Forex News
Cleveland Federal Reserve (Fed) President Beth Hammack said on Friday that the current monetary policy stance is not restrictive, emphasizing that inflation is too high. In an article on LinkedIn, she added that local contact views indicate that “now is the time for the Fed to hike to control inflation.”
Key highlights:
Inflation is still above 3 percent. The labor market is stable and near my estimate of maximum employment.
Both the hard data and the anecdotes are telling me the same thing: policy is not restrictive
Inflation is too high—and the longer it stays above our objective, the harder it will be to bring it back down.
Right now, what I'm hearing is that it's time to act.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | 0.09% | 0.22% | 0.31% | -0.03% | -0.02% | 0.31% | |
| EUR | -0.13% | -0.04% | 0.09% | 0.21% | -0.17% | -0.13% | 0.18% | |
| GBP | -0.09% | 0.04% | 0.13% | 0.25% | -0.12% | -0.09% | 0.22% | |
| JPY | -0.22% | -0.09% | -0.13% | 0.11% | -0.26% | -0.23% | 0.08% | |
| CAD | -0.31% | -0.21% | -0.25% | -0.11% | -0.37% | -0.35% | -0.03% | |
| AUD | 0.03% | 0.17% | 0.12% | 0.26% | 0.37% | 0.03% | 0.34% | |
| NZD | 0.02% | 0.13% | 0.09% | 0.23% | 0.35% | -0.03% | 0.31% | |
| CHF | -0.31% | -0.18% | -0.22% | -0.08% | 0.03% | -0.34% | -0.31% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
ING’s Muhammet Mercan notes the Central Bank of the Republic of Türkiye (CBRT) has normalised liquidity via weekly repo auctions, bringing effective funding costs down to the 37% policy rate. ING expects the CBRT to hold rates at the September meeting, then deliver two 100bp cuts to 35% in the fourth quarter, with further Gulf conflict escalation posing upside inflation risks and the policy rate seen at 35% by 2026.
Liquidity normalisation and planned cuts
"Towards the end of August, the Central Bank of Turkey took a step to normalise liquidity and started weekly repo auctions."
"Accordingly, the effective cost of funding and TLREF dropped directly to the level of the policy rate at 37% from 40%."
"The CBRT is likely to remain on hold in the September meeting this Thursday after this liquidity move."
"We see two 100bp cuts to 35% in the last quarter given the weaker-than-expected 2Q GDP data and further gradual cooling of inflation, though any further escalation in the Gulf conflict would add to upside risks."
"We see the policy rate at 35% by the end of 2026."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- AUD/USD resumes its advance after quickly reversing its NFP-driven decline.
- Strong US employment data lift Fed interest rate hike expectations, but the US Dollar struggles to hold its gains.
- Hawkish RBA expectations keep the Australian Dollar supported.
AUD/USD resumes its advance on Friday after a brief bout of weakness following a stronger-than-expected United States (US) employment report. The pair initially fell to 0.7173 before reversing as the US Dollar (USD) struggled to capitalize on the upbeat figures, even as they strengthened expectations of a Federal Reserve (Fed) rate hike at the September 15-16 meeting. At the time of writing, AUD/USD trades around 0.7206, near levels last seen on May 15.
US Nonfarm Payrolls (NFP) increased by 162K in August, well above market expectations for a 56K gain. July’s reading was revised higher to 21K from the previously reported 23K decline, while the Unemployment Rate held steady at 4.1%, as expected. US Bureau of Labor Statistics
The US Dollar jumped after the employment report but quickly lost momentum. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.10 after climbing to 99.36.
According to the CME FedWatch Tool, markets now price in around a 60% chance of an increase, up from 50% before the NFP release.
Uncertainty over the Fed’s policy path persists, with the outcome of the September meeting likely to hinge on next week’s US Consumer Price Index (CPI) and Producer Price Index (PPI) reports. Recent inflation data points to some moderation, although elevated Oil prices due to the war in the Middle East continue to complicate the inflation outlook.
Cleveland Fed President Beth Hammack said in a LinkedIn post that policy is not restrictive, adding that “inflation is too high — and the longer it stays above our objective, the harder it will be to bring it back down.”
The Australian Dollar remains supported by the RBA’s hawkish stance, with traders anticipating another rate increase later this month as inflation sits above the central bank’s 2%-3% target band, while resilient second-quarter growth gives policymakers room to tighten further.
Looking ahead, Australia’s economic calendar is relatively light next week, with September Consumer Inflation Expectations the only major domestic release. Chinese inflation and trade data will also draw attention given Australia’s close trade ties with China.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
- Gold drops as strong NFP boosts Fed hike expectations.
- The US Dollar stays firm despite fading post-jobs yield spike.
- PPI and CPI data could confirm September tightening bets.
Gold (XAU/USD) price retreats by about 0.80% on Friday, after registering losses of over 2% following the release of an upbeat US jobs report. This boosted the Greenback amid growing speculation that the Federal Reserve (Fed) could raise rates if inflation data next week comes hotter than expected. At the time of writing, XAU/USD trades at $4,437.
