed-market currency haven given its fundamental strength.
Looking at the charts, the question is whether more interventionist policies like these could provide the catalyst for a broader resumption of the bearish USD/CHF trend seen over recent decades.
Treasury intervention risks grow
This week’s developments suggest tinkering at the long end of the Treasury curve by Treasury may evolve into something far more significant, potentially the tsunami of interventionist activity I described in a separate analysis piece yesterday.
After announcing that long-dated Treasury buybacks would be doubled to at least $4 billion per operation a day earlier, Treasury Secretary Scott Bessent went further on Thursday, saying purchases could be increased beyond that level.
More importantly, Bessent was explicit that part of the objective was signalling that long-bond yields do not reflect underlying fundamentals. That is an extraordinary statement given the US fiscal position. It effectively amounts to Bessent saying he knows better than the market and is prepared to actively combat bearish forces when yields move to levels the government finds politically or fiscally uncomfortable.
Given the market reaction to the statement was to sell the long end, what was pitched as an operation to improve liquidity risks becoming something far more consequential for the US dollar. If Treasury is seen to be developing a broader suite of measures designed to push long-dated yields lower whenever market forces drive them higher, it risks eroding confidence in the dollar’s safe-haven credentials.
With US government debt already enormous and the cost of servicing it rising rapidly, the incentive to keep long-term borrowing costs contained is obvious.
Haven flows take over
Given the risk of more interventionist policies being used to artificially suppress bond yields, it is only natural that the investment community would seek out alternatives to the US dollar. Based on what we saw earlier this week, the Swiss franc was clearly among them.
Looking at the correlation matrix below, the five-day window suggests what had been a modestly positive relationship between USD/CHF, yield differentials and US Treasury yield movements has abruptly shifted over the past week.
Source: TradingView, FOREX.com
Instead, USD/CHF has maintained a strong inverse relationship with other safe havens such as gold, while its relationship with volatility measures such as VIX futures has strengthened sharply. That points to a market increasingly trading the pair through the lens of safe-haven demand rather than relative rates alone.
You could argue that the initial reaction suggests the franc could be a significant beneficiary if the dollar debasement narrative heard earlier this year, and through parts of 2025, begins to manifest itself again.
Fundamentals back the franc
The Swiss franc’s appeal is not just about reputation. The country’s underlying finances are simply a lot stronger than those of the US.
Switzerland is a major net creditor to the rest of the world, with its net international investment position sitting at around 111% of GDP in 2025. In simple terms, the Swiss own far more assets overseas than foreigners own in Switzerland.
Source: FRED, SNB, SECO, FOREX.com
The US is the complete opposite, with a net international investment position of roughly -71% of GDP. So while the dollar has the benefit of being the world’s reserve currency, the US still relies heavily on foreign investors to fund its debt. Countries such as Switzerland, with large pools of savings and overseas assets, are effectively on the other side of that trade.
Source: FRED, FOREX.com
The government debt numbers tell a similar story. Central government debt in Switzerland stood at just 22.3% of GDP in 2024, compared with 115.8% in the US.
That divide is key in the safe haven debate. Switzerland has low government debt, an extremely strong international investment position and the kind of savings base that naturally supports lower borrowing costs. Relative to the States, it’s like chalk and cheese.
USD/CHF bearish bias remains
Source: TradingView
You can clearly see the reaction to Treasury’s announcement on Wednesday with a mammoth bearish bar breaking the minor uptrend that had been in place since early July, along with horizontal support at 0.8013.
The move stalled just shy of uptrend support running from the January low before reversing on Thursday, reclaiming the 100-day moving average in the process before moving back towards former support at 0.8013.
Despite the recovery, until proven otherwise, the rebound looks something akin to a dead-cat bounce.
0.8013 is the immediate focal point overhead. If the price remains beneath that level, it could be used to initiate fresh shorts with a stop above for protection, targeting a retest of 0.7950, where the pair reversed from on Thursday.
Just beneath that sits the January uptrend, along with the key 200-day moving average and horizontal support at 0.7925, making the area from the uptrend down to 0.7925 the key support zone to watch underneath where the pair trades.
If we were to see a sustained break beneath the lower end of that zone, it could open the path for a much more pronounced bearish unwind, putting levels such as 0.7796 and 0.7750 in play initially.
Of course, if the pair were to extend its rebound back above 0.8013 and hold there, the option is there to initiate longs with a tight stop beneath 0.8013 for protection. Initial targets would be 0.8050, where the price bounced on numerous occasions over recent months prior to the breakdown, followed by former uptrend support around 0.8065 today.
