EUR/USD po výprodeji dolaru po Fedu prorazil nad 1,1500 a v červenci vzrostl o něco přes 1 %. Danske varuje, že další pokles amerických reálných výnosů by jeho short na EUR/USD dál tlačil.
Danske Bank says EUR/USD’s break above 1.1500 has challenged its bullish Dollar view, with further declines in US real yields likely to place its short-Euro position under increasing pressure. The Euro to Dollar exchange rate ended July near 1.1530 after the post-Federal Reserve Dollar selloff carried the pair decisively above 1.1500.
EUR/USD gained just over 1% during July, recovering from a monthly low near 1.1354 and reaching a high around 1.1547. The pair remains 1.7% lower since the start of 2026, having traded between January’s peak at 1.2075 and a June low of 1.1325.
Image: Euro-to-Dollar exchange rate chart - 3 month timeframe Danske Bank said “modestly stronger-than-expected Q2 GDP and July flash inflation data from the largest euro area economies supported EUR”, but stressed that domestic European data were not the main reason for the move.
Instead, the bank said “the main driver behind EUR/USD rising above 1.15 has been the post-FOMC decline in US real rates.”
Nominal US yields fell following the Federal Reserve meeting, while medium and longer-term inflation expectations moved higher. According to Danske, this reflected markets reassessing “Kevin Warsh’s commitment to bringing inflation back to target”.
That combination lowered inflation-adjusted US yields and weakened one of the central supports for the Dollar.
The effect was not confined to the Euro. Danske noted that “the same effect could be seen across other risk-sensitive currencies as well”, with easier financial conditions supporting the Swedish Krona, New Zealand Dollar and South African Rand.
For the bank, the market reaction directly challenges its recent positioning.
“The shift does challenge our recent USD-positive narrative,” Danske said, adding that this view had been “underpinned by expectation of the Fed remaining on a firm tightening bias.”
The bank is not abandoning the prospect of further US rate increases. It said: “We still think the macro case for the Fed hiking rates is very much alive.”
That remains the foundation of its medium-term case for renewed Dollar strength. Sticky inflation, resilient activity and the risk that the Fed ultimately tightens more than markets now expect could restore support to US yields.
The immediate risk, however, has moved in the opposite direction.
Image: EUR/USD chart - performance so far in 2026 Danske conceded that “tactically, further decline in US real rates would certainly put our recent short EUR/USD recommendation under even more pressure.”
The technical backdrop has improved alongside the change in rates. EUR/USD has moved above both its 20-day and 50-day moving averages after spending much of July below them.
A sustained hold above 1.1500 would leave the recovery intact and bring the 1.1600-1.1665 region back into focus. The latter marked the upper part of June’s trading range before the Euro’s slide towards 1.1325.
The broader three-month trend remains less convincing. EUR/USD is still below May’s highs near 1.1800 and has fallen around 1.7% over that period.
Danske’s forecast therefore hinges on whether the post-Fed fall in real yields persists. A further decline would reinforce the Euro’s breakout and threaten the bank’s short position, while a recovery in real rates and renewed expectations of Federal Reserve tightening could pull EUR/USD back towards 1.1400.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
BOJ zvažuje v září nebo říjnu zvýšení úrokové sazby na 1,25 %, což spolu s intervencemi proti jenu tlačí USDJPY dolů. Měnový pár za červenec oslabil zhruba o 3 % a uzavřel měsíc kolem 157,40.
Key Points:The BOJ may consider raising its policy rate to 1.25% in September or October.Yen intervention and expectations of higher Japanese rates are pressuring USDJPY.USDJPY could extend its correction if it remains below key technical support.
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The Bank of Japan kept its policy rate at 1% in July. It came after a 25 basis point hike in June. But the last meeting did not indicate that the tightening cycle was over. The BOJ placed more weight on the risk of the underlying inflation exceeding its 2% target.
The depreciating yen has increased the pressure for higher interest rates. It increases the costs of imported fuel, food and industrial materials. While currency intervention can slow the rate of decline, it may not eliminate the big interest rate spread between Japan and the United States. That could mean that the BOJ needs to tighten policy to counter the primary driver of yen weakness.
In my view, the BOJ may consider a policy rate increase to 1.25% in September/October. September is now the first realistic window while October remains possible if policymakers want more inflation and wage data.
BOJ Interest Rate Decision Keeps September Hike in Focus The BOJ maintained the interest rates steady with 8-1 vote. But the board member Hajime Takata supported an immediate increase to 1.25%. This means that the tightening camp is beginning to grow within the bank as evidenced by his dissent. The bond yield of the 2-year Japanese bond also rose to 1.51% following the meeting. This suggests the bond market expects the interest rates to remain higher.
Governor Kazuo Ueda gave clear warning about the cost of waiting too long. He said that the lack of action could increase the risk of inflation. The bank would also begin to discuss these risks starting with its September meeting. This guidance opens the door for a potential rate hike in September.
This message was supported by the BOJ’s July forecast. The bank added that it would consider raising the policy rate if the economy and prices evolve in line with the bank’s expectations. The bank said that the financial environment is accommodative, as real interest rates remain negative. So, a 1% policy rate might still be too low if the inflation 2%.
The next move will depend on the upcoming data about inflation, wages and currency. The strong wage data and another increase in inflation expectations could warrant a September rate increase. The yen’s depreciation again may push the BOJ into a more urgent decision. The bank could hold off until October or December if these pressures ease.
Japan Inflation and Wage Growth Support Further BOJ Rate Hikes The annual inflation rate in Japan climbed to 1.7% in June and the core inflation rate to 1.6%. Both readings are below BOJ’s target. But they are not based on current prices and take into account government energy subsidies. The BOJ is expecting the core inflation to surge to above 2% in the second half of fiscal 2026.
The producer prices suggest the future inflation. These grew 7.1% year on year in June, following 6.6% growth in May. The chart below shows a strong rise in producer prices since March 2026. Most of this increase was due to increased energy, chemical and petroleum prices. The companies could shift some of these costs back to consumers, making it more difficult for the BOJ to maintain the rates.
The wage data also indicates additional tightening. The average cash earnings grew 3.2% year on year in May.
On the other hand, the real earnings grew 1.4% year on year and continue to grow in 2026 as seen in the chart below.
At the same time, business inflation expectations increased from 2.4% to 2.7%. When wages are growing, consumers can more easily afford higher prices and when expectations are increasing, inflation is more likely to continue.
Strong demand for semiconductors, high energy prices and the weak yen may continue to weigh on inflation. These forces are in favor of transitioning to 1.25% by the end of 2026.
If these factors remain positive and continue to grow, the BOJ could hike rates further to 1.5% in early 2027. But if the oil price drops and the yen continues to strengthen, the bank may be able to take a break after its next rate increase.
USDJPY Forecast as BOJ Rate Hike Supports the Yen The hawkish BOJ and suspected currency intervention pushed the USDJPY lower. The strength in yen at the end of July has pushed USDJPY to close the month around 157.40. This is around 3% down for July and opens the door for further correction in August.
If the BOJ raises rates, then the US dollar will become less attractive relative to the yen. This may put more pressure on USDJPY on the downside.
But the difference in rates between the U.S. and Japan is still quite large. The 2-year yield in the United States was nearly 4.31%, while in Japan it was around 1.51%.
If the BOJ hikes rates and US yields drop, USDJPY may retreat to the 152-155 area. But a BOJ rate hike and another US rate increase would drag the pair back towards 160.
USDJPY Technical Analysis as Pullback Reaches Key Support USDJPY dropped after marking a high at the 164 level and closed the month below the 157 level. This means that the breakout above the 160 level, which was triggered in June 2026, failed. USDJPY still needs to consolidate below the 160-162 area.
The weekly chart below shows that USDJPY has been trending within an ascending channel pattern since the January 2023 lows. If USDJPY continues to drop below 157 next week, it will likely continue its momentum toward the 149-150 area as seen by lower support of the ascending channel pattern.
The importance of the current support zone is highlighted on the daily chart, which shows that USDJPY closed slightly below the rising trend line and the 200-day SMA.
But this was the last day of the month, which triggered strong volatility in the financial markets. This means that a recovery above 158 next week and continued upside momentum may allow the pair to rally toward the 160 area.
However, if the pair continues to drop below the 157 level, it will open the door for a continued decline toward the 152 area. This level is marked by the red dotted support line.
But the RSI indicator shows an extremely oversold condition in the short term and indicates a rebound before the next drop. A recovery above 161.50 will suggest that the bottom has formed. This bottom may allow the pair to continue upside.
In Closing The BOJ has opened the door to another interest rate hike. Rising producer prices, strong wage growth and higher inflation expectations support the tighter policy. The weak yen also increases imported inflation. In my view, the BOJ may raise the policy rate to 1.25% in September or October. It could delay the move if inflation eases or the yen continues to recover.
The higher Japanese interest rates could place further pressure on USDJPY. A continued decline below 157 may push the pair toward the 150-152 area. But the oversold conditions could trigger the short term rebound first. A recovery above 161.50 would indicate that the bottom is confirmed and the pair is ready to move higher again.
Read more: BOJ Rate Hike to 1.25% Puts Japanese Yen in Focus
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Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.
The Pound to Rupee (GBP/INR) exchange rate ended July at 128.63 after a volatile month carried the pair above 130.80 before part of the advance was reversed.
The Reserve Bank of India’s policy decision now provides the week’s main event risk for GBP/INR.
Latest — Exchange Rates: Pound to Rupee (GBP/INR): 128.6262 (-0.14%)
July: +2.55%
July High: 130.8147
WEEKLY RECAP:
The Pound to Rupee exchange rate (GBP/INR) recovered during the closing sessions of July after falling towards 127.28 at the start of the week.
Pound Sterling retained support following the Bank of England’s decision to hold Bank Rate at 3.75%.
Three policymakers voted for an immediate increase, although Governor Andrew Bailey played down the urgency of another move. Scotiabank noted that UK yield spreads continue to provide Sterling with underlying support.
The Indian Rupee finished the week more strongly.
Persistent Reserve Bank of India intervention, a softer US Dollar and a modest retreat in oil prices helped the currency record its strongest weekly advance since March.
The RBI’s June measures have now attracted more than $40 billion in foreign-currency inflows, providing policymakers with another tool for stabilising the Rupee.
However, India remains vulnerable to energy costs. Brent crude posted a sharp July increase, keeping inflation and the import bill firmly in focus.
Near-Term GBP/INR Forecast: RBI Decision and Technical Levels in Focus For Sterling, Monday’s final manufacturing PMI is followed by Wednesday’s services PMI and Thursday’s construction survey.
For the Rupee, Wednesday is the key session. India’s services PMI is followed by the RBI policy announcement, with most economists expecting the repo rate to remain at 5.25%.
A neutral hold accompanied by confidence in capital inflows could support the Rupee. A dovish assessment of growth risks or renewed concern over oil prices would leave it exposed.
Technically, GBP/INR is trading close to its 20-day moving average near 128.60 and above the 50-day average around 127.70.
Image: GBP/INR 3-month chart with 20MA an 50MA Share article
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The 20-day line has also moved back above the 50-day average, giving the chart a mildly positive bias.
Initial resistance sits at 129.00–129.20, followed by 130.00 and July’s 130.81 peak. Support is located around 128.00 and 127.30.
A sustained break above 129.20 could reopen 130.00, while a close below the 50-day average would expose 127.00.
In the near-term, Exchange Rates UK Research forecast that the Pound to Rupee exchange rate will trade within the 127.00–130.50 range.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
UBS expects the Australian Dollar to strengthen steadily over the coming year, with AUD/USD forecast at 0.73 by September and 0.76 by June 2027. The Australian Dollar to US Dollar exchange rate (AUD/USD) ended July at 0.7026, having gained 1.65% over the month and more than 5% since the start of the year.
That leaves the pair back above 0.70 after a difficult June, when AUD/USD fell 3.73% and briefly traded below 0.69. See our full history here.
UBS sees the recovery extending well beyond current exchange rate levels.
Its latest global forecasts put AUD/USD at 0.73 in September 2026, 0.74 in December, 0.75 in March 2027 and 0.76 by June.
The final target implies upside of just over 8% from the latest close.
The shape of the forecast matters.
UBS is not looking for one sudden surge.
It expects the pair to rise by roughly one cent in each quarter, pointing to a broader improvement in the Australian Dollar backdrop alongside a gradual weakening of the US currency.
We think that makes the 0.73 September target the key first test.
If AUD/USD can reach and hold that level, the later forecasts at 0.74, 0.75 and 0.76 become much easier to justify. If it fails well before then, the whole path starts to look more vulnerable.
The bank’s wider currency table also supports the view that this is partly a Dollar story.
UBS expects both EUR/USD and GBP/USD to rise over the same period, suggesting it sees a broad retreat in the US Dollar rather than an Australian Dollar move driven by domestic factors alone.
That distinction is important after softer Australian inflation reduced expectations for another near-term Reserve Bank of Australia rate rise.
The absence of an immediate hike removes one potential source of support for the Aussie, but it does not rule out further gains if US yields fall and the Federal Reserve becomes less restrictive.
A favourable global backdrop would help as well.
The Australian Dollar tends to perform better when equity markets are firm, commodity demand is improving and investors are prepared to hold more risk-sensitive currencies.
In our view, UBS’s forecast assumes those external forces will prove strong enough to outweigh any fading support from Australian interest rates.
The pair still has technical work to do before the first target comes into view.
AUD/USD closed July near 0.7026, above the rising 20-day moving average and around the declining 50-day average.
That is a clear improvement from late June, when the exchange rate fell towards 0.6880, but it is not yet a decisive medium-term breakout.
The immediate obstacle is the July high around 0.7044.
A move through 0.7050 would strengthen the recovery and bring 0.7100 back into focus.
Beyond there, resistance is likely around 0.7180-0.7200, followed by the May peak at 0.7277.
We would treat a break above 0.7277 as the point at which the UBS forecast starts to look technically credible.
That would complete the recovery from June’s decline and leave the market within reach of 0.73.
Image: AUD/USD three-month chart showing support near 0.7000, resistance around 0.7045 and the May high at 0.7277 The broader 2026 trend remains constructive, but the May high still guards the path to UBS’s first target The year-to-date chart is more positive than the shorter three-month view.
AUD/USD began 2026 near 0.6670 and has since gained 5.34%.
The pair rallied strongly through January, traded above 0.72 during the spring and reached a year-to-date high at 0.7277 in May.
The subsequent decline was sharp, but the exchange rate held well above its January low before recovering through July.
That leaves the broader upward structure intact.
The 20-day moving average has turned higher, while the 50-day average has begun to flatten.
A sustained hold above 0.70 would keep the recovery on course and increase the likelihood of another test of the spring highs.
Initial support is located around 0.7000, followed by the 20-day average near 0.6970.
A break beneath 0.6970 would weaken the near-term picture and expose the July support zone around 0.6940, with the late-June low near 0.6880 providing the more important downside level.
We would view a move back below 0.6970 as a warning that the July recovery is losing momentum.
Image: AUD/USD year-to-date chart showing the rise from 0.6670, May peak near 0.7277 and July recovery above 0.70 Share article
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UBS’s 0.76 forecast ultimately rests on more than the Australian Dollar story.
A move that far would require a sustained improvement in global risk appetite, supportive commodity conditions and a weaker US Dollar.
The first two targets look achievable if AUD/USD can maintain its position above 0.70 and clear the May high.
The longer-term move towards 0.76 would require a more convincing Dollar decline and a clear break from the broad range that has contained the pair since February.
For now, the technical tone has improved, but the exchange rate remains in recovery rather than full breakout mode.
A close above 0.7277 would materially strengthen the bullish case and place UBS’s 0.73 September forecast within reach.
Analysts at Scotiabank expect renewed pressure on USD/CAD after its July decline, with a break below 1.4000 opening the way towards 1.3981 and the upper 1.39s. The US Dollar to Canadian Dollar exchange rate ended July near 1.4015 after falling 1.36% over the month.
USD/CAD opened July around 1.4208 and reached a monthly high close to 1.4239 before retreating to a low near 1.3992. The pair remains 2.1% higher for 2026, having traded between approximately 1.3482 and 1.4248 since the start of the year.
Scotiabank says the Canadian Dollar has benefited from the broader deterioration in US Dollar sentiment following the Federal Reserve meeting, although progress through the 1.4000 area has so far proved difficult.
Short-term US-Canada interest-rate spreads narrowed modestly after the FOMC decision, providing some support for the Loonie. The bank cautions, however, that the remaining yield gap is still wide enough to restrain a more substantial Canadian Dollar advance.
The latest weekly close may be more significant. Scotiabank believes the move suggests that the rebound in USD/CAD from its mid-July low is beginning to reverse.
The pair has moved decisively below its 40-day moving average, which Scotiabank places at 1.4104. The bank now expects minor recoveries towards 1.4100 to encounter firm resistance.
USD/CAD tested the 1.4000 region during the final sessions of July but failed to reach the 38.2% retracement of the May-June rally at 1.3981.
According to Scotiabank, “a low close on the week suggests the USD rebound from mid-July is reversing and more pressure is likely on the upper 1.39s in the days ahead.”
The one-month chart supports the softer technical picture. USD/CAD has fallen below its declining 20-day moving average and closed close to the bottom of July’s range.
The broader year-to-date chart is less conclusive. The pair remains above its rising 50-day average and is still well above the January low, reflecting the scale of the Dollar rally during May and June.
Canada’s domestic data provide the next potential catalyst. May industry-level GDP is expected to rise 0.2% on the month and 1.4% from a year earlier. A stronger reading could help the Canadian Dollar force a clearer break below 1.4000.
Scotiabank’s short-term assessment is bearish, with 1.3981 marking the immediate downside target and the upper 1.39s likely to come under further pressure. Resistance around 1.4100 should now limit any near-term USD recovery.
Canadian Dollar Prices: This Week USDEURGBPJPYCADAUDNZDCHFUSD -1.37%-1.17%-3.91%-0.57%-0.61%-1.66%-1.35%EUR+1.39% +0.21%-2.57%+0.82%+0.78%-0.29%+0.03%GBP+1.18%-0.21% -2.77%+0.61%+0.57%-0.50%-0.18%JPY+4.07%+2.64%+2.85% +3.47%+3.43%+2.34%+2.66%CAD+0.57%-0.81%-0.60%-3.36% -0.04%-1.10%-0.78%AUD+0.61%-0.77%-0.56%-3.32%+0.04% -1.06%-0.74%NZD+1.69%+0.29%+0.50%-2.28%+1.11%+1.07% +0.32%CHF+1.37%-0.03%+0.18%-2.59%+0.79%+0.75%-0.32% The FX heat map compares how Canadian Dollar (CAD) has performed against a basket of major currencies over the past week. The largest move was against the Japanese Yen, where Canadian Dollar recorded its sharpest decline. Data comparing prices today (01/08/2026 12:20 UTC) and daily close on 25/07/2026.
To read the table, choose the base currency from the left-hand column and then move across to the quote currency along the top row. For example, the GBP row and USD column shows the weekly percentage move in GBP/USD.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
MUFG uvádí, že jestřábí postoj Bank of England podporuje GBP/USD, ale Baileyho odmítnutí brzkého zvýšení sazeb omezuje další růst. Pár zakončil červenec kolem 1,3482 po zisku 1,75 % za měsíc.
MUFG says the Bank of England’s hawkish hold should keep Sterling supported, but Governor Bailey’s pushback against imminent rate increases limits the scope for a sustained GBP/USD rally. The Pound to Dollar exchange rate (GBP/USD) ended July around 1.3482 after gaining 1.75% over the month and rebounding strongly from lows below 1.33.
GBP/USD rose around 0.85% over the final 48 hours of July, reaching a high near 1.3495 and finishing close to the top of that range.
Image: Pound to Dollar (GBP?USD) exchange rate chart - final 48hr pre-close Over the past three months, the pair has traded between approximately 1.3142 and 1.3658, leaving the latest rate near the middle of its broader spring and summer range.
MUFG believes the Bank of England’s latest communication remains supportive for Sterling, although policymakers stopped short of signalling an imminent rate increase.
The Monetary Policy Committee left rates unchanged, with MUFG’s textual analysis describing the written contributions as consistent with a hawkish hold. Policymakers continued to emphasise inflation persistence, second-round effects and the risks posed by energy prices and geopolitical uncertainty.
The committee remains divided. MUFG’s framework placed Catherine Mann firmly in hawkish territory, followed by Huw Pill and Megan Greene, while Swati Dhingra and Alan Taylor remained on the dovish wing.
Mann’s shift was particularly notable, with her comments placing greater weight on inflation risks arising from Middle East tensions and volatile energy prices.
The press conference delivered a more balanced signal than the written statement, however.
MUFG scored the MPC contributions at 23.3 on its hawk-dove scale, compared with a softer 17.0 for Governor Andrew Bailey’s press conference.
Bailey explicitly warned markets not to leave the meeting believing that the MPC was “edging towards a hike”.
That distinction is important for Pound Sterling.
The BoE remains concerned enough about inflation to resist a dovish shift, supporting UK yields and the Pound, but it is not yet preparing investors for another tightening move.
According to MUFG, “the communication remains supportive, but the deliberate pushback against rate hike expectations limits the scope for upside.”
Image: GBP/USD 3-month history The Pound-Dollar exchange rate charts reinforce that mixed picture.
GBP/USD has recovered above both its short-term moving averages, but remains below the May high near 1.3658.
A clean move through 1.3500 would improve the immediate technical tone, while the 1.3550-1.3660 area is likely to offer stronger resistance.
Pound Sterling’s rebound can therefore extend while the Dollar remains under pressure, but MUFG’s assessment suggests the BoE alone is unlikely to drive GBP/USD decisively beyond its recent highs.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
ING čeká, že EUR/USD zůstane poblíž 1,1500 po prudkém výprodeji dolaru. Trvalý růst nad 1,1600 by podle banky vyžadoval další výrazné přecenění sazeb v USA.
ING expects EUR/USD to remain supported around 1.1500 following the sharp Dollar selloff, although a sustained move above 1.1600 would require a further dovish repricing of US interest rates. The Euro to US Dollar exchange rate (EUR/USD) gained just over 1% in July, recovering from a monthly low near 1.1354 and reaching a high around 1.1547.
EUR/USD pair remains 1.7% lower for 2026, having fallen from January’s peak at 1.2075 to a year-to-date low of 1.1325 in June.
Image: EUR/USD exchange rate performance over 48h chart The latest 48-hour chart above shows the pair rising from below 1.1440 to above 1.1530, leaving it close to the upper end of its recent range. The daily chart also shows EUR/USD moving back above its 20-day moving average, although it remains close to the declining 50-day average.
ING believes the sharp change in Dollar momentum leaves the Euro better supported in the near term.
The Greenback came under pressure after the Federal Reserve delivered a more dovish message than markets had expected. Investors were left questioning whether policymakers would follow through on their inflation-fighting rhetoric with actual rate increases.
