Forex News

• AUD/JPY drops to its lowest level since July 3 as the Japanese Yen surges across the board.
• Suspected intervention sends USD/JPY nearly 480 pips lower, although Tokyo has yet to confirm any action.
• Traders shift their attention to Friday’s BoJ interest rate decision.

AUD/JPY tumbles on Thursday as a sudden surge in the Japanese Yen (JPY) sweeps across Yen crosses, fuelling speculation that Japanese authorities intervened to support the currency after USD/JPY hit a 40-year high earlier this month.

At the time of writing, AUD/JPY trades around 111.70, down roughly 1.75% on the day and at its lowest level since July 3.

USD/JPY plunged nearly 480 pips, falling below the psychological 160 mark. There has been no official confirmation from Tokyo, although Japanese officials have repeatedly warned that they are prepared to act against excessive currency moves.

Meanwhile, Reuters also recently reported that authorities were considering a change in strategy that would involve intervening without warning.

Traders now look to Friday’s Bank of Japan (BoJ) decision, alongside the Tokyo Consumer Price Index (CPI) and Unemployment Rate. The BoJ is widely expected to keep its policy rate unchanged at 1.00%.

The Australian Dollar (AUD) was already under modest pressure after softer-than-expected Australian inflation data released earlier this week. CPI fell 0.1% MoM in June, against expectations for a 0.2% increase, following a 0.7% decline in May. Annual inflation eased to 3.8% from 4.0%.

The softer inflation data reduced expectations that the Reserve Bank of Australia (RBA) will raise rates again in August.

TD Securities strategists highlight that the Bank of England (BoE) kept Bank Rate at 3.75% with a 6-3 split, signalling slightly more hawkish rhetoric but continued comfort with existing tightening. The July Monetary Policy Report shows a more benign inflation and growth outlook, yet risks remain skewed to the upside. They still expect Bank Rate on hold through September and an easing cycle starting in H1 2027.

BoE stance, projections and risks

"However, the softer inflation profile in these projections and continued evidence of underlying disinflation give us enough comfort in our call for Bank Rate to remain unchanged in September, barring a material jump in energy prices or broader commodity markets."

"July messaging was modestly more hawkish than June, seeing the Committee become more explicit that inflation risks are tilted to the upside and that policy may need to react before second-round effects are fully evident, while also broadening its concern beyond energy to risks from AI-related supply constraints, tariffs and food prices."

"As it stands, the Committee shifted slightly toward the hawks, but the dominant message remained that existing financial tightening provides sufficient restraint for now while the MPC waits for clearer evidence on inflation persistence."

"At the same time, the MPC remains uncomfortable with the upside risks around energy prices and inflation persistence, leading it to skew risks to the upside even as the central forecast has improved."

"While the July projections are more benign than those published in April, the MPC remains concerned about the uncertainty surrounding the Middle East conflict and the inflationary implications of the resulting energy shock."

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

• AUD/USD gains more than 0.8% as the Fed meeting and disappointing US growth data weigh on the US Dollar.
• Softer Australian inflation reduces expectations of a near-term Reserve Bank of Australia rate hike.
• Cooling US inflation reinforces the view that the Federal Reserve could have less room to tighten policy.

AUD/USD trades around 0.7010 on Thursday at the time of writing, up 0.82% on the day as broad-based US Dollar (USD) weakness outweighs the negative impact of softer Australian inflation.

The Australian Dollar (AUD) initially came under pressure after data showed Australia's Consumer Price Index (CPI) slowed to 3.8% YoY in June from 4% previously, below the 4% market consensus. The softer inflation reading prompted investors to sharply scale back expectations of an imminent Reserve Bank of Australia (RBA) interest rate hike, with Reuters reporting that market pricing for an August increase dropped from nearly 21% to around 3%-4%.

However, the Aussie later reversed higher as the US Dollar weakened sharply following the Federal Reserve (Fed) meeting and a series of softer-than-expected macroeconomic releases in the United States (US).

The US economy expanded at an annualized rate of 1.5% in the second quarter, missing market expectations of 2.1% and slowing from 2.1% growth in the first quarter. According to the Bureau of Economic Analysis, the slowdown mainly reflected weaker government spending, investment and exports, although stronger consumer spending partly offset these headwinds.