The message from the oscillators favours selling into strength rather than buying dips. RSI (14) continues to set lower highs and lower lows and sits beneath the neutral 50 level at 39. That message is confirmed by MACD, which has crossed beneath its signal line, flipped negative and continues to trend lower.
Given the fundamental backdrop and technical picture, shorts are favoured over longs in the near term.
NZD/USD vystoupal nad 0,5950 poté, co Čína ponechala úrokové sazby beze změny, a slabší USD podpořil kiwi. Kurz se obchodoval kolem 0,5955, tedy o 0,34 % výše za den.
The New Zealand Dollar strengthened above 0.5950 as China kept lending rates unchanged and a softer US Dollar supported higher-beta currencies. The New Zealand Dollar extended its recovery on Thursday, pushing above 0.5950 against the US Dollar and towards its strongest level of August.
The New Zealand Dollar to US Dollar (NZD/USD) exchange rate traded around 0.5955, up 0.34% on the day and 1.74% higher over five sessions.
China's one-year loan prime rate was left at 3.00% and the five-year rate at 3.50% for a fifteenth consecutive month, matching market expectations.
Image: NZD crosses today China Stability Supports Kiwi Sentiment The decision offered some reassurance for currencies exposed to Chinese demand, including the New Zealand Dollar.
Barclays said the People's Bank of China “remains in no rush to cut policy rates or the reserve requirement ratio,” with Beijing currently favouring fiscal measures and targeted support.
The Kiwi has also benefited from broader US Dollar weakness after Washington's larger Treasury buyback plan pulled long-term US yields lower.
ING strategists Chris Turner and Francesco Pesole expect that theme to remain supportive, saying: “We expect NZD/USD to be lifted in the coming months by lower front-end USD rates”.
The bank forecasts NZD/USD around 0.60 over three to six months and 0.61 over 12 months.
Image: ERUK's NZD/USD sentiment survey results August 2026 The immediate hurdle is the 0.6000 area, followed by the 2026 high around 0.6093.
A failure to hold 0.5900 would weaken the latest breakout, but the combination of steady Chinese policy and softer US rate expectations currently favours further upside pressure.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Canadian Dollar strengthened as oil prices extended their advance and renewed pressure on the US Dollar pushed USD/CAD towards fresh August lows. The Canadian Dollar gained further ground on Thursday, with firmer crude prices and a softer US currency reinforcing a move that has gathered pace over the past week.
The US Dollar to Canadian Dollar (USD/CAD) exchange rate traded around 1.3776, down 0.25% on the day and 1.09% lower over five sessions.
Latest — Exchange Rates:
Pound to Canadian Dollar (GBP/CAD): 1.880004 (+0.10%)
Euro to Canadian Dollar (EUR/CAD): 1.610518 (-0.11%)
Dollar to Canadian Dollar (USD/CAD): 1.37752 (-0.26%)
WTI crude was also up more than 1% near $85.58 a barrel as the Strait of Hormuz standoff kept supply risks elevated.
Oil Prices and Fed Expectations Support the Loonie The Canadian currency has benefited from the combination of higher energy prices and fading expectations that the Federal Reserve will deliver another near-term rate increase.
Reuters market commentary highlighted both themes as supportive for the Loonie, while Wednesday's US Treasury decision to increase long-dated bond buybacks also pulled US yields lower and weighed on the Dollar.
The move leaves USD/CAD testing an important area around 1.3770 after falling more than 2% over the past month.
ING strategists Chris Turner and Francesco Pesole remain cautiously constructive on the Canadian Dollar, saying that “broader USD weakness can still drive USD/CAD down to 1.38 by year-end.”
MUFG's latest projections similarly envisage USD/CAD easing from 1.41 in the third quarter towards 1.39 by year-end and 1.36 by the second quarter of 2027.
The immediate Canadian Dollar outlook will remain closely tied to oil and US rate expectations. A sustained break below 1.3770 would strengthen the case for a deeper USD/CAD retreat, while renewed Treasury-yield pressure would threaten the latest gains.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
AUD/USD po slabých australských datech z trhu práce krátce klesl směrem k 0,7111, ale později se vrátil zhruba na 0,7126. Míra nezaměstnanosti stoupla na 4,5 % a zaměstnanost klesla o 15 800.
The Australian Dollar fell immediately after a weak employment report before recovering as broader US Dollar softness limited the damage to AUD/USD. The Australian Dollar came under pressure after Australia's July labour-market report showed an unexpected fall in employment and unemployment at its highest level in almost five years.
Employment dropped by 15,800 against expectations for a gain of around 15,000, while the unemployment rate rose to 4.5%.
Image: AUD crosses today Australian jobs data The Australian Dollar to US Dollar (AUD/USD) exchange rate fell towards 0.7111 immediately after the release before recovering to around 0.7126 later in the morning.