The US Dollar’s decline accelerated after US core PCE inflation rose only 0.1% in June and second-quarter growth undershot expectations.
Suspected Japanese intervention against the Yen added to the pressure by triggering a sharp fall in USD/JPY and spilling over into broader Dollar sentiment.
Positioning may also keep the move going.
ING estimates that speculative long-Dollar exposure against other major currencies was at its most stretched since January 2025, while leveraged funds held their largest EUR/USD short positions since 2021.
According to the bank, “there may still be room for further USD long-squeezing”, making it too early to call a firm bottom in the Dollar selloff.
Analysts at ING note EUR/USD broke through 1.1500 “with little resistance” and expects the level to attract buyers for a while longer.
The bank sees near-term risks tilted towards further Euro gains, although it is cautious about chasing a sustained move above 1.1600.
Such a break would probably require another material repricing lower in US rates, together with an easing in Middle East tensions.
Image: EUR/USD Year-to-Date historical chart For now, ING expects buyers to continue emerging around 1.1500, with 1.1600 marking the more difficult test for the recovery.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
EUR/USD uzavřel červenec poblíž 1,1500 a za poslední obchodní týden přidal přes 1,1 %. Euro podpořila slabší data z USA a lepší výsledky z Německa a eurozóny.
The EUR/USD pair closes July with modest gains near the 1.1500 mark, adding over 1.1% in the last trading week. Price action throughout the month was dull to say the least as investors remained clueless, although the pair managed to hit 1.1530 ahead of the close. The lack of action was compounded by persistent uncertainty, centered on developments in the Middle East and the United States (US) Federal Reserve’s (Fed ) monetary policy path.
Regarding the first, an escalation of the US-Iran war spurred US Dollar (USD) demand at the beginning of the week after continued tit-for-tat attacks around the Strait of Hormuz, which, by the way, is once again closed. Mood improved early in the week amid a pause in attacks and headlines suggesting a fresh round of negotiations.
Renewed war headlines, however, were quickly overshadowed by the US Fed monetary policy announcement on Wednesday. The USD plunged after the central bank decided to leave the benchmark rate unchanged, with the split vote leaving it at a range of 3.50%-3.75%. Three regional bank presidents dissented, preferring an immediate 25-basis-point (bps) rate hike: Cleveland's Beth Hammack, Minneapolis's Neel Kashkari, and Dallas's Lorie Logan.
Chairman Kevin Warsh chickens outThe USD collapsed following the Fed’s decision as investors believed Chair Warsh had chickened out. He kept repeating his commitment to curb inflation and to price stability, but the Fed left rates unchanged for the fifth consecutive meeting.
Of course, he did not provide clear guidance on the future path of monetary policy, not actually a surprise. And he failed to specify how he intends to resolve five-year-long inflationary pressure despite affirming that there is no “soft” inflation target.
“We are on the job, we will deliver, we are focused like a laser on making sure we can do it, but the suggestion that we're going to be able to do it with our magic wand is one I want to disabuse you and everyone else of,” Warsh said.
Market players did not take well to the myriad empty words and the lack of action. However, bets on a September rate hike have increased after the dust settled. According to the CME FedWatch Tool, the chances of a hike increased to 65% from 55% one week before the Federal Open Market Committee (FOMC) announcement.
Still, there’s a long way ahead of September, and loads could happen in the way. The focus will remain on data — inflation and employment figures — and Middle East developments.
Meanwhile, the US published the preliminary estimate of the Q2 Gross Domestic Product (GDP), which showed that the economy expanded at an annual rate of 1.5%, missing expectations and below the Q1 reading of 2.1%. Other details of the report showed that the GDP Price Index jumped to 6.3% in Q2 from 3.6% in Q1, while the quarterly core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge, increased 3.3% on a yearly basis, matching the market expectation. In June, the core PCE Price Index ticked lower on a yearly basis, to 3.3% from 3.4% in May, still far above the Fed’s 2% goal.
Middle East crisis here to stayUS President Donald Trump said for the umpteenth time on Friday that the war is “going well” and that the US “keeps winning.” No strikes between Washington and Tehran were reported by the end of the week, a short truce that at least was enough to contain fears. Still, unrest leads the region as traffic through the Strait of Hormuz declined to the levels seen before the Memorandum of Understanding (MoU), while Kuwait and Egypt reported Iranian attacks early Friday.
On a positive note, US President Trump announced an historic agreement to secure the disarmament of Hamas, while a senior Hamas official confirmed it to CNN, contingent on Israel upholding its obligations. This is the first time Hamas has agreed to a specific plan to hand over weapons.
The song remains the same: the US demands Iran drops its nuclear program, while Iran requests full control of the critical sea passage. Neither side is willing to give up on those terms.
Euro finds support in dataData coming from Europe provided support to the Euro: Germany and the Eurozone (EU) released the preliminary estimates of the Q2 GDP. Annualized growth in Germany rose 0.9%, modest yet better than the 0.4% posted in Q1. The EU figure printed at 1%, up from the previous 0.3%.
German inflation met expectations as the preliminary estimate of the July Harmonized Index of Consumer Prices printed at 2.8% YoY, higher than the 2.4% from June. The EU HICP in the same period resulted in 2.5%, in line with expectations and slightly above the previous 2.4%.
Still, financial markets price in roughly a 65% probability that the European Central Bank (ECB) will deliver a 25 bps rate hike at the September meeting. Again, too early to speculate about that.
Regardless, European data was encouraging enough to spook concerns, which ended up helping the Euro on its way north. It should not be a surprise, however, if the Greenback resumes its rally on the back of war-related fears.
What’s next in the docketThe first week of August will be a busy one. Germany will kick-start macroeconomic releases by publishing June Retail Sales, while the US will publish the ISM Manufacturing Purchasing Managers Index (PMI) on Monday. The ISM Services PMI will be out on Wednesday, while EU June Retail Sales are scheduled for Thursday.
S&P Global, alongside local banks, will release the final estimates of the July PMIs for major economies throughout the week.
Midweek, the focus will turn to employment as the US releases June JOLTS Job Openings, the July ADP Employment Change report, and July Challenger Job Cuts ahead of the July Nonfarm Payrolls (NFP) report scheduled for Friday. The US is expected to have added 91K new jobs in the month, up from the 57K added in June, while the Unemployment Rate is foreseen at 4.3%, up from the 4.2% posted in June.
EUR/USD Technical Outlook:From a technical perspective, based on the daily chart, EUR/USD has partially recovered its bullish poise. The pair has run past a now mildly bullish 20-day Simple Moving Average (SMA) at 1.1430, although it remains below the 100-day and 200-day simple SMAs at 1.1568 and 1.1631, respectively, keeping the broader backdrop bearish despite the latest bounce. The 14-day Relative Strength Index (RSI) indicator turned lower but stands at 58, while the Momentum indicator holds flat above its midline, suggesting that buying interest has improved, though not enough to confirm a trend change.
In the weekly chart, EUR/USD maintains a mildly bearish near-term bias, holding below the 20-week SMA at 1.1565 while still trading above the 100- and 200-week SMAs at 1.1311 and 1.1032, respectively. Technical indicators have rotated higher, but remain below their midlines, reflecting the latest advance yet far from suggesting a bullish extension ahead.
On the topside, initial resistance is at the 100-day SMA near 1.1568, with the 200-day SMA at around 1.1631 as the next significant barrier if buyers extend the advance. On the downside, immediate support emerges at the 20-day SMA at 1.1424, where a break would expose a deeper pullback toward the June low at 1.1324.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed credibility questions underpin USD SSA spreads as EUR and GBP seen outperformingAccording to TD Securities, recent price action has seen "US swap spreads have tightened, and the yield curve has steepened," reshaping relative value across rates and credit markets. The bank argues that "questions around the Fed's credibility are supportive for USD SSA G-spreads," and, in this context, it "look[s] for front-end EUR and GBP to outperform vs USD" as investors reassess opportunities along the front end of major curves.
AUD/USD včera vzrostl o více než 1 % a dnes se dostal na intradenní měsíční maximum 0,7045. Růst podporují vyšší očekávání sazeb RBA a slabší americký růst.
Higher-for-longer RBA interest rate expectations, persistent domestic inflation, and widening yield differentials against the U.S. Federal Reserve continue to fuel the currency's upward trajectory Broader risk-on sentiment is adding tailwinds, as investors favor growth-sensitive, higher-yielding currencies like the Aussie over safe havens amid improving global market mood The RBA's August 11 decision and upcoming US data could quickly reverse momentum The Australian dollar experienced significant gains this week. Yesterday, it rose over 1% against the US dollar, marking one of its most substantial single-day movements this year. This upward trend continued today, reaching an intraday monthly high of 0.7045.
Zoom out, and the pair is up roughly 9% over the past twelve months. So what’s behind this fresh burst of momentum, and is it something traders should lean into or treat with caution?
What Is Driving this Jump? The main reason for the Aussie dollar’s quick rise is the growing gap in monetary policy between Australia and the United States.
Back home, Reserve Bank of Australia (RBA) Governor Michele Bullock again took a hawkish tone. She warned that underlying inflation is still too high, meaning more interest rate hikes aren’t off the table.
The official RBA Monetary Policy Statement confirms the central bank is determined to bring inflation back to its target. They’re keeping the official cash rate at a high 4.35%. This firm approach has made markets expect a longer period of tight policy compared to other G10 countries.
Concurrently, the US dollar faced headwinds following macroeconomic reports showing a distinct deceleration in second-quarter US GDP growth.
The combination of weaker US economic growth figures and expectations of future monetary easing by the Federal Reserve has put downward pressure on US dollar yields. This situation is prompting a redirection of capital towards commodity-linked currencies, such as the Australian dollar, which offer higher yields.
Secondary support for the Australian dollar comes from commodity prices and global risk appetite. Australia’s export sector is closely tied to industrial metals and energy. Consequently, any improvement in global market sentiment generally benefits the Australian dollar.
Is It Sustainable? That’s the harder question. The rate-differential argument holds only as long as the data keeps cooperating. A hotter-than-expected US inflation print or a surprisingly resilient jobs report could quickly revive Fed-hawkish bets and cap the Aussie’s gains.
On the Australian side, the RBA’s next decision on August 11 is a real event risk. Any indication of concern regarding the currency’s current strength or a resurfacing of growth anxieties could rapidly shift market sentiment. In the near-term, the price range of 0.7045-0.7065 is likely to be the key resistance level to monitor.
What Traders and Investors Should Consider For short-term traders, this market movement appears driven by specific data points and upcoming events, rather than a fundamental change in valuation. Therefore, careful position sizing in anticipation of the RBA announcement and the next US inflation and payrolls data releases is more critical than attempting to capitalize on the immediate breakout.
For longer-term investors, including those with Australian equity or currency exposure, it’s worth remembering not to overreact to a single week’s move. Rate-differential shifts like this can unwind quickly if either central bank changes its guidance.
Why has the Australian dollar risen sharply against the US dollar?
A shifting interest-rate differential is driving it, and markets now expect a more dovish Fed while the RBA looks set to hold rates through 2026.
Should investors increase AUD exposure immediately?
A measured approach is preferable. Confirmation of the breakout and favourable upcoming data would strengthen the case for adding positions.
Will the Reserve Bank of Australia increase interest rates again soon?
While the RBA remains hawkish, recent cooling inflation makes an extended rate hold much more likely.
NZD/USD klesl k 0,5860 poté, co slabá čínská data PMI obnovila obavy ze zpomalující poptávky. Americký dolar zároveň zpevnil po přehodnocení výhledu Fedu.
NZD/USD slipped to around 0.5860 after weaker-than-expected Chinese PMI data reinforced concerns over slowing demand. The US dollar rebounded as traders reassessed the Federal Reserve's policy outlook following this week's meeting. Improving New Zealand consumer confidence failed to offset concerns about China's economic slowdown, the country's largest export market. The New Zealand Dollar weakened against its US counterpart on Friday, with NZD/USD extending losses to trade around 0.5860 as disappointing economic data from China reignited concerns over the outlook for regional growth. The move came as investors reacted to a sharper-than-expected contraction in Chinese business activity, a development that carries significant implications for New Zealand given China’s position as the country’s largest trading partner. At the same time, the US Dollar regained traction after Thursday’s selloff, with markets continuing to digest the Federal Reserve’s latest policy decision and the prospect that US interest rates could remain elevated for longer.
Although domestic data from New Zealand painted a more encouraging picture of household confidence, external factors continued to dominate price action. Slowing Chinese demand, together with renewed demand for the US Dollar, outweighed improving sentiment at home and kept the Kiwi under pressure heading into the final trading session of the week.
Why Is NZD/USD Falling Today? The primary catalyst behind Friday’s decline was a weaker-than-expected batch of Chinese Purchasing Managers’ Index (PMI) data, which suggested the world’s second-largest economy lost momentum in July. Official figures showed the Manufacturing PMI fell to 49.2 from 50.3 in June, slipping back into contraction territory and missing economists’ expectations. Meanwhile, the Non-Manufacturing PMI dropped to 49.0 from 50.2, signalling that weakness was not confined to the factory sector but had spread across the broader economy.
The figures reinforced concerns that China’s recovery remains fragile despite previous policy support from Beijing. For New Zealand, whose economy is heavily dependent on exports of dairy products, meat, timber and other commodities to China, weaker Chinese activity often translates into expectations of softer export demand and slower economic growth. As a result, the New Zealand Dollar tends to react quickly to disappointing Chinese data, making it one of the most China-sensitive currencies in the G10 complex.
US Dollar Rebounds as Markets Reassess Fed Outlook The US Dollar also provided headwinds for NZD/USD after recovering from Thursday’s sharp decline. While the Federal Reserve left interest rates unchanged at its latest meeting, investors continue to debate whether policymakers will need to tighten monetary policy further if inflation remains stubbornly high.
Fed Chair Kevin Warsh reiterated that the central bank remains committed to restoring price stability and stands ready to adjust policy if necessary. Although he avoided offering explicit guidance on the timing of future rate moves, markets interpreted the Fed’s overall message as keeping the door open to another rate increase should inflation fail to moderate. That shift in sentiment helped the Greenback recover against most major currencies after suffering broad-based losses immediately following the policy announcement.
Additional support for the US Dollar came from stronger revisions to the University of Michigan Consumer Sentiment survey. Consumer confidence improved slightly from the preliminary reading, while both one-year and five-year inflation expectations remained elevated, reinforcing expectations that inflation risks have not yet fully subsided.
Improving Consumer Confidence Offers Limited Support On the domestic front, New Zealand released more encouraging economic data, with the ANZ-Roy Morgan Consumer Confidence Index rising eight points to 99.3 in July, marking its strongest reading since February. Households also became more optimistic about economic conditions over both the one-year and five-year horizons, suggesting that higher interest rates and easing inflation pressures are gradually improving consumer sentiment.
However, the stronger confidence figures had little impact on the currency market. Traders remained focused on external developments, particularly China’s slowing economy and the broader direction of the US Dollar. Until global growth concerns begin to ease, positive domestic indicators are likely to play a secondary role in determining the Kiwi’s direction.
China’s Slowdown Remains the Biggest Risk for the Kiwi China’s economic performance continues to be one of the most important drivers of the New Zealand Dollar. Any sustained weakness in manufacturing activity, consumer spending or property investment has the potential to reduce demand for New Zealand exports, ultimately weighing on economic growth and the country’s terms of trade.
At the same time, investors remain alert to the possibility of additional stimulus measures from Beijing. Any meaningful fiscal or monetary support aimed at stabilising growth could improve market sentiment and provide renewed support for commodity-linked currencies, including the New Zealand Dollar. Until then, concerns over slowing Chinese demand are likely to remain a significant drag on the Kiwi.
NZD/USD Technical Analysis NZD/USD remains under pressure after slipping below 0.5860, with the pair extending its recent corrective decline. Price action continues to favour sellers after failing to sustain gains above the 0.5900 psychological level, while momentum indicators suggest bearish pressure remains intact in the near term.
Immediate support is seen around 0.5850, followed by the recent swing low near 0.5800. On the upside, initial resistance is located at 0.5900, with stronger selling interest likely to emerge around 0.5950. A sustained break above that zone would be needed to signal that bullish momentum is returning.
NZD/USD Outlook The near-term outlook for NZD/USD remains tilted to the downside as markets continue to weigh slowing Chinese economic activity against expectations that US interest rates could remain restrictive for longer. While improving consumer confidence points to greater resilience within New Zealand’s domestic economy, external developments are likely to remain the dominant driver of the currency.
Investors will now look ahead to upcoming US economic data for further clues on the Federal Reserve’s next move, while any fresh announcements from Chinese authorities aimed at supporting growth could influence sentiment toward the New Zealand Dollar in the sessions ahead.
Why is NZD/USD falling today?
NZD/USD is under pressure after China’s manufacturing and services PMIs unexpectedly fell into contraction, raising concerns about demand from New Zealand’s largest trading partner, while the US dollar rebounded.
Why does China’s economy affect the New Zealand dollar?
China is New Zealand’s largest export market. Weaker Chinese economic activity can reduce demand for New Zealand exports such as dairy and agricultural products, weighing on the Kiwi.
Why does China’s economy affect the New Zealand Dollar?
China is New Zealand’s largest trading partner and a major buyer of its dairy, meat and agricultural exports. Strong Chinese economic growth typically supports the New Zealand Dollar, while weaker Chinese data often puts pressure on the currency.
UK economists expect the GBP/USD exchange rate to retreat in the near-term outlook as steady BoE rates and doubts over the durability of hawkish policy guidance weigh on Pound Sterling. The Pound to Dollar exchange rate (GBP/USD) traded around 1.3443 on Friday morning after gaining more than 1.3% over the previous two sessions.
GBP/USD closed Thursday at 1.3461, leaving the pair 1.6% higher for July but still below the month’s 1.3558 peak.
Rabobank expects that recovery to fade, forecasting Cable in a 1.32–1.33 range over the next one to three months.
The bank’s argument is that markets have already tightened UK monetary conditions on the Bank of England’s behalf by pricing further rate increases and pushing borrowing costs higher.
“In RaboResearch’s view, the heavy lifting done by the market may help the Bank avoid an actual hike in policy rates,” Rabobank said.
Thursday’s BoE decision reinforced that possibility. Bank Rate remained at 3.75%, despite three policymakers voting for an immediate increase.
The vote looked hawkish, but the majority still preferred to wait for clearer evidence that higher energy costs were feeding into wages and domestic prices.
Rabobank believes markets will initially continue “taking the BoE’s hawkish rhetoric at face value and maintain its expectations of rate hikes”.
The risk is that investors eventually demand action.
The bank questioned whether another unchanged decision could cause markets to doubt whether the Monetary Policy Committee is “truly focused on its inflation mandate”, particularly if policymakers continue talking tough without raising rates.
Image: GBP/USD median bank forecast path showing a near-term fall towards 1.33 before a longer-term recovery The latest Exchange Rates UK forecast survey poll, see chart above, broadly supports Rabobank’s near-term caution. The median bank projection falls to around 1.33 by the end of the third quarter before recovering gradually through 2027 and moving above 1.40 in late 2028.
Rabobank is less convinced about the Pound’s medium-term prospects.
“Further out we see risk that UK fiscal concerns will combine with steady BoE rates to weigh on the pound,” the bank said.
The UK labour market remains central to that view. Before the energy shock, weaker employment conditions had supported expectations that the BoE would cut rates this year.
Recent signs of stabilisation have complicated the picture and may increase the risk of “second order price effects” as oil prices rise again.
Rabobank said stronger labour data or “another ramp higher in UK CPI inflation data” could increase pressure on the Bank “to put its money where its mouth is”.
Near-Term GBP/USD Forecast: Rabobank Targets 1.32–1.33 as BoE Credibility Faces a Test Rabobank’s range implies that Thursday’s move above 1.34 will not be sustained.
A decline to 1.33 would reverse much of the latest rally, while 1.32 would return Cable towards the lower part of its recent trading range.
The Dollar side is also important. Sterling benefited when short-term US yields and the greenback fell after the Federal Reserve held rates steady, but Rabobank does not view that as enough to secure a lasting Pound advance.
Its central judgement is that the BoE may continue using hawkish language while avoiding an actual increase.
That strategy can support Sterling only while markets believe a hike remains credible. Rabobank’s 1.32–1.33 forecast suggests that confidence will become harder to maintain.
The USD/CAD pair seesaws between tepid gains/minor losses through the early European session on Friday, consolidating its recent losses to the lowest level since June 17, touched the previous day. However, a combination of supporting factors assists spot prices in holding above the 1.4000 psychological mark.
The US Dollar (USD) regains some positive traction as inflation risks stemming from volatile energy prices keep inflation risks and the US Federal Reserve (Fed) rate hike bets in play. Furthermore, retreating crude oil prices undermine the commodity-linked Loonie and act as a tailwind for the USD/CAD pair. The lack of any meaningful buyers, however, warrants some caution before confirming that a three-day-old downtrend has run its course.
From a technical perspective, this week's breakdown below the 200-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for bearish traders. Adding to this, the Moving Average Convergence Divergence (MACD) sits below zero with the line in negative territory, while the Relative Strength Index (RSI) hovers near 37. Momentum indicators hint that downside momentum remains dominant despite the proximity of initial support.
However, it will be prudent to wait for some follow-through selling and acceptance below the 1.4000 mark before positioning for deeper losses. The USD/CAD pair might then weaken to the 38.2% Fibo. retracement around 1.3979, which is followed by deeper retracement levels at 1.3897 and 1.3814, where the 50.0% and 61.8% Fibo levels could slow further losses.
On the topside, any recovery would first need to overcome resistance at the 23.6% retracement near 1.4082, with the 200-period SMA at 1.4130 capping the broader upside. Failure to clear the said hurdle will reinforce the prevailing bearish structure while the USD/CAD pair remains below it.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/CAD 4-hour chart
Canadian Dollar Price This week The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies this week. Canadian Dollar was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-1.00%-0.81%-1.96%-0.48%-0.39%-1.13%-1.03%EUR1.00%0.17%-0.98%0.53%0.62%-0.13%-0.04%GBP0.81%-0.17%-1.29%0.35%0.44%-0.30%-0.21%JPY1.96%0.98%1.29%1.54%1.64%0.88%0.89%CAD0.48%-0.53%-0.35%-1.54%0.06%-0.65%-0.56%AUD0.39%-0.62%-0.44%-1.64%-0.06%-0.74%-0.65%NZD1.13%0.13%0.30%-0.88%0.65%0.74%0.09%CHF1.03%0.04%0.21%-0.89%0.56%0.65%-0.09% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
The Euro (EUR) extends the intraday rally to near 185.20 against the Japanese Yen (JPY) after the Bank of Japan’ (BoJ) monetary policy decision during the Asian trading session on Friday. The BoJ has kept interest rates steady at 1%, as expected, with an 8-1 majority.