Inflation data also supported expectations that the disinflation process continues in the United States. The Personal Consumption Expenditures (PCE) Price Index fell 0.1% MoM in June, while the annual rate eased to 3.7% from 4.1%. Meanwhile, the Core PCE Price Index, the Federal Reserve's (Fed) preferred inflation gauge, slowed to 3.3% YoY from 3.4%.

These figures follow Wednesday's Fed decision to leave interest rates unchanged at 3.5%-3.75% while maintaining a relatively hawkish tone. Nevertheless, the US Dollar headed lower as markets questioned the need for additional monetary tightening despite persistent inflation concerns.

Rabobank’s Florence Schmit highlights that TTF Natural Gas remains exposed to Strait of Hormuz disruptions and QatarEnergy’s extended force majeure. Despite some recovery in Qatari LNG flows, Rabobank expects TTF prices around €51-52/MWh for Q3–Q4 2026, with winter scenarios ranging from normalization to escalation. Their base case sees a gradual easing only once global LNG moves into oversupply next year.

European benchmark gas faces chokepoint risk

"The Strait remains a critical chokepoint for global LNG trade, and any sustained interruption would have significant consequences for both Asian and European gas balances."

"Still, QatarEnergy’s extension of force majeure through mid-October points to a longer period of constrained LNG availability, which is why we are raising our TTF and JKM gas forecasts slightly for Q3 and Q4 2026 to €51-52/MWh and $17.00-18.50/MMBtu, respectively."

"We are currently forecasting Qatari LNG supply to start making a more meaningful return towards September/October by which point it will still be too late to return the global LNG market to comfortable supply. Winter TTF and JKM gas prices will have to reflect this reality."

"With limited alternatives for the LNG market in the short-term, price risks remain skewed to the upside even if a U.S.-Iran deal were reached in the coming weeks. We view the price path for TTF and JKM gas at €51-52/MWh and $17-18/MMBtu for the rest of Q3 and Q4."

"If, however, geopolitical tensions rise again or shipping confidence weakens, the same chokepoint risk could quickly become more material and push any Qatari LNG resumption further away. In that scenario gas prices are more likely to trade in the ~€60/MWh range and $21/MMBtu in the winter, respectively."

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

Volkmar Baur at Commerzbank assesses that China’s Gross Domestic Product (GDP) growth of 4.3% year-on-year in Q2 2026 fell short of the government’s 4.5–5% target, with real estate weakness and cautious fiscal policy weighing on demand. However, net exports contributed significantly to growth, and modest fiscal expansion is expected to bring official growth back into the target range.

Domestic weakness versus external support

"According to official statistics, the Chinese economy grew by 4.3% year-on-year in the second quarter. Although this growth rate was lower than the government’s target of 4.5–5%, the economic performance was undermined by the US-Iran conflict, particularly in April and May."

"In addition, the Chinese government has been slow to expand its fiscal expenditure, which shows in the fixed asset investment (FAI) numbers."

"On the bright(er) side, the monthly data on retail sales, industrial production and fixed-asset investment did in June point to a slight recovery."

"This might have been the reason why the Politburo in its July meeting did not see an urgent need to change course in economic policy."

"This will help at the margin and should be enough to get the official growth numbers back into the government's target range."

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

• GBP/JPY falls around 2.4%, collapsing from near 218.00 to the 213.20 area.
• The Bank of England keeps interest rates unchanged at 3.75% in a hawkish 6–3 vote.
• A sudden Yen rally fuels speculation that Japanese authorities intervened in the currency market.

The GBP/JPY cross trades sharply lower near 213.20 on Thursday, losing around 2.4% as a sudden surge in the Japanese Yen (JPY) overwhelms the British Pound’s reaction to the Bank of England’s (BoE) monetary policy announcement.

The BoE maintained its benchmark interest rate at 3.75%, as widely expected. However, the decision was considered a hawkish hold after six policymakers voted to maintain rates and three supported a 25-basis-point increase to 4.00%. Markets had generally expected only two members to vote for a hike.