At that later level, the pair was marginally higher on the day, underlining the importance of distinguishing the initial Australian data reaction from subsequent US Dollar weakness.
Jobs Data Eases Pressure on RBA Full-time employment still increased by 16,300, but participation slipped to 66.9% and total hours worked fell 0.6%.
The softer headline reduces pressure on the Reserve Bank of Australia to tighten policy again quickly.
Westpac economist Ryan Wells had already highlighted “the rising trend in unemployment and underemployment” as evidence that labour-market slack was building.
Oxford Economics Australia chief economist Ben Udy said the July figures were slightly weaker than the RBA had expected and, alongside slower wage growth, reduced near-term pressure for another increase.
Markets remain divided over whether the RBA will need another increase later this year, particularly with inflation still uncomfortable.
Image: AUD/USD intraday chart For the AUD/USD exchange rate, the immediate support zone sits around 0.7100, while the August high near 0.7129 is the first upside test.
A renewed break below 0.7100 would suggest the labour-market disappointment is beginning to dominate the broader Dollar story.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/USD v srpnu přidal 1,5 % a včera prorazil rezistenci na úrovni 1,1580, když slabší data z USA, klesající výnosy amerických dluhopisů a vyšší očekávání snížení sazeb Fedu tlačí euro výš.
The euro has surged thanks to growing expectations of U.S. Fed rate cuts, declining Treasury yields, and the ECB's cautious monetary policy guidance Overbought momentum indicators, unexpectedly high U.S. inflation, or renewed Eurozone growth worries could trigger profit-taking and push rates lower Should Eurozone growth slow, the ECB might shift to an easing policy. This would eliminate the rate-differential support that's currently boosting the euro The euro’s been gaining ground on the dollar. After climbing 0.95% in July, the EUR/USD pair added another 1.5% in August. Just yesterday, it broke past the 1.1580 resistance, ending the day up 0.88%.
This upward trend points to a change in forex market sentiment. Traders watching this cross can’t help but wonder what’s fueling the euro’s rally and what obstacles might appear.
Where Is the Euro Getting Its Fuel? The euro’s climb mostly comes from the European Central Bank (ECB) and Federal Reserve’s diverging monetary policies. Eurozone inflation, as measured by the Harmonized Index of Consumer Prices (HICP), hit 2.9%.
So, market participants expect an ECB interest rate hike at their September 10 meeting. Controlling inflation is the ECB’s main goal, a job made tougher by rising energy prices from Middle East geopolitical events.
Currently, markets are pricing in a 90% chance the ECB will raise rates by 25 basis points in September, pushing the rate to 2.50%. What’s more, better economic survey data from the Eurozone, like a stronger German ZEW index, hints at more stable regional conditions.
On the other hand, recent weaker U.S. economic data has lowered expectations for further Federal Reserve rate increases, signaling a weaker dollar. The July non-farm payrolls report missed forecasts, retail sales dropped, and inflation numbers came in lower than expected.
Consequently, the odds of a September Fed rate hike have fallen, with markets now giving about a 65% chance the Fed will hold rates steady.
Lower US Treasury yields are also weakening the dollar, partly because the Treasury Department announced it’ll buy more longer-term bonds starting in September.
EUR/USD Has Room to Run, But Watch the Data Technical analysis suggests the EUR/USD could climb, targeting 1.1750-1.1800. If prices hold above 1.1700, buyers might step in, driving the rate toward 1.1725 or even higher.
The short-term outlook looks good for the next few weeks, as long as support levels at 1.1600-1.1635 hold. But the quick price jump suggests the market might be getting overbought. That could mean some consolidation or small pullbacks.
Potential Setbacks Ahead A few things could slow the euro’s climb. For instance, if US inflation picks up again, or if employment and growth numbers come in stronger than expected, it might reignite expectations of Fed rate hikes. That would likely boost the dollar.
Another factor is ongoing geopolitical instability, particularly around US-Iran relations, along with high oil prices. These usually send investors to the dollar as a safe haven.
Over in Europe, weaker economic growth surveys or slowing inflation might dampen expectations for European Central Bank rate hikes. A big jump in longer-term US Treasury yields could also shrink the interest rate gap that’s been good for the euro.
What primarily drove EUR/USD higher in mid-August?
Softer US data reduced Fed hike odds while sticky euro-area inflation boosted expectations of an ECB rate increase in September.
What major risk could reverse the current EUR/USD trend?
A rebound in US economic data or escalating Middle East tensions that revive dollar demand and Fed-tightening expectations.
Could the ECB undermine the euro’s strength?