BoJ member Hajime Takata dissented from the vote to hold and favored a 25 basis points (bps) interest rate hike to push rates to 1.25%.
The Japanese central bank has warned that medium-to-long-term inflation expectations are set to climb and has reiterated that the monetary policy path will remain on the upside. “Will keep raising interest rates in response to economic, price trends and financial conditions,” BoJ said.
The BoJ was already anticipated to do so as it is unlikely to deliver back-to-back rate hikes to build pressure on the economy. In the June meeting, the Japanese central bank raised borrowing rates by 25 basis points (bps) to 1%, the highest level not seen since 1995.
On the Eurozone front, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for July, which will be published at 09:00 GMT. The inflation data from Germany and Spain showed on Monday that inflationary pressures grew at a faster-than-expected pace.
According to TD Securities, Eurozone inflation is likely to firm only modestly in the latest print, with the bank expecting “euro area HICP to pick up only slightly to 2.9% y/y (mkt: 2.9%; prior: 2.8%), as the recent rebound in energy is largely offset by softer food and core goods prices.” The analysts note that “airfares may provide some upside given higher jet fuel costs and the start of the summer holiday season,” but they judge that “broader services HICP is likely to remain contained, with limited evidence so far of a wider pass-through of the energy shock.” In this context, TD Securities concludes that “we see the core inflation number remaining steady at 2.4% y/y (mkt: 2.4%, prior: 2.4%).”
Signs of acceleration in inflationary pressures in the Eurozone would prompt expectations of more interest rate hikes by the European Central Bank (ECB) in the near term.
Bank of Japan FAQs The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Asian FX intervention may not be finished yet BOJ surprise hike risk has increased marginally Softer US data adds to dollar pressure AUD/USD and NZD/USD break to fresh highs AUD/USD and NZD/USD ripped higher on Friday, fuelled by broad-based US dollar weakness following apparent coordinated intervention from Asian foreign exchange authorities, softer-than-expected US economic data and a surge in risk appetite after strong earnings from Microsoft and Amazon.
Coordinated intervention rattles the US dollar The biggest driver behind the Australian and New Zealand dollars' outperformance was suspected intervention by Japanese authorities, likely undertaken in coordination with South Korean authorities and with at least tacit support from the United States. The move came with the US dollar already under pressure after the Fed opted against raising rates on Wednesday, providing an ideal backdrop to maximise the impact.
Source: TradingView
An important consideration for traders on Friday is that intervention often doesn't occur in one sitting. Earlier this year, Japanese authorities stepped into the market over several sessions rather than relying on a single operation. If authorities return to the market again, particularly around the Bank of Japan policy decision later in the session, it would point to renewed upside risks for AUD/USD and NZD/USD.
Softer US data adds to dollar headwinds Amplifying the effectiveness of intervention, US economic data broadly disappointed on Thursday. Core PCE inflation rose 0.1% in June, below the 0.2% expected, while the annual rate eased from 3.4% to 3.3%. The unrounded increase was 0.14%, meaning the downside surprise was marginal rather than dramatic.
Accompanying personal income and spending figures were also disappointing. Personal income rose just 0.2%, undershooting expectations, while personal spending increased 0.3%. With spending continuing to outpace income, the household savings rate fell to 2.7%, its lowest level in four years. That questions the sustainability of the strong rebound in consumer spending seen during the June quarter.
US Q2 GDP also disappointed, weighed down by a sizeable drag from net trade that masked underlying strength in business investment and consumer spending. Annualised growth slowed to 1.5%, below the 2.1% consensus forecast. Consumer spending rebounded to a 3.2% annualised pace after a subdued first quarter, while business investment surged 15.2%, continuing to be supported by AI-related capital expenditure. The downside surprise instead reflected a widening trade deficit and inventory drawdowns, which subtracted almost 1.7 percentage points from headline growth.
Risk appetite returns with a vengeance Alongside softer US economic data and suspected intervention, the Aussie and Kiwi ripped higher as risk appetite surged. Strong earnings updates from Microsoft and Amazon fuelled the rally, with Microsoft adding more market value in a single session than any listed company on record.
Given their sensitivity to global risk sentiment, the improvement in sentiment helped drive gains not only against the US dollar, but across most major crosses, with the yen the one exception.
All eyes turn to Tokyo When it comes to what may influence the Aussie and Kiwi on Friday, the events of the past 24 hours suggest risk appetite, the Bank of Japan policy decision and the threat of further intervention from Asian FX authorities will matter far more than economic data. That was reinforced by the total lack of reaction to an upside surprise in Tokyo's July inflation report released early Friday.
Intervention raises the stakes for the BOJ I previewed the Bank of Japan meeting in detail earlier this week, and much of that analysis still holds true. However, the intervention episode over the past 24 hours has increased the risk, at least marginally, of the Bank of Japan moving pre-emptively to raise rates today rather than later in the year, with a full hike already priced into the overnight index swap curve by year-end.
US Treasury Secretary Scott Bessent has made it clear he wants the Bank of Japan to continue normalising policy. If Japanese authorities are already working alongside their South Korean and US counterparts to strengthen the yen through intervention, it raises the question of whether the Bank of Japan may choose to oblige by delivering a surprise rate hike today.
While such a shock outcome would point to a sharply lower USD/JPY and potentially broader US dollar weakness, it would not necessarily be an outright positive for the Australian and New Zealand dollars. They may initially pop against the greenback, but given their sensitivity to shifts in risk appetite, would likely underperform lower-beta currencies if a surprise Bank of Japan hike sparked a broader risk-off episode.
As for when the Bank of Japan decision is likely to drop, it remains a frustration for traders worldwide that there is still no set time for the announcement. Generally, it tends to arrive around 12:30pm Tokyo time, although it can come earlier or later depending on how long the meeting runs. However, the general rule of thumb is that the longer it takes for the decision to drop, the greater the perceived risk that there may be some form of policy shock on the way. So expect markets to become extra twitchy if we extend well beyond 12:30pm Tokyo time.
AUD/USD breakout puts higher levels in play
Source: TradingView
AUD/USD had been coiling in what resembles an ascending triangle before a false downside break followed the softer-than-expected Australian June quarter underlying inflation report on July 29. However, that move has now been completely reversed, with the pair not only breaking back into the triangle structure, but also reclaiming the 50-day moving average and clearing resistance at 0.7020, the top of the structure.
With the price now holding above 0.7020, it provides a level to build long setups around, looking for an extension of the bullish move. Longs could be considered above that level, with a stop below, initially targeting the 100-day moving average at 0.7053 before resistance at 0.7080. A break above the latter would open the door for a potential run towards 0.7200.
The oscillators marginally favour long setups over shorts. RSI(14) has pushed above the neutral 50 level and continues to edge higher, while MACD has flipped into positive territory after staging a bullish crossover earlier this month. It's not a definitively bullish signal, but it does suggest upside momentum is building.
Should AUD/USD slip back below 0.7020 and hold there, it would instead point to a pullback towards the lower boundary of the triangle structure, which comes in around 0.6975 today.
Kiwi joins the breakout party
Source: TradingView
NZD/USD offers a similar technical picture to AUD/USD, breaking higher after grinding higher within an uptrend over recent weeks. The latest surge has seen it break above the confluence of the 50, 100 and 200-day moving averages, along with resistance at 0.5825 and, importantly, 0.5860, a level that has repeatedly acted as both support and resistance over the past couple of months.
The break above 0.5860, taking the pair to its highest level since early June, suggests scope for a further extension of the bullish move. For those looking to play from the long side, longs could be considered while the pair holds above 0.5860, with a stop below, initially targeting 0.5920, another level that has repeatedly acted as support and resistance this year. A break above that would open the door for a retest of the double top at 0.5992 set in May and early June.
The oscillators favour long setups over shorts. RSI(14) has climbed to 64, with the bullish signal reinforced by MACD, which has crossed above the signal line, continues to diverge and remains in positive territory. That suggests upside momentum is building, favouring long setups.
Should NZD/USD slip back below 0.5860 and hold there, it would instead point to a pullback towards the moving average confluence zone and the uptrend, which comes in around 0.5775 today.
The pound sterling has started to show relevant strength against the U.S. dollar. At the moment, GBP/USD has gained slightly more than 1.3% in the short term, reflecting an important buying bias.
Buying pressure began to gain relevance after the Federal Reserve decision during yesterday’s session and strengthened even further after the Bank of England decision today. For now, the central bank dynamic could continue to be key for demand in the pound sterling and maintain possible buying pressure on GBP/USD over the next few trading sessions.
Fed and BoE signals shape the outlook During today’s session, the Bank of England published its interest rate decision and kept the reference rate at 3.75%, in line with expectations. However, the vote delivered an important signal: 6 members voted to keep rates unchanged, while 3 members voted for a 0.25% hike.
Although the rate did not change, this division was interpreted as a slightly more aggressive signal, as it shows that an important part of the committee is starting to consider the need for further increases over the coming months.
In the statement after the decision, the central bank highlighted that energy prices remain volatile and that this factor could continue to pressure inflation. For this reason, although additional hikes were not confirmed, the BoE does not appear ready to ease its stance either. If annual inflation fails to move closer to the 2.00% target, the central bank could continue to consider a more restrictive monetary policy.
The dynamic in the United States was slightly different. Although the Federal Reserve also kept rates unchanged in the 3.50% - 3.75% range, Kevin Warsh’s comments after the decision did not offer a clear signal of a possible hike in September.
This difference is important because the market expected a more aggressive stance from the Fed, but the event did not confirm that expectation. According to the CME Group probability table, for the September 16 decision, there is still a probability near 61% of a rate hike in the United States. However, a probability of almost 40% that rates remain unchanged has also started to emerge, something that had not been observed with the same strength in previous weeks.
Source: CMEGROUP
As a result, the market is facing an interesting dynamic. In the United States, expectations of a more aggressive Fed have lost strength, while in the United Kingdom, the BoE showed internal division that keeps open the possibility of a more restrictive stance if inflation remains a problem.
This contrast has started to be reflected in the U.S. dollar. The DXY index, which measures the dollar’s strength against its main peers, has shown a relevant decline since the Federal Reserve announcement and is now below the 100-point area. This suggests that demand for the dollar has started to weaken significantly after the U.S. central bank decision.
Source: TradingEconomics
With this in mind, and considering that both the United States and the United Kingdom maintain rates near 3.75%, the main difference lies in each central bank’s message. While the market is starting to price in a Bank of England that appears more willing to act if necessary, the Federal Reserve has reduced signals of early rate increases.
This dynamic could continue to weigh on the dollar and open room for the pound sterling to recover more consistently. If this scenario remains in place, GBP/USD could continue to show buying pressure over the next few trading sessions.
Technical forecast for GBP/USD
Source: StoneX, Tradingview
The broad sideways range continues to dominate: Despite GBP/USD’s recovery attempts, the chart continues to show a broad sideways channel that has acted as the main technical structure for several months. This range remains between an upper area near 1.37492 and support around 1.32079. If price fails to break consistently out of these levels, the sideways structure will remain the most relevant pattern and could continue to reflect indecision over the coming trading weeks.
RSI: Now, the RSI remains above the neutral 50 level, suggesting that bullish impulses have started to gain relevance in the short term. If this dynamic continues, the indicator could keep supporting the formation of a more important buying bias over the next few sessions.
MACD: The MACD shows a histogram near the neutral 0 area, suggesting balance in the strength of short-term moving averages. This reading indicates that, although the pound has gained strength, the indecision bias has not completely disappeared from the GBP/USD chart.
Key levels:
1.36255 – Relevant resistance: This relevant high is positioned as the main bullish barrier in the short term. Price movements toward this area could reinforce the current buying pressure and open room for a more consistent bullish bias over the next few sessions. In addition, a clear break above this level could start to put at risk the broad sideways range that has remained in place for several months.
1.34079 – Near-term barrier: This recent neutral area coincides with the 50- and 200-period simple moving averages. If price moves back toward this level consistently, it could once again highlight a phase of indecision and keep the sideways range as the dominant technical structure.
1.32079 – Crucial support: This low coincides with the lower barrier of the broad sideways range. Sustained moves below this point could reflect a dominant selling bias and open room for the formation of a short-term bearish trend line over the coming trading weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
EUR/GBP po zasedání BoE krátce klesl, ale po ponechání sazeb na 3,75 % se vrátil nad 0,8585. Trh zůstal bez větší jistoty, že zářijové zvýšení sazeb skutečně přijde.
MUFG warned that Sterling needed stronger September BoE hike conviction to advance, but Thursday’s guidance left markets with little reason to bring tightening forward. The Euro to Pound exchange rate (EUR/GBP) traded around 0.8574 on Thursday afternoon after the Bank of England held interest rates at 3.75%, with Sterling failing to draw lasting support from a surprisingly hawkish 6–3 vote.
Latest — Exchange Rates:
Euro to Pound (EUR/GBP): 0.856684 (-0.14%)
Pound to Dollar (GBP/USD): 1.342999 (+0.47%)
Euro to Dollar (EUR/USD): 1.150526 (+0.33%)
Huw Pill, Megan Greene and Catherine Mann backed an immediate increase, but the guidance suggested most policymakers remain prepared to wait for clearer evidence that higher energy costs are feeding into persistent domestic inflation.
EUR/GBP initially moved lower before rebounding above 0.8585, then settled back near 0.8574. The pair remained around 0.4% lower for July but was well above its mid-month low near 0.8467.
MUFG had argued before the announcement that the unchanged rate itself would not determine Sterling’s direction. With “nothing priced for today”, the bank said markets would focus instead on “the vote, the communication in the statement, the minutes and the updated forecasts”.
That proved accurate. The three dissenting votes looked supportive for the Pound at first glance, yet the wider message did not materially increase confidence that a September hike was coming.
MUFG had set a clear test for Sterling: “For market rates to move higher and the pound to advance in response to today’s meeting we will need to see increased conviction on a September rate hike.”
The decision did little to meet that threshold.
The Monetary Policy Committee acknowledged that inflation risks remain skewed higher, particularly because of energy prices and the uncertain geopolitical backdrop. However, it also pointed to “clear signs of underlying disinflation” and limited evidence so far of stronger second-round effects.
That combination leaves the Bank concerned, but not yet ready to act.
MUFG had warned that if the inflation forecasts showed prices returning to target over time, “the take-away is likely to be that there is time to assess the inflation risks”.
In that scenario, the bank said “pricing for a September rate hike could ease back somewhat, taking the pound lower”. Thursday’s Sterling reaction was consistent with that interpretation.
Image: EUR/GBP intraday price chart showing the post-BoE rise above 0.8585 and subsequent retreat The intraday move captured the market’s changing reading of the announcement. EUR/GBP initially fell as traders reacted to the three votes for higher rates, but the decline quickly reversed once the guidance was absorbed.
The pair’s jump above 0.8585 suggested the vote count was not enough to convince investors that the next increase had moved materially closer. Its later retreat showed that the decision was not decisively dovish either.
Energy prices remain the strongest argument for keeping a hike in play.
MUFG said the backdrop had become “difficult with crude oil and natural gas prices rebounding significantly”, while a prolonged increase in energy costs “could certainly force the BoE to act, even in circumstances of mixed labour market conditions”.
That risk prevents markets from abandoning tightening expectations altogether. It also helps explain why Sterling’s losses were contained rather than severe.
Image: EUR/GBP year-to-date chart showing the July recovery from below 0.8470 towards 0.8575 The wider price history shows EUR/GBP recovering sharply after Sterling’s strongest run of the year.
The pair fell below 0.8470 in July before rebounding by more than a cent. Thursday’s decision has not broken that recovery, and the cross is again approaching levels that repeatedly contained declines during May and June.
The implication is straightforward: EUR/GBP does not require a major improvement in the Euro outlook to move higher. A modest reduction in expected UK rate support may be enough.
Near-Term EUR/GBP Forecast: September BoE Expectations Remain the Deciding Factor MUFG expected Sterling to remain “well supported at these levels” only on the assumption that “pricing for a September rate hike holds up”.
After Thursday’s announcement, that assumption looks less secure.
The 6–3 vote keeps tightening risk alive, but the guidance suggests the majority is comfortable waiting. Unless energy prices rise sharply or incoming inflation data deteriorate, September may prove too early for another move.
A further decline in September hike expectations could send EUR/GBP back above 0.8590 and towards July’s high near 0.8619.
Pound Sterling would regain firmer support if markets conclude that the three dissenters represent the beginning of a broader hawkish shift. That would require stronger inflation evidence or clearer concern from the MPC’s swing voters.
The vote looked hawkish. The message was more patient. For EUR/GBP, that leaves the recovery from July’s lows intact.
EUR/JPY ve čtvrtek prudce klesl o 2,54 % na zhruba 182,60 poté, co jen zřejmě zasáhla japonská intervence. Pár během několika minut ztratil více než 400 pipů.
EUR/JPY plunges on Thursday, down 2.54% on the day to trade around 182.60 at the time of writing, after a sudden surge in the Japanese Yen (JPY) triggered by what appears to be another intervention by Japanese authorities in the foreign exchange market. The move has been particularly violent, with the pair losing more than 400 pips in just a few minutes.
The JPY rally comes without any obvious economic catalyst, reinforcing speculation that the Japanese Ministry of Finance has stepped into the market to curb the currency's persistent weakness. USD/JPY is also tumbling below the 161.00 mark, while other major Japanese Yen crosses are posting broad-based losses.
The suspected intervention recalls the episode at the end of April, when the Japanese Yen appreciated by nearly 3% against the US Dollar after USD/JPY reached a high of 160.72. At that time, the Japanese Finance Minister Katayama Satsuki warned that "decisive" action was imminent, while top currency diplomat Atsushi Mimura described it as the market's "final warning." Two sources familiar with the matter later told Reuters that Japanese authorities had intervened to support the currency. Since then, the Finance Minister has continued to warn that further intervention remains possible as the Japanese Yen has continued to weaken.
Market attention now shifts to the Bank of Japan (BoJ) policy decision on Friday. The central bank is widely expected to leave its policy rate unchanged at 1%, but investors will closely watch the updated economic projections and Governor Kazuo Ueda's comments for clues on whether another rate hike could come as early as October or be delayed until December. A more hawkish message could extend the Japanese Yen's rebound and keep pressure on JPY crosses.
On the European side, the latest economic data has offered only limited support to the Euro (EUR). Preliminary figures showed that Germany's Gross Domestic Product (GDP) expanded by 0.2% QoQ in the second quarter, beating expectations of 0.1%, while annual growth accelerated to 0.9%.
Across the Eurozone, the economy expanded by 0.4% in the second quarter and 1% YoY, also exceeding market forecasts. Meanwhile, the European Commission reported an improvement in July Consumer Confidence and Economic Sentiment, although the Unemployment Rate edged up to 6.3%.
Japanese Yen Price Today The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.56%-0.53%-2.58%-0.28%-0.91%-1.33%-1.12%EUR0.56%0.02%-2.00%0.34%-0.37%-0.79%-0.53%GBP0.53%-0.02%-2.01%0.30%-0.38%-0.79%-0.53%JPY2.58%2.00%2.01%2.37%1.73%1.29%1.57%CAD0.28%-0.34%-0.30%-2.37%-0.62%-1.05%-0.78%AUD0.91%0.37%0.38%-1.73%0.62%-0.41%-0.17%NZD1.33%0.79%0.79%-1.29%1.05%0.41%0.29%CHF1.12%0.53%0.53%-1.57%0.78%0.17%-0.29% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
EUR/USD roste, protože trh přehodnocuje očekávání vůči ECB: ropa nad 100 USD zvyšuje šance na zářijové zvýšení sazeb zhruba na 70 %. Silnější HDP eurozóny navíc oslabuje argument, že růst je příliš slabý.
TL;DR: EUR/USD’s rebound reflects broad-based Euro strength as oil’s rebound since mid-week pushes markets toward the ECB’s own hawkish scenario, lifting September hike odds to roughly 70%.
Euro’s Broad-Based Strength Tells a Bigger Story EUR/USD has staged a notable rebound in the last 24 hours, but attributing the move solely to Dollar weakness misses a broader shift taking place in currency markets. The Dollar has indeed softened after investors pared expectations for a September Fed rate hike. Yet the Euro has strengthened not only against the Dollar, but against most major peers. That broad-based performance suggests investors are repricing the European Central Bank itself, rather than merely rotating away from weaker currencies.
Oil Is Moving the ECB’s Reaction Function in a Hawkish Direction The catalyst isn’t that the ECB has changed its policy stance, but that the assumptions feeding its reaction function have shifted. In its March staff projections, the ECB outlined a baseline scenario built around Brent crude averaging around $90 and European natural gas around €57/MWh through 2026, while an adverse scenario assumed oil near $120 and gas around €102/MWh — resulting in materially higher inflation.
That framework has become relevant again. At the ECB’s July 23 press conference, held as Brent broke above $100, President Christine Lagarde remarked that the earlier US-Iran ceasefire had been “short-lived,” leading to “serious developments on commodity markets.” She also stressed the ECB’s reaction function was “very well understood” by markets and projected inflation to remain well above target into the first half of 2027. This week’s renewed attacks involving Iran, US forces, and Saudi energy infrastructure have reversed much of the earlier decline in oil prices, pushing markets back toward the ECB’s own baseline energy scenario.
Oil Doesn’t Trigger Hikes Automatically Importantly, the ECB hasn’t become mechanically more hawkish simply because oil prices have risen. Lagarde has repeatedly emphasized that policymakers ultimately look for second-round effects — particularly stronger wage growth, firmer services inflation, and higher inflation expectations — before concluding inflation is becoming entrenched.
However, higher oil prices still matter because they shift the starting point. A sustained rise in energy costs lifts the projected path for headline inflation, making it easier for the Governing Council to conclude another rate hike is warranted. In effect, stronger oil prices lower the evidentiary burden for tightening even if second-round effects have yet to fully emerge, because the ECB’s own scenario analysis already treats prolonged energy shocks as sufficient to generate materially higher inflation.
GDP Removes One of the Dovish Arguments Today’s stronger-than-expected GDP data reinforce that assessment. Eurozone GDP expanded 0.4% qoq in the second quarter, beating expectations and rebounding from the flat first quarter. While hardly signaling an economic boom, the figures weaken one of the main dovish arguments — that growth is too fragile to absorb another rate increase. With activity proving more resilient than expected, the ECB has greater room to tighten policy without immediately risking recession.
Markets and Banks Are Converging on a September Hike That combination has fed directly into market pricing. Investors now assign roughly a 70% probability to a September rate hike, with much of this week’s repricing driven by renewed oil strength outweighing the more dovish tone that emerged from the ECB’s Sintra forum earlier this month.