The BoE acknowledged that United Kingdom (UK) inflation declined to 2.6% in June but warned that higher energy prices could push inflation back up later this year. Policymakers also indicated that the risks surrounding the inflation outlook remain tilted to the upside, particularly if elevated energy costs generate stronger wage and price pressures.

Despite the hawkish vote split, Sterling failed to retain support against the Yen. The Japanese currency strengthened abruptly across the market, sending USD/JPY below 160.00 and causing substantial declines in EUR/JPY and GBP/JPY. The speed and scale of the movement prompted speculation that Japan’s Ministry of Finance had instructed the Bank of Japan to purchase Yen, although the operation has not yet been officially confirmed.

Japanese authorities had repeatedly warned that they were prepared to take decisive action following the Yen’s decline toward 40-year lows near 164.00 against the US Dollar. Thursday’s movement therefore appears consistent with a possible intervention aimed at reducing excessive and one-sided currency volatility.

Short-term technical analysis:

On the 4-hour chart, GBP/JPY trades at 213.06, extending a bearish near-term bias after slipping well below its recent consolidation range. The pair now trades under both the 20-period Simple Moving Average (SMA) at 217.61 and the 100-period SMA at 217.87, which together suggest a deteriorating trend structure and keep any rebound attempts capped for now. The Relative Strength Index (RSI) has plunged to oversold territory near 15, hinting at stretched downside conditions, but the presence of multiple overhead levels keeps recovery prospects fragile while price holds at current depressed levels.

On the topside, immediate resistance emerges at the recent horizontal barrier at 213.96, ahead of 215.50 and 217.40, with the 20-period SMA at 217.61 and the 100-period SMA at 217.87 reinforcing a dense supply zone higher up. On the downside, initial underlying demand is seen at the horizontal support at 214.70 where it started the month, where any pause in selling could trigger a corrective bounce; a sustained break beneath this floor would open the way to further losses in the coming sessions despite the oversold RSI backdrop.

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

• Gold struggles below $4,100 after the Fed left interest rates unchanged at its July meeting.
• A weaker US Dollar supports Gold, though hawkish Fed expectations continue to cap gains.
• XAU/USD remains range-bound between $4,000 and $4,200, with momentum indicators indicating a neutral bias.

Gold (XAU/USD) remains trapped in its month-old $4,000-$4,200 range as the Federal Reserve’s (Fed) new era of limited forward guidance fails to shake the precious metal out of its sideways grind after policymakers left interest rates unchanged at 3.50%-3.75%.

At the time of writing, XAU/USD trades around $4,095 during American trading hours on Thursday, recovering from an intraday low of $4,028. The precious metal edges higher as the US Dollar (USD) comes under renewed selling pressure following suspected intervention by Japanese authorities to stem the Yen’s weakness.

The US Dollar Index (DXY), which tracks the currency against a basket of six major peers, trades around 99.90, its lowest level since June 17, down 0.90% on the day.

The latest US economic data add to the downside. Inflation cooled in June as the Core Personal Consumption Expenditures (PCE) Price Index rose 0.1% MoM, below the 0.2% forecast and down from 0.3% in May. Annual core inflation eased to 3.3% from 3.4%, in line with market expectations. The US economy grew at an annualized pace of 1.5% in the second quarter, missing forecasts of 2.1%.

However, Gold struggles to capitalize on the weaker US Dollar as the war in the Middle East keeps energy-driven inflation risks elevated. Fed Chair Kevin Warsh’s firm stance on inflation and three dissenting votes in favour of a 25-basis-point (bps) rate hike keep hawkish expectations alive. The CME FedWatch Tool shows a 55% probability that the central bank will raise interest rates in September.

Meanwhile, on the geopolitical front, the US military said it completed a “heavy wave of strikes” against Iran on Thursday in retaliation for Tehran’s ballistic-missile attack on US forces in Jordan, restarting the back-and-forth attacks in the region.