Yes. If eurozone growth weakens, the ECB could pivot toward easing, removing the rate-differential support currently favoring the euro
PBOC posílila denní fixing USD/CNY na 6,7808 z 6,7854 v předchozí seanci, což je další signál podpory jüanu. Čína zároveň ponechala základní úrokové sazby beze změny.
The Chinese Yuan received a firmer official signal after the PBOC set the USD/CNY reference rate at 6.7808, stronger than the previous 6.7854 fixing. China's central bank strengthened its daily Yuan reference rate on Thursday, setting USD/CNY exchange rate at 6.7808 compared with 6.7854 in the previous session.
The 46-pip shift continues a period in which the People's Bank of China has used the fixing to guide the currency more firmly while balancing pressure from exporters and the domestic economy.
The stronger midpoint came on the same day that China left its benchmark loan prime rates unchanged for a fifteenth consecutive month.
The one-year LPR stayed at 3.00%, while the five-year rate remained at 3.50%.
PBOC Keeps Policy Support Targeted The combination of a firmer fixing and unchanged lending rates suggests Beijing remains reluctant to deploy broad monetary easing that could undermine the currency.
Foreign exchange analysts at ING noted that the PBOC has increasingly guided daily fixes stronger and that exporters have tended to sell Dollars into USD/CNY rallies.
ING economists Deepali Bhargava and Lynn Song maintain a 6.67-6.92 forecast band for the remainder of 2026 and favour “further CNY strength heading into 2027.” Read our latest USD/CNY forecast sentiment survey for 2026, 2027 and 2028 here.
The official fixing does not guarantee the direction of USD/CNY, but it remains an important policy signal because onshore trading is permitted only within a band around the midpoint.
Further stronger-than-expected fixings would reinforce the view that authorities are comfortable with gradual Yuan appreciation, while renewed economic weakness could test that preference.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
GBP/USD surged to 1.3613 on Wednesday, reaching a three-month high. Investors are digesting fresh UK inflation and labour market data.
Consumer inflation accelerated to 2.9% in July, up from 2.6% in June and in line with forecasts. Core inflation held steady at 2.6%. Following the release, markets slightly scaled back expectations of a Bank of England rate hike before year-end.
Earlier labour market data showed unemployment holding at 4.9%, above expectations, while the number of payrolled employees fell by 86,000 year-on-year. Meanwhile, growth in regular pay remained fairly stable at 3.5%.
Additional support for the pound is coming from a weaker dollar. Soft US economic data have led investors to reduce expectations of further Federal Reserve tightening. At the same time, elevated oil prices and uncertainty surrounding the US–Iran conflict continue to pose inflation risks for the UK.
Technical analysis
On the H4 GBP/USD chart, a wide consolidation range is forming around the 1.3523 level. The market has moved towards its upper boundary. A new compact consolidation range is expected to form below 1.3631. A downside breakout from this range would open the way for a move lower towards 1.3500. The MACD supports this scenario, with its signal line above zero and beginning to turn downwards.
On the H1 chart, the market has formed a compact consolidation range around the 1.3607 level, currently extending between 1.3588 and 1.3618. A move lower towards 1.3572 is expected, followed by a move higher to 1.3600. The Stochastic oscillator confirms this scenario, with its signal line below 80 and trending downward towards 20, indicating short-term downside pressure.
ConclusionGBP/USD has climbed to a three-month high, supported by a weaker dollar and UK economic data that largely met expectations. Inflation accelerated to 2.9% in July, while core inflation held steady, prompting markets to slightly lower BoE rate hike expectations. Labour market data showed unemployment above forecasts and a decline in payroll employment, though wage growth remained stable. The dollar remains under pressure from soft US data, which has reduced Fed tightening expectations. However, elevated oil prices and geopolitical uncertainty continue to pose inflation risks for the UK. Technically, the pair may see a short-term pullback towards 1.3572, with potential for a further decline to 1.3500. The near-term direction will depend on upcoming economic releases and central bank signals.
EUR/USD vystoupal na tříměsíční maximum 1,1693, protože dolar oslabil po oznámení amerického ministerstva financí o zdvojnásobení odkupu dlouhodobých dluhopisů. Analytici vidí prostor k růstu k 1,1800.
The Euro (EUR) posts a fresh three-month high at around 1.1693 against the US Dollar (USD) during the European trading session on Thursday. The major currency pair strengthens as the US Dollar takes a hit due to plunging United States (US) long-dated bond yields after the Treasury Department’s announcement that it will double down on its bond-buying operations to curb higher borrowing costs.