Several major banks have moved in the same direction:
Deutsche Bank now describes a September increase to 2.50% as “highly likely” and close to a “done deal.” UOB expects one final 25 basis point hike followed by an extended pause. ING notes that around 23 basis points are already priced and argues the ECB has historically preferred to fully telegraph its policy moves. What to Watch Next Attention now turns to whether the oil rally proves durable. If tensions involving Iran continue to support energy prices into September, the ECB’s adverse inflation scenario will become increasingly relevant. Conversely, a renewed de-escalation could quickly reduce the urgency for another hike. Investors will also closely monitor upcoming remarks from ECB officials to see whether the stronger GDP data strengthens confidence that another move is becoming appropriate.
ActionForex’s Technical View on EUR/USD Technically, EUR/USD has improved but has yet to confirm a bullish reversal. The pair remains capped below 1.1499, which has switched from support to resistance. Encouraging signs are nevertheless emerging: the 4H MACD continues to strengthen, price has broken its near-term falling trend line, and the daily MACD continues to display bullish divergence. The pair is also finding support around the 38.2% retracement of 1.0176 to 1.2081, at 1.1353.
A decisive break above 1.1499, followed by sustained trading above the 55-day EMA at 1.1484, would strengthen the case that the decline from 1.2081 completed as a three-wave correction at 1.1323, opening the way toward 1.1848 and potentially higher.
Nevertheless, failure to overcome 1.1499 would keep the broader decline intact and leave scope for a deeper fall toward the 100% projection of 1.2081 to 1.1408 from 1.1848 at 1.1175.
Key Takeaways EUR/USD’s rebound reflects broad Euro strength against most major peers, not just Dollar weakness from fading Fed hike bets. Oil’s return above $100 is pushing markets toward the ECB’s own adverse inflation scenario, lowering the bar for another hike without requiring new second-round effects. Stronger-than-expected Q2 Eurozone GDP (0.4% qoq) removes the argument that growth is too fragile to absorb another rate increase. Markets now price roughly a 70% probability of a September ECB hike, with Deutsche Bank, UOB, and ING all leaning toward a move to 2.50%. EUR/USD needs a decisive break above 1.1499 and the 55-day EMA at 1.1484 to confirm the decline from 1.2081 has completed as a corrective structure.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
USD/JPY held near 163.50 on Thursday, with the yen retreating slightly after strengthening in the previous session. The currency had been supported by a broader dollar decline following the Federal Reserve's decision to keep interest rates unchanged.
However, three FOMC members voted in favour of a rate hike, and Fed Chairman Kevin Warsh stressed that the pause should not be interpreted as a rejection of further policy tightening. Future decisions will continue to be data-dependent.
The Bank of Japan is also expected to keep rates unchanged on Friday but is likely to signal that further hikes remain possible to contain the yen's decline. Verbal interventions from Japanese authorities have so far provided little relief, and the BOJ has offered no clear guidance on the timing of its next move.
Geopolitical tensions have once again intensified, with media reports indicating that the United States has resumed airstrikes on Iran following attacks on American forces in the region.
Technical analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 163.60 level, currently extending between 163.20 and 163.89. A move higher towards 163.60 is expected, with scope for the trend to extend to 164.15 and then to 164.85. The MACD indicator supports this scenario, with its signal line above zero but pointing downwards, indicating the potential for short-term consolidation before further upside.
On the H1 chart, USD/JPY has completed a downward move to the 163.20 level. A move higher towards at least 163.60 is expected next. A breakout above this level would open the way for a continuation towards 164.15. The Stochastic oscillator confirms this scenario, with its signal line above 50 and pointing upwards towards 80, indicating short-term bullish momentum.
ConclusionUSD/JPY is trading in a narrow range as markets digest the Federal Reserve's decision to hold rates steady, despite three dissenting votes and Chairman Warsh's insistence that the pause does not signal the end of tightening. The dollar's modest decline after the announcement provided some relief for the yen, although the currency remains vulnerable. Attention now turns to the Bank of Japan's policy meeting on Friday, where rates are expected to be left unchanged but with hawkish signals to support the currency. Geopolitical risks have re-emerged following reports of renewed US airstrikes on Iran. Technically, the pair appears poised for further upside towards 163.60 and beyond, with the BOJ's guidance and intervention risks likely to determine the near-term direction.
The Pound-Dollar rate could remain under pressure unless the Bank of England delivers a sufficiently hawkish message after an inconclusive Federal Reserve decision. The Pound to US Dollar (GBP/USD) exchange rate weakened on Thursday morning as markets turned their attention to the Bank of England following a divided Federal Reserve policy decision.
GBP/USD retreated towards $1.3345 during early European trading, extending its recovery from Wednesday’s pre-Fed lows but remaining under pressure from renewed safe-haven demand for the US Dollar.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.333627 (-0.23%)
Euro to Dollar (EUR/USD): 1.144507 (-0.19%)
Dollar to Yen (USD/JPY): 163.59918 (+0.17%)
Federal Reserve Holds Rates but Offers Little Guidance The Federal Reserve left interest rates unchanged at 3.50%–3.75% on Wednesday, in line with the majority of economists’ forecasts.
The decision was nevertheless more divided than expected, with three policymakers voting for an immediate 25-basis-point rate increase because of persistent inflation risks.
Fed Chair Kevin Warsh reaffirmed the central bank’s commitment to returning inflation to its 2% target but provided few firm clues over the timing of any future policy move.
Warsh indicated that further tightening could be required if inflation pressures remained elevated, although he resisted offering the explicit forward guidance markets had become accustomed to under previous Fed leadership.
The initial market response was mixed. Short-term Treasury yields declined as investors reduced expectations of a September rate rise, while long-term yields climbed sharply amid concerns that the Fed was not acting decisively enough to contain inflation.
The Dollar initially weakened following the announcement but recovered during Asian trading as renewed US attacks on Iranian targets increased demand for defensive assets.
Pound Sterling Awaits Bank of England Guidance Attention now turns to Thursday’s Bank of England interest-rate announcement.
The Monetary Policy Committee is widely expected to leave Bank Rate unchanged at 3.75%, placing the focus on the vote split, updated economic forecasts and Governor Andrew Bailey’s comments.
UK inflation fell to 2.6% in June, but policymakers continue to face uncertainty over the impact of elevated oil and gas prices on household costs and inflation expectations.
Markets have priced a meaningful risk of higher UK interest rates during the coming year, although economists remain divided over whether the Bank will ultimately need to tighten policy.
A hawkish vote split or a warning that renewed energy-price pressures could make inflation more persistent would offer the Pound support.
Sterling could struggle, however, if the Bank emphasises weak domestic growth, slowing private-sector wages or the risk that tighter financial conditions will weigh on the economy.
Near-Term GBP/USD Forecast: BoE Tone to Determine Next Move The near-term Pound-Dollar outlook is likely to depend heavily on whether the Bank of England validates or pushes back against expectations for future rate increases.
A hawkish BoE announcement could allow GBP/USD to recover towards the $1.3400–$1.3430 area.
A move above this zone would ease immediate downside pressure and potentially bring $1.3480 back into view.
Conversely, a cautious policy statement or a less hawkish vote than markets expect could drive the Pound back towards $1.3300.
A sustained break below $1.3300 would expose the recent lows around $1.3220.
The Dollar will also remain sensitive to developments in the Middle East, with any further escalation likely to increase safe-haven demand and maintain upward pressure on global energy prices.
Later in the week, the latest US GDP figures could also influence the pair. Stronger-than-expected second-quarter growth would reinforce expectations that the US economy can withstand elevated interest rates and could provide additional support for the Dollar.
GBP/AUD ve středu vyskočil, protože slabší australská inflace snížila sázky na další zvýšení sazeb RBA. Meziroční CPI ve 2. čtvrtletí zpomalila na 3,9 % z očekávaných 4,1 %.
Pound-Australian Dollar could extend gains if the Bank of England keeps the door open to higher rates after Australia's softer inflation weakens the Aussie. The Pound to Australian Dollar (GBP/AUD) exchange rate surged on Wednesday after weaker-than-expected Australian inflation sharply reduced expectations for another Reserve Bank of Australia interest rate hike.
At the time of writing, GBP/AUD was trading around AU$1.9161, up approximately 0.5% on the day.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.920489 (-0.01%)
Pound to Dollar (GBP/USD): 1.335415 (-0.10%)
DAILY RECAP:
The Australian Dollar (AUD) tumbled through Wednesday's Asian session after Australia's latest inflation figures came in below expectations.
Official data showed annual consumer price inflation slowed to 3.9% in the second quarter, below forecasts that it would remain at 4.1%.
The weaker inflation reading prompted investors to further reduce expectations for additional Reserve Bank of Australia (RBA) policy tightening.
The ‘Aussie’ fell sharply as markets cut the implied probability of an August interest rate hike to the low single digits, with several major banks abandoning forecasts for near-term tightening.
Meanwhile, while the Pound (GBP) strengthened against the Australian Dollar, it traded in a relatively narrow range against most other major currencies as investors awaited Thursday's Bank of England (BoE) interest rate decision.
No policy changes are expected, leaving markets focused on the Bank's accompanying statement and any guidance from Governor Andrew Bailey.
Investors remain divided over whether the BoE could still raise interest rates later this year or instead keep policy unchanged before eventually resuming its easing cycle.
Near-Term GBP/AUD Forecast: Dovish BoE to Sink Sterling? Looking ahead, Thursday's Bank of England interest rate decision is expected to be the main driver of the Pound to Australian Dollar exchange rate.
If the BoE adopts a more dovish tone, Sterling could surrender much of Wednesday's gains and potentially retest recent lows against the Australian Dollar.
However, if policymakers warn that inflation risks are building again during the second half of 2026, expectations for another interest rate hike could strengthen and provide additional support for the Pound.
Meanwhile, any renewed escalation of tensions in the Middle East could continue to weigh on the risk-sensitive Australian Dollar through the second half of the week.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The AUD/USD pair turns lower following a modest Asian session uptick to the 0.6965 region on Thursday amid the emergence of some US Dollar (USD) dip-buying. Spot prices, however, hold above an over two-week low, touched on Wednesday, and currently trade around mid-0.6900s, down less than 0.10% for the day.
The growing acceptance that the US Federal Reserve (Fed) will hike interest rates in 2026 amid inflation risks stemming from volatile oil prices, along with escalating US-Iran tensions, helps revive demand for the safe-haven Greenback. Furthermore, soft Australian consumer inflation figures on Wednesday led to some unwinding of near-term Reserve Bank of Australia (RBA) rate hike bets, which undermines the Australian Dollar (AUD) and contributes to capping the AUD/USD pair.
From a technical perspective, the recent repeated failures near the 0.7020 horizontal resistance and the overnight close below the 100-period Exponential Moving Average (EMA) on the 4-hour chart favor bearish traders. Furthermore, the Relative Strength Index (RSI) drifts below the neutral 50 line and Moving Average Convergence Divergence (MACD) stays marginally below zero. Momentum indicators together hint at subdued bullish momentum and a corrective tone after recent losses.
However, it will still be prudent to wait for some follow-through weakness below the overnight swing low, around the 0.6925 region, and a technically significant 200-day Simple Moving Average (SMA) near 0.6900 before positioning for further losses. The AUD/USD pair might then aim to challenge the June monthly swing low, around the 0.6865 zone, and extend the downfall further to the 0.6835 area, or the year-to-date low touched in March, and the 0.6800 round-figure mark.
On the topside, initial resistance is defined by the 100-period EMA at 0.6974. A sustained move above this barrier would be needed to ease immediate downside pressure and open the way for a more constructive recovery. Until then, the AUD/USD pair remains vulnerable to further slippage, with traders likely to fade upticks while spot prices remain capped below the said EMA.
AUD/USD 4-hour chart
Australian Dollar Price This week The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the US Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.50%-0.10%-0.08%-0.28%0.67%-0.10%-0.11%EUR0.50%0.38%0.43%0.21%1.18%0.40%0.39%GBP0.10%-0.38%-0.09%-0.17%0.76%0.02%0.00%JPY0.08%-0.43%0.09%-0.21%0.76%-0.02%-0.12%CAD0.28%-0.21%0.17%0.21%0.94%0.19%0.17%AUD-0.67%-1.18%-0.76%-0.76%-0.94%-0.77%-0.80%NZD0.10%-0.40%-0.02%0.02%-0.19%0.77%-0.01%CHF0.11%-0.39%-0.00%0.12%-0.17%0.80%0.01% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Rabobank říká, že tříměsíční cíl pro USD/JPY na úrovni 159 nyní vypadá optimisticky. Pár se drží poblíž 163,86 a další růst závisí na jestřábím postoji BoJ a slabších očekáváních Fedu.
Economists say the Dollar-Yen could extend higher unless the BoJ signals faster rate hikes, with its three-month forecast at 159 now requiring several factors to align. The US Dollar traded close to 163.84 against the Japanese Yen on Wednesday, holding near its highest level of 2026 as markets awaited policy decisions from both the Federal Reserve and Bank of Japan.
USD/JPY has gained around 4.5% since the end of December and approximately 0.8% in July alone. The pair has also risen in five of the past six months, leaving the Yen under sustained pressure.
Latest — Exchange Rates:
Dollar to Yen (USD/JPY): 163.86431 (0.00%)
Euro to Dollar (EUR/USD): 1.137884 (-0.06%)
Pound to Dollar (GBP/USD): 1.328349 (-0.02%)
Rabobank says Friday’s BoJ meeting will come with one advantage: policymakers will already know the outcome of the Fed decision.
That matters because the bank believes the FOMC “may have more impact on the USD/JPY exchange rate than” the BoJ’s own announcement.
A surprise Fed hike would likely deliver another powerful Dollar boost. Rabobank does not expect that outcome, however, and says unchanged US rates could instead trigger “a little profit-taking on long USD positions”.
The Yen’s bigger test comes a day later.
Rabobank argues that recent BoJ comments may have been “specifically aimed at preparing markets for hawkish signals” from Friday’s meeting. Without them, the risk is straightforward: “an absence of hawkish signals from the BoJ this week could open the door for further upside pressure on USD/JPY”.
Image: USD/JPY year-to-date chart showing the climb from January lows near 152 towards 164 USD/JPY’s path this year helps explain why Rabobank thinks the BoJ cannot afford an ambiguous message. The pair has not simply spiked towards 164; it has rebuilt its advance in stages since May, repeatedly recovering from shallow setbacks.
That persistence is the uncomfortable part for Tokyo. Verbal warnings and earlier Ministry of Finance intervention have slowed the move at times, but neither has changed its direction for long. The chart therefore supports Rabobank’s view that intervention alone may be “too costly” when the underlying force is an appreciating US Dollar.
Rabobank notes that the MoF has not bought Yen in the open market since spending JPY11.73 trillion between late April and late May.
One explanation is cost. The bank says officials may simply consider it “too costly to push against an appreciating USD”, particularly while US rate expectations remain firm.
There are signs that Japanese policy support has had some impact. Although USD/JPY has climbed sharply, the Yen is still the fourth-best-performing G10 currency over the past three months because the Dollar has strengthened even more broadly.
Rabobank says this suggests “both the MoF’s intervention and the hawkish signals from the BoJ have had some impact in supporting the JPY”.
Near-Term USD/JPY Forecast: A Move Back to 159 Needs a Hawkish BoJ and Softer Fed Expectations Rabobank maintains a three-month USD/JPY forecast of 159, but admits that target “currently looks optimistic”.
A faster BoJ tightening cycle would help. The bank says an October rate increase, rather than waiting until December, could provide the Yen with support.
Japan’s inflation backdrop gives policymakers room to sound firmer. The BoJ has said an underlying price measure remains well above its 2% target, while wage negotiations have delivered another strong result.
Even that may not be enough on its own.
Rabobank says a move to 159 would likely require “various factors to come together”: greater reassurance over Japan’s fiscal outlook, a clearly hawkish BoJ and a decline in fears of further Fed tightening.
The final ingredient may prove decisive. As the bank puts it, “how far the JPY can recover versus the USD, if at all, is likely to be determined” by the Fed Chair’s message.
The dollar’s next move hinges on tonight’s Fed decision, and this time markets genuinely don’t know what to expect. While economists still lean toward a hold—with CME FedWatch odds sitting near 68.5% for no change—Kevin Warsh’s hawkish rhetoric on having “no tolerance” for inflation, paired with growing internal FOMC support for a hike, has pushed hike odds up sharply from just 18% two weeks ago to over 30% today. Complicating things further, Warsh has deliberately scaled back forward guidance, meaning tonight’s press conference may offer fewer clues than usual.
The euro, meanwhile, has already had its say: the ECB held rates steady at 2.25% last Thursday, as expected, with Lagarde reaffirming the 2% target while flagging that energy-driven inflation risks from the Middle East conflict have yet to fully play out. Eurozone inflation cooled to 2.8% in June, but sticky services inflation near 3.5–4% keeps the door only cautiously open for a September move in either direction.
With EUR/USD trading near 1.1408, tonight’s Fed decision—not the ECB—is what will likely determine the pair’s next major direction.
EUR/USD Technical Analysis
As the EUR/USD chart shows, the pair has been consolidating within a defined range since late June, squeezed between an ascending trendline and a descending trendline, both converging around the current price near 1.1400. The 200-period EMA continues to slope lower above price, reinforcing a cautious backdrop ahead of tonight’s Fed decision.
Bullish Scenario Should the dollar weaken on a dovish Fed outcome, price would need to break above the converging trendlines and reclaim the 0.382 Fibonacci retracement near 1.1420, with the 200-period EMA just above acting as the next key test. A confirmed break above the EMA would open the path towards the 0.5 and 0.618 retracements near 1.1480–1.1500, where stronger resistance has capped rallies since late June.
Bearish Scenario Conversely, a hawkish surprise—or even a hike—could send the euro sharply lower, breaking both the ascending trendline and the psychological 1.1360 support level. A confirmed break here would expose the 1.1320 zone, the 0.0 Fibonacci level marking the origin of the entire recovery move, with further downside risk towards fresh multi-week lows if selling pressure accelerates.
With price coiled right at the intersection of both trendlines and the Fed decision just hours away, EUR/USD looks primed for a decisive move. Will the dollar reassert its dominance, or will the euro finally break free of this range?
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AUD/USD klesá už třetí den v řadě po slabších australských inflačních datech a je asi 0,25 % níže za den. Pár se propadl na více než dvoutýdenní minimum.
The AUD/USD pair attracts sellers for the third straight day on Wednesday and dives to an over two-week trough following the release of softer Australian consumer inflation figures. Spot prices, however, rebound a few pips from the Asian session low and currently trade just above mid-0.6900s, still down around 0.25% for the day.
The US Dollar (USD) remains on the back foot below the monthly high, touched on Tuesday, as bulls opt to move to the sidelines ahead of the crucial FOMC policy decision, due later today. This, in turn, offers some support to the AUD/USD pair. However, a fresh escalation of tensions between the US and Iran revives inflation fears. This, in turn, bolstered bets for at least one rate hike by the US Federal Reserve (Fed) in 2026, which favors USD bulls and backs the case for further depreciation for the currency pair.
From a technical perspective, the recent repeated failures to find acceptance above the 0.7000 psychological mark and the latest leg down below the 0.6965-0.6960 confluence support could be seen as a key trigger for AUD/USD bears. The said area marked the lower boundary of a two-week-old range and the 38.2% Fibonacci retracement level of the recent move up from a multi-month low, touched in June. Meanwhile, the Relative Strength Index (RSI) hovers near 38, hinting at lingering downside pressure.
Moreover, the slightly negative Moving Average Convergence Divergence (MACD) suggests that bearish momentum is present but not accelerating decisively. Moreover, an intraday resilience below the 50% retracement level makes it prudent to wait for some follow-through selling below the daily swing low, around the 0.6935 region, before placing fresh bearish bets on the AUD/USD pair. If selling extends, spot prices could fall to the 61.8% level at 0.6926 as traders await the FOMC decision.
Meanwhile, a deeper slide would expose the 78.6% retracement at 0.6898 and the structural floor at 0.6863, levels that could attract dip-buying interest should the current bearish bias persist.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/USD 4-hour chart
Australian Dollar Price This week The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the British Pound.
USDEURGBPJPYCADAUDNZDCHFUSD-0.05%0.25%-0.15%0.02%0.64%0.22%0.15%EUR0.05%0.28%-0.09%0.06%0.69%0.26%0.19%GBP-0.25%-0.28%-0.48%-0.21%0.42%-0.01%-0.08%JPY0.15%0.09%0.48%0.14%0.76%0.35%0.19%CAD-0.02%-0.06%0.21%-0.14%0.59%0.21%0.13%AUD-0.64%-0.69%-0.42%-0.76%-0.59%-0.42%-0.49%NZD-0.22%-0.26%0.01%-0.35%-0.21%0.42%-0.07%CHF-0.15%-0.19%0.08%-0.19%-0.13%0.49%0.07% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Slabší australská CPI posílila sázky na to, že RBA už letos sazby nezvýší, a AUD/USD spadl pod rostoucí kanál. Další klíčová support zóna je kolem 0,6750.
TL;DR: Australia’s soft CPI print has pushed all four major banks into agreement that the RBA’s tightening cycle is over for now, driving AUD/USD below its rising channel with 0.6750 emerging as the next major support cluster.
Why This CPI Print Changes the Story Australia’s softer inflation report is more than just another downside CPI surprise — it marks the point where markets concluded the RBA’s tightening cycle has effectively run its course. That shift in policy expectations triggered a sharp decline in AUD/USD, but its implications extend well beyond Wednesday’s trading session. With expectations for further RBA tightening fading rapidly, the Australian dollar is losing one of its few remaining domestic pillars of support.
What the Data Actually Showed The inflation data itself offered little justification for another near-term rate increase. Headline CPI slowed from 4.0% to 3.8% y/y in June, while trimmed mean inflation was unchanged at 3.6%. Quarterly figures echoed the same trend, with headline inflation easing from 4.1% to 3.8% and trimmed mean inflation rising only modestly from 3.5% to 3.6%.
The most important detail, however, was how those figures compared with the RBA’s own expectations. Both the monthly and quarterly trimmed mean measures came in below the central bank’s May forecast of 3.8%. That outcome effectively validated Governor Michele Bullock’s remarks on Tuesday that underlying inflation had evolved broadly as expected since May — while also hinting the disinflation process may be progressing slightly faster than policymakers themselves anticipated.
Westpac’s Reversal Seals a Rare Bank Consensus The biggest surprise came from Westpac. Until Wednesday, it had been the only one of Australia’s Big Four banks still forecasting another rate hike in August. Following the CPI release, Westpac abandoned that call, now expecting the RBA to remain on hold for the rest of 2026 — leaving open only a conditional risk of a November hike should inflation reaccelerate sharply during the third quarter.
That revision carries significance beyond a single economist’s forecast. For the first time this tightening cycle, all four major Australian banks are united in expecting the RBA to leave policy unchanged through year-end based on current information. That consensus reinforces the perception that Australia’s monetary tightening phase has probably ended — unless a fresh inflation shock, such as another sustained surge in oil prices, materializes.