Technical analysis: RSI stays near neutral as XAU/USD searches for direction

On the daily chart, XAU/USD remains confined to its $4,000-$4,200 range, trading around the 20-day SMA, which also serves as the Bollinger middle band, near $4,072. This keeps the short-term outlook neutral and points to a lack of clear directional momentum.

The Relative Strength Index (RSI) at 48 sits just below neutral, and the Moving Average Convergence Divergence (MACD) remains positive, together suggesting a constructive but not overstretched recovery within a moderately trending backdrop indicated by an Average Directional Index (ADX) reading of 30.

On the downside, the psychological $4,000 mark remains the key support holding the range together. A sustained break below this level would expose the Bollinger lower band near $3,969 and signal a possible bearish breakout.

On the upside, the Bollinger upper band near $4,176 offers initial resistance, followed by the upper boundary of the range at $4,200. A daily close above $4,200 would be needed to confirm a bullish breakout and open the door to further gains.

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

TD Securities strategists explain that Gold has bounced after the Federal Open Market Committee (FOMC) left rates unchanged and Chair Warsh signaled tolerance for an inflation shock. However, they argue that shifting hike expectations from September to December does not materially change the outlook. Entrenched CTA (Commodity Trading Advisors) short positions require a move above $4,200/oz for minimal covering, with $4,300/oz needed for notable net longs.

CTA shorts face high covering threshold

"The FOMC held interest rates steady, but it was Fed Chair Warsh’s willingness to look through an inflation shock and steer away from data dependency that has given gold a lift higher."

"Hike pricing has since shifted away from September out to December. However, the market shifting hikes out a few months down the road does little to alter the prevailing outlook for the yellow metal."

"We continue to believe that market expectations for rate hikes will keep a lid on any material bullishness across precious metals."

"Pricing simulations highlight the potential for asymmetric upside with prices closer to $4,300/oz likely to see notable net long positions, however, we expect the gold upside will fall short of hitting those upside CTA scenario levels."

"CTAs still have a high bar to see any short covering with a move above the $4,200/oz region needed to catalyze only very minimal short covering."

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

• EUR/JPY plunges more than 400 pips within minutes after suspected intervention by Japanese authorities.
• Investors react to a sharp rebound in the Japanese Yen, echoing previous intervention episodes by Tokyo.
• Market attention now turns to the Bank of Japan's monetary policy decision on Friday.

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 Economic Sentiment, although the Unemployment Rate edged up to 6.3%.

(This story was corrected at 14:37 GMT to remove the wording in the final paragraph that said Eurozone July Consumer Confidence improved. It remained flat with the prior reading at -15.9.)

The Japanese Yen (JPY) is surging across the board in the American session on Thursday, without a clear catalyst. This development hints that Japanese authorities may finally be intervening in foreign exchange markets following days of speculation.

At the time of press, the USD/JPY pair was down 2.4% on the day at 159.50, while EUR/JPY was losing 1.9% at 183.90, and GBP/JPY was falling 1.8% at 214.40.

USD/JPY managed to hold comfortably above 163.00 early Thursday even though the US Dollar (USD) was struggling to stay resilient against other major currencies. At the beginning of the American session, the disappointing second-quarter Gross Domestic Product (GDP) data from the US, which showed that the economy expanded at an annual rate of 1.5% to miss the market expectation of 2.1%, further weighed on the USD.

While there is no official confirmation, Japanese authorities might have taken action after seeing how USD/JPY's downside remained limited despite the USD selloff.

In the early Asian session on Friday, the Bank of Japan (BoJ) will announce its monetary policy decisions.

BoJ rate hold seen as done deal as focus shifts to timing of next hike

Analysts at Commerzbank expect the Bank of Japan to "leave its overnight call rate unchanged at its monetary policy meeting early Friday," noting that "the market is pricing this in at 99.3%, and all analysts surveyed by Bloomberg agree." As a result, they argue that "that won’t be the deciding factor" for markets, with "the outlook" for policy and guidance "much more important."

Commerzbank points out that "the market continues to expect that the Bank of Japan will raise interest rates only about every six months - and thus not again until December." However, in their view, "the economic situation could well allow for an earlier move," suggesting that communication around the timing of the next hike may prove more market-relevant than the widely anticipated hold itself.