Strategists at Danske Bank note that EUR/USD “spiked higher” after the US Treasury announced an increase in buyback volumes of longer-dated Treasury bonds, a move that coincided with a flattening of the US yield curve. They highlight that the 10Y UST, at “4.64% currently, … is now 10bp below the peak on Tuesday,” and that the adjustment in US yields has “only partly spilled over to Europe, where the primary market has opened with plenty of SSA and covered bond deals.”
In the European session, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its decline and posts a fresh 11-week low near 98.70.
US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.15%-0.17%0.16%-0.24%-0.01%-0.33%0.15%EUR0.15%-0.02%0.30%-0.08%0.13%-0.19%0.30%GBP0.17%0.02%0.32%-0.07%0.15%-0.15%0.32%JPY-0.16%-0.30%-0.32%-0.40%-0.17%-0.50%-0.01%CAD0.24%0.08%0.07%0.40%0.24%-0.08%0.39%AUD0.01%-0.13%-0.15%0.17%-0.24%-0.31%0.16%NZD0.33%0.19%0.15%0.50%0.08%0.31%0.50%CHF-0.15%-0.30%-0.32%0.01%-0.39%-0.16%-0.50% 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).
On the Euro front, financial markets are confident that the European Central Bank (ECB) will raise interest rates at the September meeting. In contrast, the Federal Reserve (Fed) is expected to leave them steady in the same month.
EUR/USD Technical Analysis
EUR/USD trades at 1.1693, extending its advance above the 20-period exponential moving average (EMA) at 1.1547. The pair’s position comfortably above this short-term trend indicator suggests a constructive near-term bias, though the Relative Strength Index (RSI) at 73.98 signals overbought conditions that could cap upside in the very short run.
On the downside, initial support is located at the 20-day EMA around 1.1547, where a pullback would likely be tested before any deeper correction unfolds. Looking up, the pair could advance towards May's high at around 1.1800 once it stabilizes above 1.1700.
Analysts at UOB Group are also constructive on the pair in the near-term horizon, recalling that they “turned positive on Monday (17 Aug, spot at 1.1570), indicating that ‘the price action suggests EUR is likely to trade with an upside bias.’” On Tuesday (18 Aug, spot at 1.1580), they maintained that “while the upside bias remains intact, given that there is no significant increase in upward momentum, EUR must break and hold above 1.1615 before a move to 1.1655 and beyond can be expected.” That condition was met yesterday as EUR “broke above 1.1615, as it rallied sharply to 1.1679,” with the pair closing “at a three-month high of 1.1677, up by 0.89%.”
UOB now judges that, “given the strong momentum, there is room for further upside in EUR toward 1.1725,” and will “maintain our positive EUR view as long as it stays above 1.1600 (‘strong support’ level previously at 1.1525).”
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
The Pound to Dollar (GBP/USD) exchange rate jumped above 1.3600 on Wednesday, reaching its strongest level since May as falling Treasury yields hit the US Dollar.
Pound Sterling's own UK inflation backdrop was broadly neutral.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.360955 (+0.55%)
Euro to Dollar (EUR/USD): 1.167557 (+0.86%)
Dollar to Yen (USD/JPY): 158.12827 (-0.89%)
DAILY RECAP:
GBP/USD climbed around 0.5% as the Dollar sold off sharply across the major currencies.
The decisive move came after the US Treasury announced it would double buybacks of longer-dated government bonds, sending 10 and 30-year yields lower and easing financial conditions.
Deutsche Bank strategist George Saravelos warned that failure by the Federal Reserve to recognise that effect would amount to “an additional dollar negative driver.”
The subsequent FOMC minutes were more hawkish.
Several policymakers had been prepared to raise rates in July, while many judged that another increase would be needed if inflation failed to return towards target.
Markets largely looked through that message following softer jobs, inflation and retail sales data released since the meeting.
ING's Chris Turner said: “Our base case is that it does not, and the dollar softens a little,” referring to the prospect of a September Fed hike.
Scotiabank remains similarly cautious on the US currency, stating: “We remain bearish on the outlook for the USD in the short/medium term.”
Pound Sterling had earlier shown little reaction to UK inflation.
Headline CPI rose as expected to 2.9%, while services inflation eased to 3.4% and producer input prices dropped 1.7%.
Those figures, combined with Tuesday's softer labour data, leave the Bank of England with little urgency to raise rates again.
Near-Term GBP/USD Forecast: 1.3650 in Focus After Dollar Sell-Off Thursday brings US jobless claims, forecast at 210,000, alongside the Philadelphia Fed manufacturing index.
Friday is busier for Sterling. UK retail sales are forecast to fall 0.5%, before manufacturing and services PMIs at 09:30 BST.
US flash PMIs follow at 14:45 BST.
Strong UK activity alongside softer US figures could push GBP/USD through 1.3650 and expose 1.3700.