Where the Risk Shifts Now: The Fed and Asian Equities Attention therefore shifts away from Australia and toward global developments. Domestically, the policy story is largely settled for now. Externally, however, AUD/USD still faces several potentially bearish catalysts.
The first is the Federal Reserve, with the FOMC rate decision scheduled for today. Cleveland Fed President Beth Hammack and Dallas Fed President Lorie Logan are widely expected to vote in favor of another rate increase. If additional FOMC members also dissent, markets would likely interpret the outcome as a more hawkish signal than currently anticipated — supporting higher Treasury yields and extending the Dollar’s recent strength. The second is regional risk sentiment. Asian equity markets remain fragile despite Wednesday’s brief rebound. Renewed selling in technology shares has already pushed the KOSPI roughly 17% lower this week, while pressure continues to build across the broader AI sector. Given the Australian dollar’s strong correlation with Asian equity performance and global growth expectations, a deeper regional correction could reinforce downside momentum. ActionForex’s Technical View on AUD/USD The technical picture has already begun reflecting that deteriorating backdrop. AUD/USD broke decisively below its short-term rising channel after once again failing to overcome the falling 55 D EMA near 0.7004. The price action strongly suggests the rebound from 0.6864 ended at 0.7026 as merely a corrective recovery within the broader decline from 0.7277.
As long as rallies remain capped below the 55 4H EMA around 0.6981, the path of least resistance remains lower. A retest of 0.6864 should be seen next, with a sustained break opening the way toward the 61.8% projection of 0.7277 to 0.6864 from 0.7026, at 0.6771. That level sits just above a major medium-term Fibonacci support — the 38.2% retracement of 0.5913 to 0.7277, at 0.6756 — creating a critical support cluster around 0.6750.
Whether buyers are prepared to defend that area should decide whether the broader uptrend from 0.5913 remains intact or gives way to a much deeper medium-term decline.
Key Takeaways Australia’s Q2 trimmed mean CPI came in below the RBA’s own 3.8% May forecast, validating Bullock’s “evolving as expected” framing. Westpac abandoned its lone August hike call, leaving all four major Australian banks aligned on an RBA hold through year-end. Today’s FOMC decision and continued Asian equity weakness (KOSPI down ~17% this week) are now the dominant risks for AUD/USD, not domestic policy. AUD/USD broke its short-term rising channel after failing at the 55 D EMA (0.7004), with the 0.6864–0.7026 rebound now viewed as corrective. 0.6750 is the key support cluster to watch — a break opens a deeper medium-term decline; holding it keeps the broader uptrend from 0.5913 intact.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
GBP/JPY broke below 218 on Monday, trading near 217.84, pressured by UK political uncertainty and softer bond yields The wide UK-Japan rate gap still supports carry trades, but Japanese intervention fears and dovish repricing are capping gains Investors should monitor 217.50 support and 218.50 resistance while watching central-bank guidance for clearer signals on the pair’s next direction. The British pound’s strong performance against the Japanese yen in early July has moderated, with the yen seemingly turning the tables. After reaching a high near 219.61-219.70 in mid-July, the GBP/JPY pair consolidated before falling below the significant 218.00 level. By July 27, the exchange rate was trading around 217.84, reflecting broader pound weakness.
What’s Driving the Slide? Several factors seem to be lining up right now. Political shifts created fresh uncertainty, with the pound losing ground as new Prime Minister Andy Burnham took office. Markets don’t like uncertainty, and a leadership change naturally raises questions about policy direction, even before anything real shifts.
That gap, usually around 275 basis points, hasn’t gone away. What has changed is how confident the market feels about the gap widening further. Plus, persistent talk that Japanese authorities might step in to prop up the yen has kept the pair from advancing much for weeks.
Meanwhile, traders have been cutting back exposure ahead of this week’s central bank decisions. The Bank of England (BoE) will likely hold its benchmark rate at 3.75%, and the Bank of Japan (BoJ) is also expected to keep its policy rate unchanged at 1%.
Oil price drops and a temporary calm in US-Iran tensions have also eased inflation worries. This, in turn, pulled UK government bond yields lower, taking away one of the Pound’s recent supports.
Is the Carry Trade Losing Its Grip? The strength of GBP/JPY in recent months was largely attributed to the significant interest rate differential between the UK and Japan. This gap made the pair attractive for carry trades, where investors borrow low-interest yen to invest in higher-yielding pound assets.
That gap, historically estimated near 275 basis points, hasn’t disappeared. What has changed is the market’s confidence in how much further that gap might widen, and lingering speculation that Japanese authorities could step in to support the yen has kept a lid on the pair’s advances for weeks.
At the same time, reports of BoJ officials being open to faster rate increases, combined with ongoing speculation about possible currency intervention, have intermittently supported the yen.
Both the BoE and BoJ were widely expected to keep rates steady at their late-July meetings. This limited the chance of a sudden policy split that would drastically change the pair’s medium-term path. So, the current dip looks more like a correction after a strong run, rather than the start of a long downturn.
How Should Investors Position? Considering the current political uncertainty, cautious central bank outlooks, and reduced carry trade appeal, adopting a defensive investment approach appears prudent for the short term. Investors should closely monitor the Bank of England and Bank of Japan announcements this week, as any unexpected policy shifts could lead to significant repricing of the GBP/JPY pair.
A sustained move below 218.00, confirmed by a break under 217.50, could increase bearish pressure towards 216.60 and 215.00. Conversely, a recovery above 219.00 would support the possibility of testing previous highs.
Is the UK-Japan rate gap still supporting the pair?
Yes, though intervention fears and reduced confidence in further widening have weakened its usual carry-trade support.
What should investors focus on this week?
The BoE and BoJ policy decisions, both expected to hold rates, but any surprise could move the pair sharply.
Goldman Sachs čeká, že AUD/NZD ve střednědobém horizontu klesne, protože silnější inflace na Novém Zélandu zvyšuje sázky na další dvě zvyšování sazeb RBNZ. Vyšší ceny energií ale mohou pár krátkodobě držet nad vodou.
Goldman Sachs sees scope for AUD/NZD to retreat over the medium term as stronger New Zealand inflation revives RBNZ rate-hike expectations, despite near-term support from higher energy prices. Analysts at Goldman Sachs expect the Australian Dollar to New Zealand Dollar exchange rate (AUD/NZD) to correct lower over the medium term, although higher energy prices may continue to support the cross in the immediate outlook.
AUD/NZD was trading around 1.2098 on Monday, up approximately 0.3% on the day. The pair has fallen around 0.7% since the beginning of July but remains more than 4% higher in 2026.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.907748 (+0.30%)
Pound to Dollar (GBP/USD): 1.330182 (+0.09%)
Australian Dollar to US Dollar (AUD/USD): 0.697252 (-0.20%)
The bank said AUD/NZD has recently been “buoyed up” by the rise in global energy prices, reflecting Australia’s more favourable commodity exposure and the relative resilience of the Australian Dollar during periods of higher raw-material costs.
Goldman nevertheless believes that monetary-policy developments in New Zealand could ultimately place renewed downward pressure on the cross.
New Zealand inflation surprised firmly to the upside, with consumer prices rising 1.5% quarter-on-quarter and annual inflation accelerating to 4.1%.
The stronger reading has led Goldman Sachs to revise its Reserve Bank of New Zealand outlook. The bank now expects the RBNZ to raise interest rates in September, followed by a final 25-basis-point increase in December.
That would take the Official Cash Rate to 3.00%, creating a stronger rate backdrop for the New Zealand Dollar and narrowing one of the key sources of support for AUD/NZD.
The shift is important because the cross has spent much of 2026 benefiting from a widening contrast between expectations for Australian and New Zealand monetary policy.
Stronger New Zealand inflation now challenges that narrative by increasing the likelihood that the RBNZ will need to tighten policy further to prevent price pressures becoming entrenched.
Australian inflation data will provide the next major test for the outlook.
A stronger-than-expected Australian CPI reading could reinforce expectations that the Reserve Bank of Australia will also need to maintain a restrictive policy stance, potentially extending near-term support for the Australian Dollar.
Energy prices remain another source of uncertainty. Australia is a major commodity exporter, meaning higher energy and raw-material prices can improve the country’s terms of trade and support the currency.
This helps explain why Goldman is cautious about expressing its bearish AUD/NZD view through a short-dated trade.
Medium-Term AUD/NZD Forecast: Goldman Prefers Longer-Dated Puts Rather than betting on an immediate decline, Goldman Sachs prefers longer-dated AUD/NZD put options to express its expectation that the cross will eventually move lower.
The strategy is designed to manage the risk of sharp near-term volatility surrounding Australian inflation data and further energy-price shocks.
In practical terms, longer-dated puts allow investors to retain exposure to a future AUD/NZD decline without relying on the correction beginning immediately.
The bank’s central view is that higher energy prices can keep the cross supported in the short run, but a renewed RBNZ tightening cycle should become increasingly important over the medium term.
With AUD/NZD still trading above 1.20 and recording a sizeable year-to-date gain, Goldman sees scope for some of that strength to unwind as markets price a higher New Zealand interest-rate path.
The immediate direction will depend on Australian CPI and commodity markets, but the prospect of two additional RBNZ increases strengthens the case for the New Zealand Dollar to recover against its Australian counterpart over the months ahead.
Despite the Canadian dollar’s recovery attempts in previous weeks, a renewed loss of strength against the U.S. dollar is becoming evident. This is reflected in USD/CAD, which has gained more than 0.2% over the last 2 trading sessions, including the close of last week and the first session of this week.
For now, buying pressure remains stable, in a context where the behavior of U.S. bonds and expectations around the Federal Reserve continue to limit a consistent recovery in the CAD. This is also being reinforced by uncertainty around possible trade tariffs on Canada, a factor that could remain relevant for the pair over the next few trading sessions.
Is the Federal Reserve still relevant? When analyzing USD/CAD expectations, it is important to consider the central bank dynamic in both the United States and Canada. On one hand, the Bank of Canada maintains an outlook of unchanged rates near 2.25%. On the other hand, the United States continues to hold a higher reference rate at 3.75%.
What is relevant is that the Federal Reserve’s interest rate decision is expected this week, and market probabilities have started to gain importance. The event could reinforce expectations of a more aggressive monetary policy stance in the United States and widen the rate differential with Canada, favoring the relative appeal of USD-denominated investments.
For this week’s decision, the market assigns a probability close to 62.00% that there will be no change in interest rates. However, this probability was close to 83% one week ago, while the probability of a possible hike at the July 29 decision now stands near 38%.
In addition, for the September 16 meeting, the probability remains above 50% that the United States could raise interest rates toward a new area close to 4.00%.
Source: CMEGROUP
Source: CMEGROUP
With this in mind, and unlike the more neutral outlook from the Bank of Canada, the market is starting to consider a potentially more aggressive Federal Reserve over the coming months. This possibility could be confirmed by this week’s decision and continue to support the relative appeal of USD-denominated assets.
This scenario also helps sustain strength in the U.S. 10-year Treasury market. Now, these securities maintain a yield near the upper 4.6% area, around 2026 highs, representing a robust return for one of the safest markets in the world.
Source: TradingEconomics
Therefore, the situation remains complicated for the Canadian dollar. If the Bank of Canada maintains a neutral stance and the market continues to anticipate a more aggressive Fed, USD-denominated investments could preserve a relative advantage. This would make a clearer recovery in the CAD more difficult and could continue to support buying pressure in USD/CAD over the next few sessions.
Does the tariff threat remain in place? So far, the threat of a 50% tariff on Canadian goods imposed by the United States last week remains relevant. The latest update is that Canada has not responded immediately with retaliatory measures, as Mark Carney announced that the country is intensifying negotiations with the United States before the tariffs come into effect.
However, no major progress has been seen yet that would reduce this threat in the short term. Trade uncertainty remains elevated, especially because the goods directly affected are estimated to represent nearly 28 billion Canadian dollars in exports. This could significantly affect Canadian trade and confidence around investments in Canada.
For this reason, the tariff issue could continue to weigh on the Canadian dollar. If no solid negotiations are seen that remove the threat of new tariffs, the appeal of the CAD could remain limited, and USD/CAD could maintain relevant buying pressure over the next few trading sessions.
Technical forecast for USD/CAD
Source: StoneX, Tradingview
Lack of direction begins to become evident: Over the last few weeks, USD/CAD has started to show a phase of neutrality on the chart, with most movements taking place between an upper area near 1.42132 and a lower area around 1.39968. For now, price continues to move within these levels. If it fails to break consistently out of this possible range, indecision could continue to gain relevance in the short term.
RSI: Now, the RSI remains close to the neutral 50 level and shows important flattening. This reflects a balance between buying and selling impulses over the last few sessions. If this behavior continues, the indicator could continue to highlight a relevant neutral phase over the next few sessions.
MACD: The MACD also maintains a histogram close to the neutral 0 level, suggesting balance in the strength of short-term moving averages. This reading reinforces the possibility that the indecision phase could remain important for USD/CAD over the next few sessions.
Key levels:
1.42132 – Relevant resistance: This area corresponds to 2026 highs and remains the main bullish barrier on the chart. Price movements toward this level could reactivate a buying bias and open room for a possible recovery of the bullish trend line that was relevant in previous weeks.
1.40907 – Near-term barrier: This area corresponds to the most relevant 23.6% Fibonacci level on the chart. Price movements that fail to move consistently away from this level could continue to highlight an important neutral phase and even open room for a more relevant short-term sideways range.
1.39968 – Crucial support: This relevant bearish barrier corresponds to the 38.2% Fibonacci retracement and also aligns with the 50-period simple moving average. Price movements below this level could reaffirm a more consistent selling bias and open room for a possible short-term bearish trend line over the next few sessions.
Written by Julian Pineda, CFA, CMT – Market Analyst
The USD/INR pair fell nearly 0.7% after failing to breach 97.00, driven by active RBI intervention and declining crude oil prices The pair’s rejection near higher levels echoes mid-May failures around 97.00, highlighting persistent resistance without stronger supporting catalysts Rising oil prices and US inflation present key risks, while delayed exporter dollar conversions offer opportunities for further rupee appreciation The USD/INR currency pair experienced a notable reversal on Monday, declining by nearly 0.7% after a period of steady gains since late June. The Indian rupee strengthened, with early trading showing gains of approximately 28 paise, reaching levels near 96.25 against the US dollar, before settling in the mid-95.80s.
This movement mirrors previous attempts to push towards the 97.00 psychological level, including a peak in mid-May. Such instances where a clear trend encounters significant resistance often lead market participants to consider whether the change is temporary or signals a broader shift.
What Drove the Latest Decline? The main source of pressure was a sharp drop in crude oil prices. Brent futures fell over 4% to about $92.74 per barrel, which eased pressure on India’s large oil import bill. Adding to this, positive signals from West Asia emerged, where the United States and Iran indicated a halt to strikes and opened the door for diplomatic talks.
US Ambassador to the United Nations Mike Waltz said negotiations were progressing on multiple fronts. This helped reduce the geopolitical risk premium that had pushed oil prices higher and boosted dollar demand.
A softer US dollar index, which came down from its highs, also helped. Strong buying in domestic equity markets encouraged capital flows, which in turn benefited the rupee.
A Familiar Ceiling Near 97.00 Today’s pullback feels like history repeating. Back in mid-May, USD/INR pushed toward the 97.00 mark but just couldn’t hold. The pair swung through one of its widest ranges in modern history in the first half of 2026, hitting an all-time record high of 96.84 on May 20. It then recovered partly to around 94.35 by late H1. That recovery was helped by RBI intervention, falling crude prices, and a coordinated package of capital-account reforms.
Now, the pattern feels almost repetitive. The pair climbed back toward similar territory over the past week. Wise’s exchange rate data shows it hit a high of 96.888 on July 23, 2026, before rolling over again. Today’s dip to a low of 96.166 on July 27, 2026, suggests the 97.00 zone remains a meaningful resistance level. The pair has now failed to clear it twice.
Risks and Opportunities for Investors For investors and traders monitoring the USD/INR pair, the current situation presents a balanced outlook. Repeated rejections near the 97.00 level indicate a technical ceiling, likely reinforced by consistent dollar selling, potentially including actions by the RBI.
Opportunities may arise for those anticipating a reduction in market volatility. A sustained decrease in oil prices would positively impact India’s macroeconomic balance by reducing the import bill and inflationary pressures.
However, underlying factors that could drive the pair higher remain. Elevated crude oil prices linked to tensions in West Asia and ongoing foreign portfolio outflows are persistent risks that could push USD/INR back towards its recent highs.
Why did USD/INR decline sharply today?
Falling crude oil prices and signals of easing US-Iran tensions reduced dollar demand and supported the rupee in Monday’s session.
How does this compare to earlier moves towards 97.00?
Similar to mid-May, advances near 97.00 failed to sustain, reflecting market caution at higher levels without stronger catalyst.
What should investors watch for in USD/INR going forward?
Going forward, investors should monitor crude oil price movements, the trend of foreign institutional investor outflows, and whether the 97.00 level holds as resistance or experiences a decisive break.
GBP/CAD se drží nad 1,8800 a trh čeká na rozhodnutí BoE, které může pár posunout zpět k 1,8900. Minulý týden skončil asi 0,4 % níže kvůli obavám o britské finance a dražší ropě.
GBP/CAD could recover towards 1.8900 this week, although the Bank of England decision, UK fiscal concerns and volatile oil prices will determine whether the rebound can hold. The Pound to Canadian Dollar exchange rate (GBP/CAD) opened the new week near CA$1.8820, having recovered from last week’s three-week low around CA$1.8740.
GBP/CAD nevertheless ended the previous week approximately 0.4% lower, as UK fiscal concerns weighed on Pound Sterling while rising oil prices supported the commodity-linked Canadian Dollar.
Latest — Exchange Rates:
Pound to Canadian Dollar (GBP/CAD): 1.8819 (+0.20%)
Euro to Canadian Dollar (EUR/CAD): 1.608296 (+0.35%)
Dollar to Canadian Dollar (USD/CAD): 1.4096 (+0.01%)
Image: GBP/CAD Technical Outlook Ahead of the Bank of England Decision Near-term momentum has improved after GBP/CAD moved back above the 1.8800 area.
The 15-minute chart shows the pair holding above its short-term moving average and session VWAP, while the relative strength index remains positive without signalling an extreme overbought position.
Initial resistance is located around 1.8830. A sustained break above this level could open the way towards 1.8870 and then the psychologically important 1.8900 area.
On the downside, 1.8800 is the first support to watch. A break beneath 1.8780 would weaken the recovery and expose last week’s low near 1.8740.
Near-Term GBP/CAD Forecast: Bank of England Holds the Key Thursday’s Bank of England decision will provide the week’s main test for Sterling.
The Bank is widely expected to leave interest rates unchanged at 3.75%, meaning the vote split, updated forecasts and guidance on future tightening will be more important than the decision itself.
At the previous meeting, two Monetary Policy Committee members voted for an immediate increase to 4.00%.
Further concern about the inflationary impact of elevated energy prices could therefore reinforce expectations that the Bank may raise rates later this year.
A relatively hawkish decision, particularly one that keeps a September increase under consideration, would support a GBP/CAD move through 1.8830 and towards 1.8900.
However, Pound Sterling could retreat if the Bank emphasises weaker growth, softer headline inflation or the risk that higher energy costs will damage demand rather than create persistent domestic inflation.
UK political and fiscal developments will remain an additional risk.
The Pound struggled last week after Prime Minister Andy Burnham appointed John Healey as Chancellor and investors questioned how the government’s proposed tax reductions would be funded.
This political uncertainty overshadowed stronger-than-expected UK retail sales and business activity figures, preventing Sterling from making a sustained recovery.
Oil Prices and Canadian GDP Could Support the Loonie For the Canadian Dollar, oil prices are likely to remain at least as important as domestic data.
Crude prices surged last week following attacks on Saudi tankers and infrastructure around the Red Sea, but fell sharply on Monday as a pause in US-Iran attacks encouraged hopes of renewed diplomacy.
Shipping disruption through the Bab el-Mandeb Strait means the risk premium has not disappeared, leaving CAD sensitive to further geopolitical headlines.
A renewed rise in Brent crude would probably favour the Canadian Dollar and could push GBP/CAD back towards 1.8780.
Conversely, a continued oil-price correction would remove an important source of CAD support.
Friday’s Canadian GDP report will provide the main domestic event.
Statistics Canada will publish May’s GDP figures alongside an advance estimate for June, following April’s 0.5% expansion.
Stronger growth would reinforce the downside risk for GBP/CAD.
Nevertheless, the central forecast is for the pair to remain supported above 1.8780, with a hawkish Bank of England outcome potentially driving a recovery towards 1.8870–1.8900.
EUR/USD zůstává pod tlakem a vstupuje do posledního týdne července na úrovni 1,1369, přičemž se drží poblíž měsíčních minim. Trh dál počítá alespoň s jedním zvýšením sazeb Fedu do konce roku, zatímco silná americká data podporují dolar.
EUR/USD enters the final week of July at 1.1369. Friday's modest decline in energy prices reduced expectations that the Federal Reserve could raise rates as early as its upcoming meeting, scheduled for Tuesday and Wednesday.
At the same time, the main currency pair remains very close to the monthly low recorded in late June. Markets continue to price in at least one Fed rate hike before the end of the year.
Inflation risks have risen following a renewed escalation in the US–Iran conflict. Restrictions on the movement of energy tankers in the Persian Gulf and the Red Sea have pushed oil and fuel prices higher.
Additional support for the dollar is coming from strong US economic data. S&P PMIs showed the fastest pace of private business activity growth this year. Meanwhile, the number of initial jobless claims fell at the fastest pace in nearly six decades, confirming the resilience of the labour market.
Technical analysis
On the H4 chart of EUR/USD, the market has formed a consolidation range around the 1.1389 level, currently extending between 1.1336 and 1.1413. This range is nearing completion. An upside breakout would suggest a corrective move towards 1.1420, followed by a decline to 1.1313. A direct downside breakout would open the way for a move to 1.1313. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.
On the H1 chart, the market has completed an upward move to the 1.1414 level. A consolidation range is currently forming below this level. Today, a move lower to 1.1390 is expected, followed by a move higher to 1.1420, and then a decline to 1.1370, with scope for the trend to extend to 1.1313. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.
ConclusionEUR/USD remains under pressure as it approaches the final week of July, hovering near monthly lows. The modest retreat in energy prices at the end of last week briefly reduced expectations of an immediate Fed rate hike, but markets continue to price in at least one increase before the end of the year. Renewed US–Iran tensions and supply disruptions in the Persian Gulf and the Red Sea have pushed oil prices higher, reinforcing inflation risks. Strong US economic data – including robust PMI readings and a sharp decline in jobless claims – continue to support the dollar. Technically, the pair may see a temporary corrective move towards 1.1420, but the broader bearish structure remains intact, with downside potential towards 1.1313. The Federal Reserve meeting this week will be the key catalyst.