Weak UK retail sales combined with resilient US data would put 1.3500 back in view.
The broader Pound to Dollar exchange rate (GBP/USD) remains constructive while the pair holds above the low-1.35 area.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/GBP se vyšplhal na dvoutýdenní maximum kolem 0,8570, protože britská libra oslabila po zpomalení jádrové inflace služeb na 3,4 %. Euro zůstalo pevné po potvrzení červencové inflace v eurozóně na 2,9 %.
EUR/GBP trades on the front foot on Wednesday, pushing up to the vicinity of a two-week high near the 0.8570 region as the Euro holds firm against a softer British Pound (GBP). The pair has cleared its recent range after a run of green candles on the 4-hour chart.
The move followed July inflation reports from both economies. UK headline Consumer Price Index (CPI) rose 2.9% over the year, a four-month high and up from 2.6% in June, matching forecasts. Core CPI held at 2.6%, a touch hotter than the 2.5% expected. But core services inflation, the gauge the Bank of England (BoE) watches most closely, eased to 3.4% from 3.6%, and that cooling limited Sterling's lift after the release.
On the other side of the pair, the final euro-area reading confirmed headline inflation at 2.9% for July, unchanged from June and still well above the European Central Bank (ECB) target. With price pressure firm and the print in line, the Euro kept its footing.
The backdrop remains a global bond-market squeeze. Longer-dated yields have run to multi-year highs this week on inflation and fiscal worries, with German and UK long-end yields both elevated. US Treasury yields pulled back on Wednesday from those highs as traders square up ahead of the Federal Reserve's (Fed) Federal Open Market Committee (FOMC) Minutes.
Investors will look for detail on the split at that meeting, where pre-release reporting flagged three dissenters who wanted a rate hike. The tone of the Minutes will steer broader risk sentiment into the European close.
Short-term technical analysis:On the 4-hour chart, EUR/GBP trades at 0.8572, holding a modest bullish bias as it remains above both the 20-period Simple Moving Average (SMA) at 0.8552 and the 100-period SMA at 0.8559. The cluster of nearby horizontal levels at 0.8561 and 0.8563 reinforces this underlying demand zone, while the Relative Strength Index (RSI) near 68 suggests firm upward momentum that is edging toward overbought territory, hinting at the risk of a short-term pause if buyers hesitate near the current highs.
On the topside, immediate resistance is defined by the recent horizontal barrier at 0.8573, and a sustained break above this level would open the way for further gains in the near term. On the downside, initial support is seen at the 0.8563/0.8561 band, ahead of the 100-period SMA at 0.8559 and the lower horizontal and moving average floors at 0.8558 and 0.8552, where dip-buying interest is likely to emerge while the pair maintains its current constructive structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY se drží kolem 159,53, zatímco jen zůstává v úzkém pásmu a odevzdal zhruba polovinu zisků po konci červencové intervence. Trh zároveň více započítává zářijové zvýšení sazeb BoJ.
USD/JPY held around 159.53, with the Japanese yen trading sideways for more than a week. The currency has lost approximately half of the gains made following the joint intervention by Tokyo and Washington at the end of July.
Pressure on the yen persists due to a wide interest rate differential, rising fiscal risks, and elevated energy and import costs.
At the same time, markets are increasingly pricing in a Bank of Japan rate hike in September to support the yen and contain inflation. The yield on 10-year Japanese government bonds climbed to 30-year highs this week, reflecting expectations of near-term policy tightening and concerns over the state of public finances.
Core machinery orders rose 9.7% in June, significantly exceeding forecasts and providing further support for expectations of tighter policy while signalling robust business capital expenditure.
Technical Analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 159.49 level, currently extending down to 159.20. A move higher to 159.49 is expected today, followed by a decline to 159.00. A break below this level would open the way for a correction towards 158.54. The MACD indicator supports this scenario, with its signal line above zero and trending downward.
On the H1 chart, USD/JPY has moved up to 159.65. A consolidation range is currently forming below this level. A downside breakout would open the way for a move lower to at least 159.00. The Stochastic oscillator confirms this scenario, with its signal line below 50 and trending downward towards 20, indicating short-term downside pressure.
Conclusion USD/JPY remains range-bound as the yen struggles to sustain gains from the late-July intervention. The currency has given back roughly half of its post-intervention appreciation, weighed down by persistent fundamental headwinds. However, markets are increasingly pricing in a September rate hike from the Bank of Japan, supported by rising bond yields and stronger-than-expected machinery orders data. Technically, the pair may see a short-term pullback towards 159.00 and potentially 158.54 before its next directional move. The yen’s outlook will depend on Bank of Japan policy signals, US economic data, and the trajectory of energy prices.
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The AUD/JPY has pulled back after a strong uptrend, with the momentum attributed to short-term profit-taking. However, the pair’s broader uptrend remains intact Joint interventions have not helped the yen much and stubborn inflation is a significant concern for Japan’s policymakers Despite the recent dip, the wide interest rate gap between the RBA and BoJ continues to favour carry trade in the long-term The AUD/JPY currency pair climbed for over ten straight days from its early August low around 110.14. It started falling on Tuesday, though, and has kept dropping into today’s trading session.
Earlier this month, the pair rose from roughly 110-111 to a high near 113.27-113.65. It’s since dropped, however, to about 112.64-112.72. This move signals a break in the prior upward trend.
So, is this the start of a bigger downtrend? What’s making the yen stronger? And what does it mean for carry traders?
Is Momentum Shifting Lower? Recent price movements point to a short-term pause, not a full trend reversal. The pair still trades above important long-term moving averages across various analyses, and the overall trend since the August lows still suggests a recovery.
However, technical indicators on medium-term charts, however, look more cautious. Some suggest short-term selling pressure has built up after the rapid ascent.
The Relative Strength Index (RSI) on daily charts has moved back toward the 50-52 range. This doesn’t automatically signal a bearish divergence. Instead, it likely shows the pair correcting from overbought conditions after a long period of gains
Reuters reports the Bank of Japan (BOJ) is getting ready to raise interest rates as early as its September 17-18 meeting. Policymakers might even speed up the pace of hikes beyond the current rate of about twice a year.
Policymakers are reportedly growing more concerned about ongoing inflation, strong global demand driven by AI, and the yen’s persistent weakness, even after joint currency interventions. Bank of America has even raised its year-end forecast for the yen, noting intervention needs faster rate hikes to be truly effective.
Implications for Carry Traders The AUD/JPY is among the most popular currency pairs in carry trade. Traders usually borrow Japanese yen, with its low interest rates, to buy the Australian dollar, which offers higher returns. This rate difference made the pair appealing over the last year. But when the exchange rate falls, that advantage shrinks, and traders often adjust their positions.
If you’re already holding long-carry positions, the recent drop means your investments are worth less on paper. It also raises the risk of further selling if prices keep falling. If the carry trade loses its appeal, some investors might trim their holdings or look to hedge more.
On the other hand, if the pair stabilizes or starts to climb, the carry trade strategy will regain its appeal. This is especially true if Australian economic data stays strong and the Bank of Japan slowly tightens its monetary policy. When these shifts happen, the pair can become more volatile as traders adjust their leveraged positions.
Has AUD/JPY momentum clearly turned bearish?
It is not yet confirmed. The current decline follows a strong multi-session rally and looks like consolidation before a potential break of key support.
What is driving the yen’s recent strength?
Market expectations for a Bank of Japan rate hike are up, there are lingering effects from late-July intervention, and policy outlooks differ when compared to Australia.
How does this affect carry trades?
A falling AUD/JPY cuts the profit from borrowing yen to hold Australian dollars. This can prompt leveraged traders to reduce their positions.
MUFG varuje, že EUR/USD je podle krátkodobého modelu asi o 2,5 % až 3,0 % přeceňovaný a naráží na odpor na úrovni 1,1630. Banka zároveň upozorňuje na rostoucí energetická a růstová rizika v Evropě.
The Euro-Dollar is struggling to clear 1.1630, with MUFG warning the EUR/USD looks overvalued as European gas and growth risks build. The Euro to Dollar (EUR/USD) exchange rate has climbed back towards 1.1600, but the move is starting to look less convincing once valuation and Europe's energy exposure are brought into the picture.
EUR/USD traded around 1.1597 early on Wednesday after reaching 1.1614 earlier in the week.
Softer expectations for Federal Reserve tightening should, on paper, have given the Euro more room to run. It hasn't quite happened.
MUFG sees the hesitation as significant.
“The 200-day moving average is offering resistance at 1.1630,” the bank said, noting that the best level reached on Monday was 1.1614. “We do certainly sense a high level of caution in buying EUR/USD.”
Image: EUR/USD 48h chart EUR/USD has recovered from below 1.1570, but the latest advance still leaves the pair short of the 1.1630 area highlighted by MUFG.
The more striking warning comes from MUFG's valuation model.
“Our short-term regression model for EUR/USD already indicates current spot is about 2.5%-3.0% overvalued,” the bank said.
That is the awkward part. The Dollar has lost some rate support, yet MUFG argues the Euro is already trading richer than underlying short-term fundamentals justify.
Energy is central to the concern.