Lloyds čeká, že EUR/USD letos v létě klesne k 1,1214, protože přetrvávající inflační rizika v USA znovu zvýhodňují dolar. Pár v pátek uzavřel na 1,1371.
Lloyds expects EUR/USD to retreat towards 1.1214 this summer as persistent US inflation risks restore the Dollar’s interest-rate advantage. At Friday’s market close, the Euro to Dollar (EUR/USD) exchange rate was quoted at $1.1371, down 0.05% on the day and from $1.1438 the previous Friday.
EUR/USD fell in four of the five sessions and finished just above July’s low at 1.1362, leaving the Euro on the defensive heading into the new week.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.137117 (-0.05%)
Pound to Dollar (GBP/USD): 1.332498 (+0.09%)
Dollar to Yen (USD/JPY): 163.85169 (0.00%)
Lloyds Bank says the latest rise in energy and wider commodity prices has revived inflation concerns, but the policy consequences are likely to be more challenging for the United States than the Eurozone.
“The Fed faces a more challenging mix than slow Europe, the USD ought to benefit from that,” says Nicholas Kennedy, FX strategist at Lloyds Bank.
The US economy has absorbed the latest energy shock with relatively little damage to domestic demand.
Lloyds points to resilient household consumption, a steadier labour market, rising equity-market wealth and the continuing AI investment boom. Tariffs, tight inventories and wider supply constraints are adding to the underlying price pressure.
Europe faces a less supportive combination.
The European Central Bank may still raise interest rates further, but higher input costs and tighter monetary policy are also likely to weigh more heavily on the Eurozone’s already-fragile demand and confidence.
Markets May Still Be Underpricing the Fed “One soft month for inflation data does not alter those underlying influences,” Kennedy says.
At the time of Lloyds’ 23 July report, markets had almost two Federal Reserve rate increases priced by the end of 2026.
“While the market now has almost two Fed hikes priced in by year-end, there is not much after that,” the bank says, noting that only another 13 basis points of tightening was priced through to the middle of 2027.
Lloyds believes that may prove too cautious if strong demand continues to collide with limited supply, accommodative financial conditions and rising business costs.
“If ECB assumptions are too hawkish, we’d still see the Fed curve as too low,” Kennedy adds.
The implication for EUR/USD is that US-Eurozone rate differentials could move back in the Dollar’s favour even if the ECB retains a hawkish policy stance.
With Eurozone growth fragile and investors reluctant to revive the broader anti-Dollar trade, Lloyds says the Dollar’s carry advantage is beginning to reassert itself.
“A further drift down towards EUR/USD 1.1214, if not a bit below... remains our expectation over the summer,” the bank concludes.
Image: EUR/USD 15-minute technical chart at Friday’s market close EUR/USD Technical Outlook Remains Soft The short-term chart also points to a continued downside bias.
EUR/USD ended Friday below the session VWAP at approximately 1.1381 and the 200-period moving average near 1.1392.
The 14-period RSI stood at 44.3, below the neutral 50 level but not yet signalling oversold conditions.
Initial support is located at July’s 1.1362 low.
A sustained break below that area would strengthen the case for another move lower and keep Lloyds’ 1.1214 target in view. That level is approximately 1.4% below Friday’s close.
Lloyds identifies 1.1065 as the next technical support should EUR/USD fall below the 1.12 region.
On the upside, the pair would need to recover the 1.1381–1.1392 area to ease immediate selling pressure.
Until then, the approaching Federal Reserve meeting and any further evidence of persistent US inflation will remain important tests of the bank’s bearish summer forecast.
GBP/USD se drží poblíž 1,3325, i když britská data byla silnější, než se čekalo. Scotiabank ale upozorňuje, že libra dál naráží na politickou a fiskální nejistotu.
The Pound to Dollar exchange rate held near 1.3325 on Friday, having retreated more than two cents from July’s high around 1.3558.
GBP/USD is still around 0.6% higher this month, but Sterling has struggled to respond to a stronger run of UK economic data.
Over the past year, the pair has traded between approximately 1.3010 and 1.3858.
Scotiabank noted that June retail sales were far stronger than expected, while the preliminary July business surveys also surprised positively.
The manufacturing PMI rose to 52.8, signalling a solid expansion, while the services index recovered from contraction territory to 51.8.
Despite the upbeat figures, the bank said “market participants are clearly not responding to fundamentals”, with political uncertainty and concerns over the UK’s fiscal position continuing to weigh on the Pound.
Attention now turns to next Thursday’s Bank of England meeting. Rates are expected to remain unchanged, but Scotiabank anticipates a hawkish hold alongside updated economic forecasts.
Markets currently price around 16 basis points of tightening by September and 32 basis points by November.
Pound Sterling could gain if policymakers strengthen the case for a rate rise at the following meeting.
The options market is sending a more cautious signal, however, with demand increasing for protection against renewed GBP weakness.
Scotiabank linked the shift to geopolitical risks and domestic political concerns, both of which have pushed gilt yields higher.
The bank’s technical outlook remains neutral.
GBP/USD has slipped below the support previously expected near 1.3350, leaving 1.3300 as the immediate level to watch.
Stronger support is located at 1.3150, with resistance around 1.3550.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Euro remains supported by expectations of further ECB tightening, but EUR/USD is still struggling to escape the lower end of its July range. EUR/USD traded close to 1.1371 at the end of the latest session, leaving the pair near July’s low after a subdued week for the single currency.
The Euro has fallen in six of the past eight completed sessions and is down around 0.4% for July, having retreated from a monthly high near 1.1481 to within one cent of June’s 1.1325 low.
Both ING and Nordea expect the European Central Bank to maintain a hawkish bias, with further interest-rate increases still likely.
However, neither the rate outlook nor the latest ECB meeting has generated enough momentum to push EUR/USD out of its narrow trading range.
ING expects the pair to remain supported by higher Eurozone rates, but retains a near-term downside bias towards 1.1380.
Nordea goes further, forecasting three additional 25-basis-point rate increases that would lift the ECB deposit rate from 2.25% to 3.00% by March 2027.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.137117 (-0.05%)
Pound to Dollar (GBP/USD): 1.332498 (+0.09%)
Dollar to Yen (USD/JPY): 163.85169 (0.00%)
ING Sees September Hike Remaining in Play ING had expected the ECB to leave rates unchanged while preserving the hawkish market pricing already embedded in Eurozone interest rates.
Its baseline was for a hawkish hold, with policymakers attempting to prevent inflation expectations from becoming unanchored as European gas and global energy prices remain elevated.
“The aim today could be – once again – to preserve market pricing to limit the risk of inflation expectations de-anchoring,” says ING FX strategist Francesco Pesole.
ING argued that achieving this might require a clear indication that a September rate increase remained possible, either through the press conference or subsequent guidance.
The bank noted that the market had already priced approximately 45 basis points of tightening by the end of 2026, setting a relatively high hurdle for the ECB to deliver an additional Euro-positive surprise.
“The hawkish bar set by the market via pricing isn’t low,” says Pesole.
ING nevertheless expected a firm ECB stance to limit the downside for short-dated Eurozone rates and, by extension, the Euro.
The difficulty is that supportive rate differentials have not translated into a decisive EUR/USD advance.
“A central bank meeting would normally be a prime catalyst for EUR/USD to break out of its tight trading range, but we do not expect that to happen,” ING says.
The bank retained a near-term downside bias, arguing that currency markets remained too relaxed about the potential consequences of further escalation in the Gulf.
“Unless the newsflow becomes more constructive, we look for EUR/USD to slip towards 1.1380 in the coming days.”
That target has already been reached, with the pair ending the latest session near 1.1371.
Nordea Forecasts Three More ECB Rate Increases Nordea believes the ECB remains in a genuine tightening cycle rather than delivering one or two isolated increases.
The bank forecasts 25-basis-point hikes in September, December and March 2027, which would raise the deposit rate to 3.00%.
“The ECB did not touch rates today, but the message was in line with more rate hikes to come,” Nordea says.
“Our updated forecast still sees three more rate increases, but at a quarterly pace as opposed to a faster speed before.”
Nordea says the ECB’s latest communication left the door “wide open” to a September increase.
It highlights the central bank’s assessment that energy prices remained close to the assumptions used in its June forecast, which showed core inflation staying above 2% throughout the projection period even with two further rate increases already included.
The bank’s conviction does not depend on another major escalation in the Middle East or a renewed surge in oil.
Instead, Nordea expects broader price pressures and a relatively resilient Eurozone economy to keep the ECB tightening for longer.
“We think that we are amidst a hiking cycle rather than one or two isolated rate moves, and continue to expect the ECB to raise rates three more times.”
The bank has slowed the expected pace of tightening because oil prices have fallen from their earlier highs and the growth outlook has become less certain.
A rapid improvement in the geopolitical backdrop could reduce the need for further action, while a prolonged conflict and renewed energy-price increase could produce faster or additional rate increases.
Image: Nordea chart showing 25-basis-point ECB hikes in September, December and March 2027, taking the deposit rate to 3.00% - Courtesy of Nordea. Energy Inflation May Take Time to Spread Nordea argues that markets and policymakers may still be underestimating the delayed second-round effects of higher energy costs.
Its research notes that during the previous inflation cycle it took several months for rising energy prices to feed into food, goods and services inflation.
It also took considerably longer for forward inflation expectations to peak than for spot inflation itself.
“We still see risks biased towards more second-round impact on inflation than what markets and the ECB expect,” Nordea says.
This possibility supports the case for further tightening even if the immediate increase in oil and gas prices begins to reverse.
The bank also points to inflation expectations that remain above the ECB’s target across several measures.
Its report shows five-year market inflation expectations around 2.26%, while household and large-company measures remain closer to 2.9%.
Nordea expects Eurozone growth of approximately 1% in 2026, although it acknowledges that the risks are tilted to the downside.
The bank nevertheless says the economy has remained more resilient than weak purchasing managers’ surveys would suggest.
Manufacturing output and retail sales increased in the available April and May data, while second-quarter growth may have been around 0.3%.
Nordea expects household consumption to remain the primary source of positive growth, supplemented by investment in technology and defence.
EUR/USD Technical Outlook Despite the increasingly hawkish ECB outlook, the EUR/USD chart shows little evidence of sustained buying momentum.
The pair is trading close to 1.1371, below its 20-period moving average near 1.1372 and beneath session VWAP around 1.1381.
It also remains below the 200-period moving average near 1.1392, leaving the immediate intraday structure tilted to the downside.
EUR/USD attempted to recover towards 1.1390 during the latest session but failed to sustain the move.
The retreat confirms a band of resistance between approximately 1.1380 and 1.1392, with the 1.1400 level providing the next major barrier.
RSI stands around 44, having recovered from levels close to 30.
This indicates that selling pressure has eased and the pair is no longer oversold, but momentum remains below the neutral 50 threshold.
The technical picture is therefore consistent with consolidation near the lows rather than the start of a convincing Euro recovery.
Initial support is located around 1.1368, followed by July’s low near 1.1362.
A sustained break below that area would expose the June low around 1.1325.
On the upside, EUR/USD must first recover above 1.1375 and 1.1381.
A move through the 1.1390-1.1400 region would provide the first meaningful evidence that the Euro is developing greater breakout power.
Image: EUR/USD 15-minute chart showing support at 1.1362, resistance at 1.1380 and the 1.1390-1.1400 breakout zone Why ECB Hikes Have Not Lifted the Euro The lack of a stronger EUR/USD response reflects the fact that much of the hawkish ECB outlook is already priced into the market.
Nordea notes that almost a full rate increase is priced by September, another is largely priced by December and part of a further hike is reflected in March 2027 contracts.
This leaves limited room for interest-rate expectations to move further in the Euro’s favour without a fresh inflation shock or more forceful ECB guidance.
The US Dollar also retains support from higher US rates, geopolitical uncertainty and the risk that elevated energy prices eventually damage global risk appetite.
ING says the current low-volatility environment may be underestimating how quickly Dollar demand could return if financial markets lose their tolerance for higher oil and gas prices.
The Euro is therefore receiving support from ECB tightening expectations, but not enough to overcome simultaneous demand for the Dollar.
Euro Forecast 2026: Latest Bank Projections ING and Nordea both see a hawkish ECB, but the implications for EUR/USD remain restrained.
Nordea expects three further rate increases and a 3.00% deposit rate by March 2027, while ING believes policymakers will keep a September hike in play and defend current market pricing.
These forecasts should limit the risk of an immediate collapse in the Euro.
However, the rate outlook is already heavily reflected in market prices, while geopolitical and energy risks continue to favour the Dollar.
EUR/USD therefore remains vulnerable while below 1.1390-1.1400.
A break beneath 1.1362 would expose the June low near 1.1325, while only a sustained recovery above 1.1400 would suggest that hawkish ECB expectations are finally generating a meaningful upside breakout.
Kurz EUR/CHF vystoupal na zhruba 0,9304, nejvýše od ledna. UBS říká, že bezpečný přístav švýcarského franku slábne a čeká obchodování na nebo nad 0,93.
The Euro to Swiss Franc exchange rate has strengthened to around 0.9304, its highest closing level since January and close to July’s peak at 0.9315.
EUR/CHF has gained 0.8% this month and 1.3% in June, extending its recovery from the March low near 0.8981.
The pair nevertheless remains below the 12-month high around 0.9454 recorded in August 2025.
UBS believes the Swiss Franc’s traditional safe-haven appeal has faded since the opening phase of the Iran conflict, when EUR/CHF briefly fell below 0.90.
The bank says most major central banks responded to higher inflation with tighter policy, while the Swiss National Bank remained far from raising rates because domestic inflation stayed contained.
This divergence has widened the Swiss Franc’s yield disadvantage and weakened its performance against other G10 currencies.
According to UBS, “the Swiss franc’s perceived ‘safe-haven’ appeal has faded”, with the currency failing to strengthen during subsequent escalations in the Middle East.
UBS expects the Franc to underperform the Euro on both a spot and total-return basis.
The Euro offers a yield advantage of roughly 2.5%, while European fiscal stimulus should support growth and encourage greater demand for higher-returning assets.
The bank forecasts EUR/CHF at 0.93 in September, December, March and June, describing the longer-term trend as sideways.
It expects resistance around 0.9350 and sees the market establishing a new medium-term equilibrium close to current levels.
UBS added: “We expect EURCHF to trade at or above 0.93.”
A renewed global recession or sharp increase in risk aversion would threaten that view by restoring demand for the Franc, while stronger risk appetite and greater use of CHF-funded carry trades could push EUR/CHF higher.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Rabobank expects renewed pressure on Pound exchange rates as concerns over Prime Minister Andy Burnham’s spending plans unsettle the gilt market. The British Pound concluded this trading week facing a difficult combination of political uncertainty, elevated UK bond yields and doubts over how the new government intends to fund its policy agenda.
UK economists at Rabobank say the initial market response to Burnham’s cabinet and early policy announcements has been notably cautious.
Latest — Exchange Rates:
Pound to Euro (GBP/EUR): 1.171822 (+0.14%)
Pound to Dollar (GBP/USD): 1.332498 (+0.09%)
Euro to Dollar (EUR/USD): 1.137117 (-0.05%)
The UK 10-year gilt yield has moved above 5.0%, while Pound Sterling has ranked as the weakest G10 currency over the latest one-day period.
Although the appointment of an experienced Chancellor has offered some reassurance, the bank warns that uncertainty surrounding the government’s fiscal strategy could keep both gilts and the Pound under pressure.
Rabobank analysts expect EUR/GBP to rise to 0.8650 over the next three months and sees scope for GBP/USD to fall back towards 1.3200.
At current rates, those forecasts imply a weaker Pound against both the Euro and the US Dollar.
Rabobank Warns Burnham’s Honeymoon Could Be Brief Rabobank says the appointment of Healey as Chancellor is a stabilising factor because the country’s finances have been placed in the hands of an experienced politician with previous Treasury exposure and respect across Parliament.
However, the larger question is how Burnham plans to finance his agenda.
The Prime Minister has said he intends to use “flexibility” within the fiscal rules, which Rabobank says could point towards placing some infrastructure-related debt on the balance sheets of public financial institutions.
Although such borrowing might sit outside the most closely watched fiscal measures, it would still need to be absorbed by the bond market.
“The market will be wary about whether this constitutes ‘back door’ funding,” Rabobank says.
The government’s first cost-of-living measure is a reduction in VAT on household electricity bills from October.
Officials have indicated that the measure will be funded by cancelling the previous government’s digital identity programme, although reports have raised doubts over whether that scheme was fully funded in the first place.
Rabobank notes that use of greater flexibility within the fiscal rules could potentially mobilise an additional £16 billion for infrastructure projects over the remainder of the decade.
Infrastructure investment could improve productivity in parts of the UK outside London and the South East, but those benefits may take years to materialise.
Burnam, by contrast, faces a general election in less than three years.
That leaves the government under pressure to deliver visible improvements quickly, increasing the risk that spending commitments expand before the economic benefits become apparent.
“The market is now bracing itself for a list of further announcements,” Rabobank says.
“This suggests that funding issues will remain at the fore of the market’s mind and hints that Burnham’s honeymoon may be short-lived.”
Gilt Market Particularly Sensitive The latest UK borrowing figures were slightly better than expected for June, but borrowing over the first three months of the fiscal year remains above projections from the Office for Budget Responsibility.
At an early stage of the financial year, that overshoot might ordinarily attract limited attention.
Rabobank argues that the political backdrop makes investors more sensitive than usual.
Burnham is associated with the softer left of the Labour Party and has said he wants government to become less reliant on what he described as the “imperial” Treasury.
Against this backdrop, the bond market is likely to demand clear reassurance that new spending plans will remain compatible with the fiscal rules.
Rabobank also highlights structural vulnerabilities in the UK economy.
The country has a low household savings ratio and a substantial current-account deficit, increasing its dependence on overseas capital.
These characteristics can amplify market reactions when confidence deteriorates.
“The UK may not have the largest debt-to-GDP ratio in the developed world, but arguably it has one of the most sensitive debt markets,” Rabobank says.
Lower BoE Expectations Are Another Pound Risk The reduction in VAT on household electricity bills should mechanically lower inflation.
Rabobank also expects headline UK CPI inflation to ease to 2.7% year on year, offering some short-term reassurance to the gilt market.
The inflation outlook remains complicated by higher spot energy prices following the escalation in the US-Iran conflict, but Rabobank believes current Bank of England pricing is too aggressive.
Markets are pricing approximately 43 basis points of BoE tightening over the next six months.
Rabobank expects the central bank to avoid raising rates this year.
“On our view, this is overdone and a reduction in market expectations for BoE policy tightening is another headwind for the pound,” the bank says.
This is important because elevated UK interest-rate expectations have provided Sterling with some protection against fiscal and political concerns.
Were investors to remove those expected rate increases, the Pound would lose part of its yield advantage at the same time as the gilt market remains uneasy about government borrowing.
Image: Exchange Rates UK Research polling shows GBP/USD median bank forecast chart showing the live rate near 1.3325, a Q3 median near 1.32 and the longer-term forecast path GBP/USD Forecast: 1.3200 Comes Back Into View GBP/USD ended the latest session around 1.3325, recording a modest daily gain after Thursday’s 0.47% decline.
The pair has nevertheless fallen by more than two cents from the 15 July close near 1.3540 and remains well below July’s high of 1.3558.
The short-term chart shows Sterling attempting to stabilise around 1.3320 after repeated failures to sustain advances above 1.3340.
GBP/USD is trading close to the 20-period moving average at 1.3327 and session VWAP near 1.3323.
That positioning suggests the pair is currently balanced around its immediate fair-value area rather than developing a strong recovery.
The 200-period moving average near 1.3340 remains the more important overhead barrier.
A recent rebound failed close to that level, confirming the 1.3340-1.3350 region as the first substantial resistance zone.
RSI has recovered to approximately 48 from below 40, showing that downside momentum has eased.
However, the indicator remains below 50 and does not yet signal that buyers have regained control.
Initial support is located around 1.3310, followed by 1.3290.
Rabobank’s 1.3200 objective would come into clearer view following a break below these levels, while July’s low at 1.3221 represents a significant intermediate support area.
On the upside, a sustained move above 1.3340 would reduce immediate downside pressure, although GBP/USD would still need to recover through 1.3400 to suggest the broader July correction has ended.
Image: GBP/USD 15-minute chart with 1.3310 support, 1.3340 resistance and Rabobank’s 1.3200 forecast marked The median bank forecast path also points to near-term weakness before a later recovery.
The Q3 2026 median projection is close to 1.3200, broadly matching Rabobank’s three-month forecast, while the consensus path then rises towards 1.35 in early 2027 and approximately 1.38 by the end of that year.
Rabobank’s view is therefore consistent with the wider consensus in anticipating near-term pressure, although it does not rule out a longer-term recovery.
Image: EUR/GBP survey poll forecasts July 2026 EUR/GBP Forecast: Rabobank Targets 0.8650 EUR/GBP closed around 0.8534 after falling 0.14% in the latest session.
The cross has recovered from July’s low near 0.8455, but remains almost 1% lower for the month and below the July opening level near 0.8614.
The 15-minute chart shows that EUR/GBP has surrendered part of its recent rebound after failing above 0.8550.
The cross is trading close to its 20-period moving average near 0.8533, but remains below session VWAP around 0.8541 and beneath the 200-period moving average near 0.8539.
This leaves the immediate technical picture mixed.
The latest recovery from below 0.8530 shows that selling pressure has moderated, while RSI near 46 has moved above its signal line.
However, the cross remains below the neutral 50 level and has yet to overcome the main intraday resistance cluster.
Initial resistance is located around 0.8539-0.8542, followed by 0.8547 and the recent highs around 0.8550-0.8555.
A break through that area would strengthen the case for a return towards 0.8600.
Rabobank’s 0.8650 forecast lies above the current technical range and would require a more decisive deterioration in Sterling sentiment.
On the downside, support is located around 0.8530, followed by 0.8525.
A break below these levels would weaken the immediate recovery and raise the risk of a renewed move towards 0.8500.
Image: EUR/GBP 15-minute chart with 0.8530 support, 0.8550 resistance The wider bank consensus also leans towards a higher EUR/GBP rate over the coming quarters.
The median forecast stands close to 0.8700 from the third quarter of 2026 through early 2028, before easing towards 0.8600 and then 0.8450 by the end of 2028.
Rabobank’s 0.8650 target is therefore slightly below the near-term consensus median but still implies a meaningful Sterling decline from current levels.
Pound Sterling: Rabobank’s forecasts leave GBP exposed on two fronts Against the Euro, the bank expects EUR/GBP to rise towards 0.8650 as investors question the government’s fiscal plans and reassess the likelihood of Bank of England tightening.