European gas storage is running just below the range seen in comparable years since 2011, while delayed winter purchases risk becoming more expensive as Asian LNG demand competes for supply.
MUFG also points to unusually low river levels across the Rhine, Danube, Loire and Po. That is not merely a transport problem. Lower waterways can disrupt industry, food production and power generation at the same time.
“If the refilling period continues to disappoint ahead of winter, a more severe terms of trade hit is likely,” MUFG warned.
Near and Medium-Term EUR/USD Outlook: ING Still Sees 1.18 ING is cautious about the immediate upside too, although its medium-term conclusion is notably more bullish.
“Yesterday's EUR/USD rally stalled shortly above 1.16, and investors will be reluctant to push it much higher given energy price developments,” ING's Chris Turner said.
ING also thinks the Dollar is “not quite ready to make a sustained break lower just yet”, with higher energy prices and long-dated US Treasury yields offering support. It expects DXY to remain broadly inside 99.40-100.00 in the near term.
Still, the bank keeps EUR/USD at 1.17 for end-September and 1.18 for year-end, based on its view that the Fed does not raise rates.
Image: EUR/USD forecast outlook The wider bank consensus also leans higher, with the median path reaching around 1.18 by Q2 2027, although the full forecast range stretches from roughly 1.10 to 1.21.
So there are really two EUR/USD stories here.
ING still sees a route higher once Fed tightening risk fades.
MUFG is warning that the Euro may already have run ahead of the near-term fundamentals, especially if Europe's energy bill starts climbing again.
For the immediate trade, 1.1630 looks like the line that matters.
Trump odložil plánovaná 50% cla na zhruba 20 miliard USD kanadského zboží o tři dny a uvedl, že USA a Kanada mají dohodu. To snižuje riziko pro USD/CAD.
Trump delays threatened 50% tariffs on Canadian goods
US-Canada deal puts Keystone XL pipeline back on the table
USD/CAD tariff tail risk materially reduced
As alluded to in a separate analysis piece released on Tuesday, one of the key headwinds overhanging USD/CAD was the status of tariff negotiations between the United States and Canada. Well, it looks like Donald Trump has brought TACO to the tariff negotiations.
In a Truth Social post, Trump said the slated 50% tariffs on roughly US$20 billion of Canadian goods, which had been due to kick in tomorrow morning, have now been postponed for three days. More importantly, he said the two sides, subject to the finalisation of documents, “have a DEAL!”
Source: Truth Social
Of note, after repeated setbacks in trying to secure cheaper energy from the Gulf, energy infrastructure looks to be at the centre of the agreement. With talks between the United States and Iran now effectively dead, Trump appears to be looking north for another route to eventually deliver lower US energy prices. He immediately linked the tariff reprieve to the Keystone XL pipeline.
Trump approved the project during his first term, only for the Democrats to pull the plug after returning to power. Now, more than five years later, it looks like it may be back on the table.
Bullish reversal risk recedes
Source: TradingView
Having flagged bullish reversal risks a little over 24 hours ago, USD/CAD did pop higher on Tuesday, with the close roughly in line with the midpoint of Monday’s bearish candle, completing a three-candle morning star reversal pattern in the process.
However, the latest news flow immediately raises questions about the validity of that signal, with USD/CAD pulling back from minor horizontal resistance at 1.3910. The pair remains stuck in a narrow range between that level on the topside and a support zone running from 1.3870 down to the 200-day moving average at 1.3851. Those are the two immediate focal points for traders.
Given the reaction to the tariff news, the risk of a resumption of the broader bearish trend may be increasing, putting the emphasis on a potential break beneath the lower end of that support zone. If that were to occur, 1.3775 is the first level to watch, followed by a more pronounced support zone around 1.3714, the 78.6% Fibonacci retracement of the September 2024 to January 2025 bull move. That area has seen plenty of work over recent months, acting as resistance for lengthy periods earlier this year.
If the bullish price signal proves more prescient, the immediate focal point above 1.3910 is the 100-day simple moving average at 1.3919, where the price bounced on several occasions before breaking lower earlier this week. A break above would put horizontal resistance at 1.3967 in play, with 1.3991 another minor level overhead before the broader downtrend from the July highs comes into play.
The message from the oscillators still favours selling into strength. RSI (14) continues to trend lower and sits marginally above oversold territory at 32, while MACD confirms the message, continuing to trend lower in negative territory after crossing its signal line from above.
FOMC minutes loom
The FOMC minutes from the July meeting screen as the most likely fundamental catalyst to determine the next move in USD/CAD. With Fed tightening expectations having been pared sharply following the recent run of softer US data, traders will be watching for signs of whether the hawkish dissents seen at the meeting extended more broadly across the committee.