Against the Dollar, it sees GBP/USD falling towards 1.3200 as political uncertainty, gilt-market sensitivity and lower UK rate expectations weigh on the Pound.
The technical charts show that neither move has yet been fully confirmed.
GBP/USD is attempting to stabilise around 1.3320, while EUR/GBP remains below resistance around 0.8550.
However, the fundamental risks identified by Rabobank remain unresolved.
A reduction in expected BoE tightening would remove an important source of Sterling support, while further spending announcements without a convincing funding plan could renew pressure on gilts.
The base case is therefore for Pound Sterling to remain vulnerable, with a GBP/USD break below 1.3290 strengthening the path towards 1.3200 and an EUR/GBP move above 0.8550 opening the way towards Rabobank’s 0.8650 target.
GBP/EUR se po pátečním odrazu drží nad 1,1700, ale zůstává pod rezistencí 1,1760–1,1780. Britská data zlepšila výhled libry, avšak trh čeká na rozhodnutí Bank of England.
Stronger UK retail sales and improving business activity support the pound, but GBP/EUR must break 1.1760 to revive July’s rally. The Pound to Euro exchange rate recovered on Friday after suffering three consecutive daily declines earlier in the week.
GBP/EUR traded at 1.1718 late on Friday, up 0.14% on the day but below the previous week’s close of 1.1763.
Sterling reached a July high of 1.1827 on July 15 before retreating as softer UK inflation encouraged some investors to take profits and the Euro received support from improving Eurozone economic data.
Despite the setback, GBP/EUR remains around 0.9% above the July opening level near 1.1610 and comfortably above the June close at 1.1610.
The pullback has also stopped close to 1.1700, suggesting buyers remain willing to defend the exchange rate above the former July consolidation zone.
Image: GBP/EUR chart showing July rally to 1.1827 and pullback towards 1.1700 The technical outlook is therefore constructive but no longer decisively bullish.
GBP/EUR has formed resistance between 1.1760 and 1.1780, an area containing several recent daily closes. A recovery above this zone would improve the prospect of another challenge to 1.1800 and the July high at 1.1827.
Initial support is located around 1.1700, followed by the July 14 low and earlier cluster of closes around 1.1725.
A sustained break below 1.1700 would expose the June high at 1.1623 and the July opening area between 1.1600 and 1.1610.
UK Economy Ends the Week on a Stronger Footing Friday’s UK data offered some encouragement after employment and inflation figures had raised questions over the strength of the economy earlier in the week.
The Office for National Statistics reported that retail sales volumes increased 1.0% in June, defying expectations for a 0.3% decline.
Sales were also 4.2% higher than a year earlier, with warm weather, promotions and stronger online demand supporting spending.
Non-store retail sales rose 4.4% during the month, while the proportion of sales made online reached its highest level since April 2021.
The figures followed a 1.2% monthly increase in May and meant retail sales expanded 0.6% during the second quarter.
UK business activity also strengthened during July.
The flash composite purchasing managers’ index rose to 52.1, its highest level since February and above the 50 threshold separating expansion from contraction.
Services activity benefited from hospitality, domestic tourism and improved consumer confidence, while business cost pressures showed signs of easing.
The combination of stronger retail spending and renewed private-sector growth provides a better starting point for the new government and should reduce immediate concern over a sharp economic slowdown.
However, the improvement may prove vulnerable if higher oil and gas prices squeeze household incomes during the second half of the year.
Softer Inflation Limits the Pound’s Recovery Sterling’s response to Friday’s data was positive but limited because the latest inflation report has reduced the urgency for further Bank of England tightening.
The UK consumer price index increased 2.6% in the year to June, down from 2.8% in May and below the Bank of England’s previous projections.
Monthly inflation was just 0.1%, while CPIH inflation declined from 3.0% to 2.8%.
The figures followed evidence that private-sector wage growth has slowed and vacancies have fallen to 712,000.
Together, these reports suggest that underlying domestic inflation pressures are easing, even though the renewed increase in energy prices threatens to push headline inflation higher later this year.
The Bank of England will announce its latest interest-rate decision next week.
Policymakers are widely expected to leave Bank Rate unchanged at 3.75%, but markets will focus on the vote split and any guidance concerning the remainder of the year.
A cautious statement that emphasises weaker wage growth and lower June inflation could weigh on the Pound, particularly if policymakers push back against expectations for further rate increases.
Pound Sterling would receive stronger support if the Bank concentrates on the inflation risks created by rising energy costs and signals that another increase remains possible.
For GBP/EUR, the decision will be important because the Pound’s interest-rate advantage over the Euro remains one of its main sources of support.
ECB Leaves the Door Open to Higher Rates The European Central Bank left its three principal interest rates unchanged on Thursday, keeping the deposit rate at 2.25%.
In its latest monetary-policy decision, the ECB warned that the full inflationary consequences of the energy shock had yet to emerge.
The central bank maintained a data-dependent, meeting-by-meeting approach and said it would monitor the duration of the shock and the risk of indirect or second-round effects.
That kept the prospect of another increase in September alive.
Money markets continue to see a strong chance of two additional ECB increases before the end of the year, although weak growth could restrict how far policymakers are willing to tighten.
The economic picture improved on Friday as the Eurozone composite PMI rose from 50.0 to 51.9 in July.
The reading was well above expectations for 50.3 and signalled the strongest expansion in five months.
New orders returned to growth, while the survey was consistent with quarterly economic growth of approximately 0.3%.
An ECB survey published on Friday nevertheless showed economists expect Eurozone growth of only 0.6% during 2026, down from an earlier estimate of 1.0%.
The same survey placed average inflation at 2.7% this year and 2.2% in 2027.
The Euro therefore benefits from the possibility of further ECB tightening, but the outlook is constrained by weak underlying growth and the risk that higher energy costs damage the region’s manufacturing economy.
What’s the Forecast for the Pound versus the Euro? The broader Pound-to-Euro exchange rate trend remains positive, but the failure above 1.1800 and three consecutive daily declines indicate that the July rally has entered a consolidation phase.
Friday’s rebound from 1.1700 is technically encouraging and suggests the correction has not yet developed into a more significant reversal.
The central forecast is for GBP/EUR to remain within a 1.1680–1.1780 range ahead of the Bank of England decision.
A break above the cluster of recent closes around 1.1760–1.1780 would suggest buyers are regaining control and expose 1.1800, followed by the July high at 1.1827.
A close above 1.1827 would confirm a fresh breakout and bring 1.1900 into consideration.
The downside risk would increase if GBP/EUR closes below 1.1700.
That would indicate the recent rebound has failed and expose 1.1620–1.1630, where the June high and former resistance are located. The July opening level near 1.1610 would provide additional support.
Stronger UK activity data and the Pound’s existing interest-rate advantage favour eventual recovery, but the Euro has gained support from a more hawkish ECB outlook and a surprisingly strong July PMI.
The Bank of England will therefore determine whether GBP/EUR can return towards 1.1800 or whether the correction extends towards the former breakout area above 1.1600.
ING’s forecast for EUR/USD to retreat towards 1.1380 has already been realised, with the pair now testing its lowest levels of July as higher energy prices support the US Dollar. The Euro-to-Dollar exchange rate traded close to 1.1371 late on Friday, extending its retreat from the mid-July peak near 1.1470.
EUR/USD fell 0.30% on Thursday and has now declined in seven of the past eight completed sessions.
The pair is also down by around 0.3% for July, having traded between 1.1362 and 1.1481 during the month.
ING had expected EUR/USD to drift back towards 1.1380 as elevated energy prices continued to favour the Dollar.
That objective has now been reached and modestly exceeded, leaving the market focused on whether support around 1.1360 can prevent a deeper Euro decline.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.137117 (-0.05%)
Pound to Dollar (GBP/USD): 1.332498 (+0.09%)
Dollar to Yen (USD/JPY): 163.85169 (0.00%)
ING Sees US Dollar Support from Higher Energy Prices ING describes a global investment environment in which equity-market sentiment remains relatively resilient even as higher energy prices push interest rates upwards.
According to the bank, investors are favouring currencies that provide both attractive yields and some protection against a further escalation in energy costs.
“The dollar and the Norwegian krone remain the go-to currencies here,” says Chris Turner, ING’s Global Head of Markets and Regional Head of Research for the UK and Central and Eastern Europe.
The Dollar’s yield advantage and the relative resilience of the US economy leave it better positioned than lower-yielding currencies during a period of elevated oil and gas prices.
ING expects the Dollar Index to remain supported within its 100.35-101.80 range and continues to favour the upside over the short term.
Higher energy prices are particularly relevant for EUR/USD because the Eurozone is a major net energy importer.
An extended increase in oil and natural gas costs can weaken the region’s terms of trade, squeeze household spending and raise costs for European businesses, while simultaneously supporting the Dollar through higher US yields and safe-haven demand.
Image: EUR/USD 15-minute technical chart showing support around 1.1360 and resistance between 1.1380 and 1.1392 EUR/USD Reaches ING’s 1.1380 Target Analysts at ING noted that EUR/USD had initially held up relatively well despite the rebound in energy prices and a rise in European natural gas towards €60 per megawatt hour.
Interest-rate expectations helped explain that resilience.
Higher energy costs encouraged investors to price a more aggressive tightening response from the European Central Bank than from the Federal Reserve, temporarily supporting Eurozone yields and the single currency.
However, ING questioned how much further ECB expectations could move in a hawkish direction.
“It is hard to see the market pricing in even higher ECB rates, regardless of the language delivered at tomorrow’s ECB meeting and press conference,” says Turner.
“Barring a near-term move towards another cease-fire between the US and Iran, our bias remains for EUR/USD to drift back to 1.1380.”
That forecast has proved accurate, with EUR/USD falling through 1.1380 and approaching July’s low around 1.1362.
The question now is whether the retreat represents the completion of the corrective move or the beginning of a more sustained decline.
EUR/USD Technical Outlook Remains Fragile The short-term chart continues to favour the US Dollar, although the Euro is attempting to stabilise near the bottom of its recent range.
EUR/USD trades below its 20-period moving average near 1.1372 and beneath session VWAP around 1.1381.
The pair is also well below the 200-period moving average near 1.1392, confirming that the immediate intraday trend remains bearish.
Repeated failures between 1.1390 and 1.1400 have established this region as significant resistance. The Euro would need to recover above this area to suggest that the sequence of lower short-term highs has been broken.
RSI has recovered to approximately 44 after previously approaching oversold territory.
The indicator remains below the neutral 50 level, showing that bearish momentum is still present, but the recovery from its lows suggests selling pressure is no longer accelerating.
This is consistent with a market consolidating after a decline rather than one already embarking on a convincing rebound.
Initial resistance is located around 1.1374, followed by ING’s former target at 1.1380.
A recovery above 1.1380 would allow EUR/USD to challenge 1.1387 and the 200-period moving average close to 1.1392.
The 1.1400 area then represents the more important technical barrier. A sustained break above it would weaken the immediate bearish case and suggest the pair is returning to a broader range.
On the downside, July’s low at 1.1362 is the key near-term support.
A decisive break beneath that level would confirm that the decline has extended beyond ING’s original objective and expose the lower portion of June’s range.
Energy Market Remains the Key Risk ING’s EUR/USD assessment was conditional on the geopolitical and energy-market backdrop.
A ceasefire or meaningful de-escalation between the US and Iran would reduce the energy-price premium supporting the Dollar and could allow the Euro to recover.
The opposite scenario presents the larger downside risk.
A renewed rise in oil or European gas prices would probably reinforce demand for the Dollar while increasing concerns over the Eurozone growth outlook.
The policy implications are also complicated.
Higher energy prices can raise headline inflation and encourage expectations of tighter ECB policy, but they simultaneously weaken real incomes and economic activity.
ING’s argument is that the market has limited capacity to price substantially more ECB tightening, reducing the potential support available to the Euro from interest-rate expectations.
The Federal Reserve, meanwhile, benefits from a stronger US growth backdrop and a currency that tends to attract demand when geopolitical uncertainty increases.
EUR/USD Technical Forecast ING’s move towards 1.1380 has been completed, but the short-term technical picture does not yet provide a convincing signal that the decline is over.
EUR/USD remains below its main intraday moving averages and continues to trade near the bottom of July’s range.
The 1.1362 monthly low is now the immediate dividing line.
Holding above this level could produce a corrective recovery towards 1.1380 and potentially 1.1390, particularly if energy prices ease or geopolitical tensions subside.
A break below 1.1362 would instead strengthen the Dollar’s advantage and leave EUR/USD vulnerable to a deeper extension lower.
The base case is therefore for the Euro to remain under pressure while below 1.1390-1.1400, with energy prices and developments in the Gulf determining whether the pair stabilises or resumes its decline.
EUR/USD zůstává pod tlakem po týdnu, kdy euro oslabilo o více než 0,4 % za poslední 2 obchodní seance. ECB nepřinesla euru větší podporu, zatímco dolar zůstává silný.
It was not an easy week for the euro. Now, EUR/USD has accumulated a decline of more than 0.4% over the last 2 trading sessions, reflecting significant short-term weakness in the European currency.
For now, selling pressure remains relevant, in a context where the European Central Bank decision failed to generate greater appeal for the euro. In addition, the U.S. dollar continues to show some strength as global risk events drive demand for liquidity and more defensive assets.
If this dynamic continues, selling pressure could continue to shape EUR/USD movements over the next few trading sessions.
Does the ECB fail to support the euro? During the week, the European Central Bank held its interest rate decision. The deposit rate remained unchanged at 2.25%, while the refinancing rate stayed stable at 2.4%.
In its message after the meeting, the central bank maintained a cautious pause. The institution noted that inflationary pressures could remain relevant, but also highlighted that economic dynamics in Europe may not support consistent interest rate increases.
For this reason, the ECB showed a fairly neutral stance toward possible changes in monetary policy. It also emphasized that future decisions will depend on economic data meeting by meeting, without committing to a specific path in the short term.
After the event, the central bank’s neutrality did not generate a relevant increase in the euro’s relative appeal. This is mainly because the ECB did not confirm an outlook for higher rates, while in the United States, the Federal Reserve continues to show signs that it could adopt a more aggressive stance over the coming months.
This difference keeps in place a dynamic that has been relevant for several months in the bond market. Currently, U.S. 10-year Treasury yields remain above 4.6%, while European bond yields barely reach the 3.6% area.
Source: TradingEconomics
The differential between both markets continues to favor dollar-denominated investments. The United States maintains a more attractive bond market, supported by a potentially more aggressive Fed, while Europe faces a more indecisive central bank and a less competitive bond yield.
This dynamic could continue to limit appetite for the euro in the short term. If the rate differential remains in place, EUR/USD could continue to face selling pressure over the next few trading sessions.
Is uncertainty becoming relevant? The week was also marked by important risk events for markets. On one hand, new escalations in the Middle East conflict pushed WTI crude oil above 90 dollars per barrel. On the other hand, new comments from the U.S. government pointed to a global tariff plan of up to 12.5% for several countries.
Both events have revived market concerns about a broader trade conflict and possible additional inflationary pressure. This combination could be affecting risk sentiment and driving flows toward safe-haven assets in the short term.
In this scenario, the behavior of the U.S. dollar is key. In previous months, the currency had already acted as one of the market’s main liquidity safe havens. During this week, that dynamic became evident again in the DXY index, which measures the dollar’s strength against its main peers.
As risks increased across markets, the DXY maintained consistent gains and moved back above the 101-point area, approaching the year’s highs again. This behavior reflects relevant demand for the dollar in an environment of greater uncertainty.
Source: TradingEconomics
The role of the U.S. dollar remains fundamental. If the market once again sees the currency as a liquidity safe haven, and risk events continue to generate uncertainty, demand for the USD could remain strong.
This would make a consistent recovery in the euro more difficult and could continue to generate selling pressure on EUR/USD over the next few trading sessions.
Technical forecast for EUR/USD Source: StoneX, Tradingview
Sideways range begins to emerge: Although the daily EUR/USD chart still maintains a major long-term bearish trend line, a short-term sideways range has also started to form. This range has an upper barrier near 1.14742 and a lower area around 1.13538. If selling pressure fails to stabilize consistently, this sideways structure could remain relevant over the next few trading sessions.
RSI: Now, the RSI remains below the neutral 50 level, suggesting that selling impulses continue to dominate the average of the last 14 sessions. If this dynamic continues, the indicator could keep highlighting a relevant selling bias in EUR/USD over the next few sessions.
TRIX: The TRIX also remains below the neutral 0 line, indicating that bearish strength in the exponential moving averages remains relevant. This reading reinforces the possibility that the selling bias could continue to be important in the short term.
Key levels:
1.14742 – Relevant resistance: This recent weekly high coincides with the area of the 50-period simple moving average. Price movements above this level could start to put the bearish structure and current sideways range at risk, opening room for a more relevant buying bias over the coming weeks.
1.14125 – Near-term barrier: This level corresponds to an important retracement area on the daily chart. If price fails to move consistently away from this reference, it could continue to highlight a phase of indecision and give more relevance to the current sideways channel over the next few sessions.
1.13538 – Definitive support: This level corresponds to the 2026 low zone and represents the most important bearish barrier in the short term. Moves below this area would mark new relevant lows for the year and could reinforce a dominant selling bias, potentially extending the long bearish trend line over the coming weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
GBP/AUD klesl na téměř měsíční minimum poté, co australská zaměstnanost v červnu vzrostla o 76 300, výrazně nad odhadem 15 000. Silnější data podpořila očekávání dalšího zvýšení sazeb RBA.
The Pound to Australian Dollar (GBP/AUD) exchange rate fell to a near one-month low on Thursday after stronger-than-expected Australian employment figures boosted the ‘Aussie’.
At the time of writing, GBP/AUD was trading around AU$1.9091, having recovered from an intraday low of approximately AU$1.9066.
Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.911595 (-0.12%)
Pound to Dollar (GBP/USD): 1.332 (-0.41%)
DAILY RECAP:
The Australian Dollar (AUD) strengthened during Thursday’s Asian trading session following the release of Australia’s latest employment report.
The data showed employment increased by 76,300 in June, comfortably beating forecasts for a rise of 15,000.
The stronger-than-expected labour market reinforced expectations that the Reserve Bank of Australia (RBA) could continue raising interest rates later this year.
However, the risk-sensitive ‘Aussie’ struggled to hold onto all of its gains as a cautious market mood weighed on demand during European trade.
Meanwhile, the Pound (GBP) remained subdued as markets continued to assess Andy Burnham’s first week as Prime Minister.
Sterling had strengthened in the run-up to Burnham entering Downing Street as investors unwound the political risk premium previously built into the currency.
However, the Pound has since trended lower amid ongoing questions over how the government's spending commitments and tax cut pledges will be financed.
This uncertainty continued to limit Sterling on Thursday.
Near-Term GBP/AUD Forecast: PMI Surveys in Focus Looking ahead, Friday's Asian session brings Australia's preliminary PMI surveys.
If private sector activity slowed to near-stagnation in July, as expected, the Australian Dollar could face renewed pressure.
European trading then begins with the UK's June retail sales figures. A forecast 0.3% contraction in sales could weigh on Sterling.
Later in the morning, attention turns to the UK's preliminary PMI surveys, with investors particularly focused on the services reading. Any improvement in business activity could provide the Pound with modest support.
Meanwhile, broader market risk appetite and UK political developments are also likely to influence GBP/AUD trading, potentially leading to increased volatility.
The EUR/JPY extends its advance for the third straight day, set to end the week with solid gains as traders brace for the end of the week. The shared currency didn’t capitalise on the hawkish forward guidance by the European Central Bank (ECB), as Bloomberg, citing sources, revealed that officials are ready to raise rates in September.
Euro gains as ECB hawkishness offsets BoJ intervention cautionDigging into ECB President Christine Lagarde’s press conference, she said that inflation risks are tilted to the upside and growth to the downside, but stated that the central bank would set monetary policy to ensure that inflation returns to the 2% goal in the medium term. She added that they would remain data-dependent and would not pre-commit to an interest rate path.
Meanwhile, the Japanese Yen weakened less than expected against the Euro as investors remain wary that the Bank of Japan (BoJ) might intervene in the foreign exchange markets to push its local currency.
On Friday, EUR/JPY traders will be watching the release of Japanese inflation data. The National CPI excluding Fresh Food is expected to rise from 1.4% to 1.6% YoY. Also, traders would be looking for updates on Jibun Bank Flash PMIs, with the manufacturing activity index measure expected to ease from 54.8 to 54.5.
In the Eurozone, traders will also digest HCOB Flash PMIs for Germany, France, and the European Union (EU). The EU’s HCOB Manufacturing PMI is expected to drop from 51.4 to 51.3, while the Services PMI is expected to improve, but will remain in contractionary territory, from 49.4 to 49.8.
EUR/JPY Price Forecast: Technical outlook
The EUR/JPY daily chart shows that momentum is tilted to the upside, further confirmed by a rising Relative Strength Index (RSI). Additionally, a trendline break since last week shifted the market structure from sideways trading to an uptrend, as prices drift higher at a modest pace.
For a bullish continuation, the EUR/JPY needs to clear the April 30, high at 187.56, before buyers can eye 187.95, the year-to-date (YTD) high. Above lies the psychological 188.00 and 190.00 levels.
On the downside, sellers could trigger a break of the market structure, but first they need to clear Thursday’s low of the day (LOD) at 186.05. Once done, they could test the confluence of the 50 and 100-day SMAs at 185.16/02, before targeting the 200-day SMA at 183.44.
EUR/JPY Price Chart – Daily
EUR/JPY daily chart Japanese Yen Price This week The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Swiss Franc.
USDEURGBPJPYCADAUDNZDCHFUSD0.43%1.03%0.92%0.48%-0.03%1.08%1.01%EUR-0.43%0.61%0.43%0.07%-0.43%0.65%0.58%GBP-1.03%-0.61%-0.17%-0.54%-1.03%0.03%0.02%JPY-0.92%-0.43%0.17%-0.36%-0.90%0.11%0.20%CAD-0.48%-0.07%0.54%0.36%-0.47%0.46%0.58%AUD0.03%0.43%1.03%0.90%0.47%1.11%1.07%NZD-1.08%-0.65%-0.03%-0.11%-0.46%-1.11%-0.02%CHF-1.01%-0.58%-0.02%-0.20%-0.58%-1.07%0.02% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
The latest trading sessions continue to show weakness in the Japanese yen. This dynamic is reflected in USD/JPY, which has gained more than 0.7% over the last 3 sessions, highlighting the loss of strength in the Japanese currency.
For now, buying pressure in the pair remains supported by the wide rate differential with the United States, which could even widen over the coming months. In addition, renewed dollar strength, driven by updates in the Middle East, has also supported the advance in USD/JPY.
If these catalysts remain in place, buying pressure in the pair could continue to be relevant over the next few trading sessions.
Is the rate differential still weighing on the yen? Over the last few months, the rate differential between the United States and Japan has been one of the main factors behind yen weakness. While the Federal Reserve maintains a reference rate of 3.75%, Japan keeps one of the lowest interest rates in the world, near 1.00%.
This difference is also reflected in the bond market. Although bonds in both countries have shown recent increases in yields, the gap remains wide. U.S. 10-year Treasury yields have already reached a new yearly high near 4.7%, while Japan’s 10-year bond yields remain much lower, around 2.7%.
Source: TradingEconomics
This dynamic continues to limit the appeal of the Japanese yen. Higher U.S. bond yields favor dollar-denominated investments over yen-denominated assets, a relationship that has remained in place for several months and has restricted demand for the Japanese currency.
What is relevant now is that this differential could widen even further. So far, there have been no major updates from the Bank of Japan pointing to a possible rate hike. In contrast, the Federal Reserve has started to reflect a higher probability of higher rates over the coming months.
According to the CME Group probability table, for the September 16 decision, there is still a dominant probability above 56% that the United States could deliver a rate hike, which would further widen the differential with Japan.
Source: CMEGROUP
As a result, if the market continues to see a stable Bank of Japan with no relevant changes, compared with a potentially more aggressive Federal Reserve, the rate differential could continue to favor the relative appeal of the dollar. This dynamic may make a sustained yen recovery more difficult and could maintain buying pressure in USD/JPY over the next few sessions.
Is Middle East becoming relevant again? New updates in the Middle East suggest that risk may be increasing not only around the Strait of Hormuz, but also in the Red Sea, following attacks carried out by Iran-backed groups from Yemen. This event adds to new U.S. military actions and reflects a scenario that still appears far from a negotiated solution in the short term.
The escalation continues to support oil prices, increase uncertainty and lift the market’s risk premium.
In this context, the U.S. dollar has started to show a renewed recovery. This is reflected in the DXY index, which measures the dollar’s strength against its main peers, and which has already moved above the 101-point area after several consecutive advances.
This suggests that, as seen in previous months, the dollar could be acting as a liquidity-driven safe-haven currency amid rising tensions in the Middle East.
Source: TradingEconomics
This dynamic is also important for the yen. If the conflict continues to escalate and the dollar maintains its strength as a safe-haven asset, the Japanese currency could struggle to regain ground consistently. For this reason, USD/JPY could continue to show buying pressure over the next few trading sessions.
Technical forecast for USD/JPY
Source: StoneX, Tradingview
Bullish trend appears unstoppable: For several months, USD/JPY has maintained a dominant bullish trend line. This structure remains the most relevant pattern on the chart, especially due to the lack of selling moves strong enough to put the main trend at risk. As long as buying pressure remains in place, this trend line could continue to act as the dominant technical reference over the next few sessions.
RSI: The RSI remains above the neutral 50 level, reflecting dominant buying impulses in the short term. However, it is also important to note that the indicator has started to form lower highs, while USD/JPY price action continues to register higher highs. This dynamic has created a possible bearish divergence, which could warn of excessive recent buying pressure and open room for potential short-term corrections
MACD: The MACD shows a histogram increasingly close to the neutral 0 area. This suggests that the strength of short-term moving averages is starting to balance out. For this reason, the indicator could also be anticipating a phase of greater neutrality on the chart over the next few sessions.
Key levels:
164.238 – Key resistance: Given the lack of relevant references from previous years, this level coincides with the 61.8% area of a trend-based Fibonacci extension. If price manages to approach this zone again, it could reinforce the buying bias and keep the bullish trend line as the dominant structure.
161.898 – Near-term barrier: This area works as an important technical reference, as it coincides with the highs recorded in previous weeks. It could also act as a tentative barrier in case of possible short-term corrections.
160.214 – Main support: This area remains the most relevant support on the chart. In addition to coinciding with recent retracements and acting as a psychological market level, it also aligns with the base of the major bullish trend line. Moves that approach this level again could put the bullish structure at risk and open room for a more relevant selling bias over the coming weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
USD/CAD klesl pod 1,4100 na zhruba 1,4080, protože rostoucí ceny ropy a slabší dolar podpořily kanadský dolar. Nová americká 50% cla na vybrané kanadské zboží ale dál drží pár pod tlakem.
Rising crude oil prices and a weakening greenback pushed USD/CAD back below 1.4100, threatening a return to its July downward channel Central bank divergence remains a risk, as a cautious Bank of Canada (BoC) and hawkish Federal Reserve could limit further loonie gains The Bank of Canada’s steady policy rate keeps interest rate differentials tilted in favor of greenback dip-buyers on deeper pullbacks The US dollar briefly halted the Canadian dollar’s recent climb earlier this week. But it started falling again yesterday and still looks weak today. Now trading below 1.4100, around 1.4080, investors wonder if USD/CAD will return to the steady decline it had between late June and mid-July.
What Broke the Downtrend The brief pause in the downtrend had a clear cause. On Monday, the US administration announced new 50% tariffs on various Canadian goods, including wine, dairy, and cement. This action was stated as a response to what the US described as discriminatory practices against American products in Canada.
Canadian Prime Minister Mark Carney called this the latest in a series of unilateral US trade actions. He said Canada had “merely matched” prior US measures. Headlines like that usually hit the loonie first and hardest, which explains why the dollar strengthened Monday and Tuesday.
What Is Driving the Loonie’s Rebound? A significant increase in global crude oil prices is the primary driver behind the Canadian dollar’s resurgence. As a major exporter of commodities, Canada benefits directly from rising crude prices. Oil prices have reached new multi-week highs, which has helped to offset recent domestic challenges and provide strong fundamental support for the Canadian dollar.
Potential Risks Beneath the Surface Despite the current trend, a return to a consistent downtrend is not guaranteed. The tariffs announced on Monday will take effect in 30 days. If trade tensions escalate further before then, sentiment towards Canadian assets could shift negatively, irrespective of oil prices or interest rate movements.
While the current trend favors a stronger Canadian dollar, underlying risks require careful assessment. Uncertainties surrounding the USMCA trade agreement renewal and potential tariff discussions remain significant factors that could strengthen the US dollar if tensions increase.
Market expectations indicate that the Bank of Canada (BoC) might maintain a supportive monetary policy stance, influenced by recent lower domestic consumer price index (CPI) figures. In contrast, persistent US inflation data suggests the Federal Reserve is likely to continue its restrictive monetary policy for a longer period.
Investors should consider USD/CAD with a balanced view. Those expecting further gains in the Canadian dollar might explore strategies that leverage CAD strength, such as hedging US dollar exposure or investing in Canadian assets sensitive to commodity prices.
Effective risk management remains crucial. Diversification and close attention to central bank statements, oil market developments, and trade news will be essential for navigating market fluctuations. Adopting a flexible approach that adapts to evolving data, rather than making large directional bets, is likely to better serve long-term investment goals.
Is USD/CAD returning to its prior downward channel?
The recent weakness in the US dollar suggests a potential return to the late June to mid-July downtrend if current momentum continues.
What risks could impact USD/CAD trajectory?
Trade tensions related to the USMCA, geopolitical shocks in the energy sector, and differing monetary policies between the Federal Reserve and the Bank of Canada present notable risks of upward movement for the pair.
How do central bank interest rate expectations affect the USD/CAD outlook?
A potentially cautious Bank of Canada alongside a hawkish Federal Reserve could limit severe downside losses for USD/CAD.
GBP/EUR oslabil o 0,5 % za posledních pět obchodních dnů, protože nižší britská inflace a zpomalující růst mezd snížily očekávání dalšího zvýšení sazeb BoE. Euro navíc drží ECB před dnešním rozhodnutím.
After gaining over 1% past month, the British pound dropped 0.5% against the euro due to cooling UK inflation and wage growth Lowering expectations for Bank of England rate hikes narrowed the yield gap between the pound and euro, triggering recent short-term profit-taking Anticipation of a hawkish policy stance from the European Central Bank provided additional underlying support for the euro against the British pound The British pound saw a significant monthly increase against the euro, rising over 1% to reach levels near 1.1800, last seen in mid-July. However, the pound has since given back some of these gains, falling about 0.5% in the last five trading days and moving back towards 1.1715. Understanding these movements offers valuable insight for market participants.
The Month’s Rally Explained Two central banks did most of the heavy lifting here. In the Eurozone, June inflation cooled to 2.8%, reducing the likelihood of further interest rate hikes from the European Central Bank following their June increase to a 2.25% deposit rate.
Additionally, a more stable political environment in the UK under new leadership has boosted market sentiment and lessened previous concerns that had impacted the pound. Andy Burnham’s uncontested succession brought an end to the nation’s political uncertainty. This removed a risk premium previously built into the currency.
Why the Pound Lost Its Grip The UK’s latest Consumer Price Index (CPI) report showed headline inflation slowing to 2.6% year-over-year in June, below market expectations of 2.7%. While core CPI held steady at 2.6%, the slower headline figures, combined with slowing wage growth, tempered investor expectations for immediate rate hikes from the Bank of England (BoE).
As the British pound struggled for direction, the euro gained support. Investors were positioning themselves ahead of the European Central Bank’s (ECB) latest monetary policy announcement. Expectations that ECB policymakers would maintain a hawkish stance helped the single currency stay resilient.
What This Means Going Forward Looking ahead, the immediate focus will be on the ECB’s decision today and the BoE’s meeting on July 30. If the ECB maintains its current stance and suggests a potential September hike, it may not significantly affect the pound.
The BoE meeting, however, carries more weight. With a new Monetary Policy Report, the outcome could range from a cautious approach to signals of a potential rate increase, particularly as the number of dissenting votes favoring tighter policy has increased.
For the UK, slowing inflation combined with stable growth metrics suggests the BoE can prioritize economic stability without resorting to aggressive easing measures. This scenario could indicate confidence in the pound’s underlying strength, bolstered by the credibility of domestic policy.
In the Eurozone, persistent challenges related to energy costs and subdued growth forecasts highlight potential weaknesses, even with the ECB’s stated commitment to its 2% inflation target. The euro’s current softness relative to the pound may reflect investor preference for sterling, although both currencies face external pressures from global economic trends.
How Investors Might Position With two significant central bank meetings occurring closely together, this period presents heightened uncertainty for investors, making substantial directional bets less advisable. Those with substantial sterling transactions or exposure due in the next two weeks should account for this increased event risk.
For investors with a longer-term perspective, the current trends, including a more cautious ECB and a BoE possibly moving towards tightening policy, may continue to favor the pound. However, that view should be held loosely until both decisions land.
What key economic data release caused the pound to lose momentum against the euro over the last five sessions?
Softer UK headline inflation of 2.6% and cooling wage growth lowered market expectations for imminent Bank of England rate hikes.
How has the ECB’s upcoming policy announcement influenced the euro’s performance against the Sterling?
Anticipation of a hawkish rate hold by the European Central Bank provided support for the euro against the pound.
How should investors approach GBP/EUR right now?
Investors should avoid large directional bets until both central bank decisions land; the medium-term uptrend looks intact but near-term volatility is elevated.
EUR/USD ve čtvrtek vzrostl na 1,1429, protože dolar dál oslaboval. Trh sleduje geopolitické napětí a očekává, že Fed příští týden sazby ponechá beze změny.
EUR/USD rose to 1.1429 on Thursday, with the US dollar continuing its moderate decline from the previous session. The market is assessing rising inflation risks driven by elevated energy prices against a backdrop of weakening economic data, while seeking further signals on Federal Reserve policy.
At next week's meeting, the regulator is expected to keep rates unchanged. However, uncertainty about future decisions has increased due to the lack of clear guidance from the new Fed Chairman Kevin Warsh.
Dollar declines are being limited by persistent demand for safe-haven assets. Tensions remain high in the Middle East, with Donald Trump stating that the US will strike Iranian infrastructure in response to attacks on vessels in the Strait of Hormuz. Tehran has threatened retaliation against energy and infrastructure facilities in the region.
Additional concerns have been raised by attacks on tankers in the Red Sea – the first such incidents since late February. Markets are worried about the potential expansion of the conflict and new disruptions to global trade.
Technical analysis
On the H4 chart of EUR/USD, the market has formed a consolidation range around the 1.1410 level, currently extending down to 1.1405 and up to 1.1434. This consolidation range is nearing completion. An upside breakout would suggest a corrective move towards 1.1500, followed by a decline to 1.1260. A direct downside breakout would open the way for a move to 1.1260. The MACD indicator supports this scenario, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.
On the H1 chart, the market has completed an upward move to the 1.1434 level. A consolidation range is currently forming below this level. Today, a move lower to 1.1400 is expected, followed by a move higher to 1.1420, and then a continuation of the downward trend to 1.1370. The Stochastic oscillator confirms this scenario, with its signal line above 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.
ConclusionEUR/USD has recovered modestly as the dollar softened amid heightened geopolitical uncertainty and a lack of clear guidance from the Federal Reserve. Rising energy prices and tensions in the Middle East – including threats of strikes on Iranian infrastructure and renewed attacks in the Red Sea – continue to fuel inflation concerns and risk-off sentiment. Markets expect the Fed to hold rates steady next week, while the outlook beyond that remains uncertain. Technically, the pair may see a temporary corrective move towards 1.1500, but the broader bearish structure remains intact, with downside potential towards 1.1260 in the medium term. The direction will largely depend on geopolitical developments and any future signals from the Fed.
The New Zealand Dollar (NZD) extends losses for the third consecutive day against the US Dollar (USD) on Thursday, with the NZD/USD pair dipping below 0.5800, after being rejected at the 0.5875 area earlier in the week. The Kiwi Dollar is giving away previous gains as higher Oil prices and concerns about the escalation of the Middle East conflict have offset the positive impact of the hawkish Reserve Bank of New Zealand's (RBNZ) monetary policy stance.
The dismal market mood is finally taking a toll on the risk-sensitive Kiwi, as tensions in the Middle East remain high and reports of attacks on vessels sailing through the Red Sea raise concerns that the conflict might extend through the region, boosting fears of disruptions in Oil supply.
Against this background, the barrel of Brent Oil has crossed the $90 line for the first time in the last six weeks. This has prompted investors to shift their focus from inflation to the negative impact on economic growth of another energy shock, which will, ultimately, limit the central bank’s margin to tighten its monetary policy.
Technical Analysis: Key support is at the 0.5750 area
NZD/USD trades just below 0.5800, with bears gathering pace as intraday momentum indicators tread further within negative territory. The 4-hour Relative Strength Index (14) has retreated to 35, approaching oversold levels, while the Moving Average Convergence Divergence (MACD) remains slightly negative, altogether hinting at waning downside momentum but not yet at a clear reversal.
The pair might find some support at previous resistance around 0.5790 (July 10, 13 highs), although the key support area lies at the confluence of the immediate trendline support and the July 13 low, in the area of 0.5750. A confirmation below here would put bears in control, and bring the July 6 and 8 lows, around 0.5675, into focus.
Upside attempts, on the contrary, have been contained below 0.5825 on Thursday, while the key resistance area is in the area between the 61.8% Fibonacci retracement of the June selloff, at 0.5855, and Tuesday's high, at the mentioned 0.5875, which has capped bulls several times during the current month.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar Price Today The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.
USDEURGBPJPYCADAUDNZDCHFUSD-0.08%0.02%0.11%-0.13%-0.08%0.26%0.05%EUR0.08%0.11%0.21%-0.05%0.00%0.36%0.13%GBP-0.02%-0.11%0.11%-0.17%-0.11%0.25%0.02%JPY-0.11%-0.21%-0.11%-0.25%-0.20%0.13%-0.08%CAD0.13%0.05%0.17%0.25%0.04%0.39%0.16%AUD0.08%-0.00%0.11%0.20%-0.04%0.36%0.16%NZD-0.26%-0.36%-0.25%-0.13%-0.39%-0.36%-0.24%CHF-0.05%-0.13%-0.02%0.08%-0.16%-0.16%0.24% 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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
ING’s Francesco Pesole expects the ECB to leave rates unchanged but deliver a hawkish hold, with Middle East tensions and rising European gas prices keeping hawks in control. He argues policymakers aim to preserve market pricing of around 45bp of tightening by year-end, likely via a familiar post-meeting media leak, which should support front-end Euro rates even as ING’s near-term EUR/USD bias remains tilted lower toward 1.1380.
"The ECB is widely expected to leave rates unchanged today, but a surprise hike cannot be fully ruled out."
"Our baseline is a hawkish hold. The re-escalation in the Middle East and European gas prices rising faster than oil prices should keep hawkish voices dominant in the governing council, in our view."
"The aim today could be – once again – to preserve market pricing (45bp by year-end) to limit the risk of inflation expectations de-anchoring."
"Achieving that may well require some indication that a September hike remains in play – more likely through a familiar post-meeting media leak than directly in the press conference."
"A central bank meeting would normally be a prime catalyst for EUR/USD to break out of its tight trading range, but we do not expect that to happen today. Our near-term bias remains tilted to the downside, as we believe FX markets are dangerously complacent about developments in the Gulf. Unless the newsflow becomes more constructive, we look for EUR/USD to slip towards 1.1380 in the coming days."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The AUD/USD pair catches fresh bids during the Asian session on Thursday following the release of the upbeat Australian jobs report, which lifted bets for another interest rate hike by the Reserve Bank of Australia (RBA). Furthermore, a modest US Dollar (USD) weakness lifts spot prices to the 0.7020 region in the last hour, back closer to an over one-month high set on Tuesday.
Meanwhile, escalating US-Iran tensions and rising supply disruption concerns lift crude oil prices to a fresh high since June 11, fueling inflationary concerns and bolstering hawkish US Federal Reserve (Fed) expectations. This could help limit deeper losses for the safe-haven Greenback and hold back traders from placing aggressive bullish bets on the risk-sensitive AUD/USD pair.
From a technical perspective, spot prices retain a modest bullish near-term bias above the 38.2% Fibonacci retracement level of the decline from 0.7200 (late May high) and the 100-period Exponential Moving Average (EMA) on the 41-hour chart. Adding to this, the Relative Strength Index (RSI) at 59.45 validates the constructive outlook without signaling overbought conditions.
However, the Moving Average Convergence Divergence (MACD) histogram flattens just below the zero line, hinting that upside momentum is positive but not aggressive. Hence, any subsequent move up is likely to confront initial resistance at the 50.0% level at 0.7033. Furthermore, the 61.8% Fibo. retracement at 0.7072 should act as the next hurdle in the current recovery sequence.
Further up, the 78.6% level at 0.7129 and the cycle high region at 0.7201 mark stronger barriers. On the downside, immediate support is seen at the 38.2% retracement at 0.6993, ahead of the 100-period EMA at 0.6976. A deeper pullback would expose the 23.6% retracement at 0.6944, with the broader bullish structure only threatened on a slide toward the anchor low near 0.6865.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/USD 4-hour chart
Australian Dollar Price Today The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.14%-0.06%-0.03%-0.12%-0.21%0.00%-0.10%EUR0.14%0.09%0.13%0.01%-0.07%0.16%0.04%GBP0.06%-0.09%0.04%-0.08%-0.17%0.04%-0.06%JPY0.03%-0.13%-0.04%-0.10%-0.19%0.02%-0.09%CAD0.12%-0.01%0.08%0.10%-0.10%0.14%0.00%AUD0.21%0.07%0.17%0.19%0.10%0.24%0.14%NZD-0.01%-0.16%-0.04%-0.02%-0.14%-0.24%-0.14%CHF0.10%-0.04%0.06%0.09%-0.01%-0.14%0.14% 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).
EUR/CHF tento týden prorazil nad 0,9278, protože růst cen ropy znovu zvýšil inflační obavy a posílil sázky na jestřábější ECB. Trh čeká, zda Christine Lagarde tato očekávání potvrdí, nebo utlumí.
EUR/CHF may already be telling investors what to expect from today’s European Central Bank meeting. The cross broke decisively above 0.9278 this week, extending its recent rally as surging oil prices revived inflation concerns across Europe. The move suggests markets have begun positioning for a relatively more hawkish ECB even though policymakers are almost universally expected to leave the deposit rate unchanged at 2.25%. With the decision itself largely priced in, attention will instead turn to whether President Christine Lagarde validates—or pushes back against—the hawkish repricing already underway.
The backdrop confronting the Governing Council has changed dramatically since it last met in June. At that meeting, Brent crude was also trading around $95 a barrel, but the trend pointed firmly lower as markets anticipated a breakthrough in US-Iran negotiations. Optimism was soon rewarded with a 60-day ceasefire announced on June 17, sending Brent to around $70 by early July and reinforcing expectations that energy-driven inflation would continue to ease. That narrative has since been turned on its head. The ceasefire has collapsed, military conflict has resumed, shipping risks around the Strait of Hormuz have intensified, and Brent has climbed back above $95. The crucial difference is that oil is now surging rather than falling, fundamentally changing the inflation outlook facing European policymakers.
Financial markets appear to have recognized that shift before the ECB has had a chance to respond. This week’s move in EUR/CHF suggests investors are increasingly pricing a policy outlook that is more hawkish than it appeared only a few weeks ago. While markets are not yet fully convinced another rate hike will follow, they have become less willing to assume June’s increase marked the end of the tightening cycle. The renewed rise in energy prices has reopened the possibility that inflation could prove more persistent than previously expected.
That leaves Lagarde’s press conference carrying far greater significance than the policy announcement itself. Given the speed at which geopolitical developments are evolving, the ECB is unlikely to provide firm forward guidance. The most likely message is that inflation risks have shifted to the upside, uncertainty surrounding the Middle East and the Strait of Hormuz remains exceptionally high, and policy decisions will continue to depend on incoming data. Preserving flexibility is likely to take precedence over signalling a specific policy path.
The key question is whether Lagarde chooses to resist growing market expectations for another rate hike as early as September. Such a question is certain to surface during the press conference. If she explicitly dismisses those expectations, recent Euro gains could fade as markets pare back hawkish bets. On the other hand, if she simply acknowledges heightened inflation risks without challenging current pricing, investors may interpret that as tacit acceptance that another hike remains a live possibility should the energy shock persist.
Meanwhile, EUR/CHF could emerge as the cleaner expression of today’s outcome than EUR/USD. Any hawkish shift from the ECB is likely to be offset by similar expectations that higher oil prices will also keep the Federal Reserve on a tighter path. By contrast, the Swiss National Bank is still widely expected to leave rates unchanged at 0.00% through the remainder of the year, leaving EUR/CHF more directly exposed to changes in ECB expectations.
Technically for EUR/CHF, Wednesday’s break above 0.9278 resumed the rally from March’s 0.8979 low and keeps the pair on course for 100% projection of 0.8979 to 0.9264 from 0.9094 at 0.9379. Just beyond lies the key structural resistance at 0.9394. A sustained break above that level would strengthen the case for a medium-term bullish reversal, reinforcing the view that investors are pricing a widening policy divergence between Frankfurt and Zurich rather than simply reacting to day-to-day geopolitical headlines.
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