XAU/USD retreats as upbeat jobs data supports Dollar and September tightening risks
Nonfarm Payrolls in August crushed estimates of 56K, coming in at 162K, while July’s print was upward revised from -23K to 21K. At the same time, the Unemployment Rate was unchanged at 4.1%. The data reassured Fed officials that if needed, they can raise rates without harming the labor market.
Last week, Fed Chairman Kevin Warsh said the jobs market was “consistent with full employment” in a speech in Jackson Hole, in which he leaned hawkish, placing inflation as the foremost mission.
On Thursday, Fed Governor Christopher Waller said the Fed isn't rushing to raise rates if inflation cools, but a weak data release next week favors a rate increase at the FOMC's meeting.
Money markets have priced in a 61% chance for a rate increase by the Fed at the September meeting, up from 54% a day ago, as shown by Prime Terminal.
US Treasury yields, namely the 10-year T-note, rose to a high of 4.81% before erasing post-NFP gains and are down to 4.768%. The Greenback also gave back some of its gains, but it remains in positive territory, as indicated by the US Dollar Index (DXY).
The DXY, which measures the performance of the US Dollar against six currencies, is up 0.13% at 99.13.
Following the US NFP release, traders await next week’s producer and consumer inflation reports. If both show persistent disinflation, a rate hike might not be necessary.
Next week, the US economic docket highlight will be the release of the Producer Price Index (PPI), the Consumer Price Index (CPI), jobless claims data, the US Monthly Budget Statement and the University of Michigan Consumer Sentiment for September.
XAU/USD technical outlook: Gold consolidates within 100- and 200-day SMAs
Price action shows Gold is poised to trade sideways, capped on the downside by the 100-day Simple Moving Average (SMA) at $4,354 and on the upside by the 200-day SMA at $4,534.
The Relative Strength Index (RSI) is bullish, but in the short term it is trending downward toward the 50-neutral level, an indication that sellers are gaining momentum.
For a bearish continuation, XAU/USD must drop below the $4,400 mark, followed by the 100-day SMA. Below this area, the next target will be the day's low at $4,282.
For a bullish continuation, Gold must rise above $4,450. If buyers gain enough momentum, they could challenge $4,500 before targeting August’s monthly peak of $4,697.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- DJIA short of 53,400, down roughly 325 points, low just under 53,300 at 15:00 GMT.
- Payrolls 162K against a 56K forecast, U6 underemployment at 7.7%, lowest since June 2025.
- Hike odds above 60% from roughly even on Thursday as the president demands a cut.
The Dow Jones Industrial Average trades just short of 53,400, roughly 325 points or 0.6% lower on Friday, after August Nonfarm Payrolls (NFP) printed 162K against a 56K forecast at 12:30 GMT and pushed the probability of a September hike above 60%. Thursday's 600-point rally was built on a governor's lean toward a hold that he made conditional on the data, and the data spent that condition inside one five-minute bar.
A labour market that took away the excuse
The 162K headline is the strongest monthly gain since March and more than five times the 31K average of the previous twelve months, with July revised to a 21K gain from a 23K loss and June marked up as well. The unemployment rate held at 4.1% as forecast while participation rose to 61.6% from 61.4%, the U6 underemployment rate fell to 7.7% from 7.9%, its lowest since June 2025, and average hourly earnings rose 0.3% MoM as forecast with the annual rate at 3.1% against 3% expected.
A Chair who used Jackson Hole to say the Fed has work to do if inflation persists was never going to rest a hold on weak hiring, so the only defensible case for one was a labour market too soft to tighten into, and it lasted one release. The two-year Treasury yield rose roughly eight basis points to above 4.40%, its highest since January 2025, and the index is trading that move rather than the payroll count.
Sixty for September, one hundred by December
Fed funds futures now price a 60.4% probability of a quarter-point hike at the September 16 decision against 39.6% for a hold, from close to even on Thursday. The rest of the table matters more: October carries an 87% probability of at least one hike, December leaves nothing on the current 3.50% to 3.75% range and puts 40% on two, and by March 2027 the entire distribution sits at 4.00% to 4.25%.
The curve is not debating whether the Fed tightens, only whether the first move lands on September 16 or six weeks later, and Friday's print moved the date rather than the destination. A 0.6% decline is the price of a date, which is why the index sits roughly 2.5% beneath the early-August record rather than further.
The president's leverage is the index's supply chain
At 13:56 GMT the president praised the number, told the Fed board to be patriots, and wrote that unless the rate is lowered he will stop trading with every country the United States runs a deficit with, more than 90 of them. He cited the February Supreme Court ruling that struck down his tariffs under the International Emergency Economic Powers Act (IEEPA), and the ruling does leave him the lever, since the statute's explicit power to prohibit importation was not what the court took away.
For a price-weighted index of 30 multinationals the threat lands on the constituents, not the Fed. Apple (AAPL) assembles in China, India and Vietnam, Nike (NKE) makes most of its footwear in Vietnam and Indonesia, Walmart (WMT) is the largest containerized importer in the country, and Boeing (BA) and Caterpillar (CAT) sell into the markets an embargo would seal. The deficit in question ran to roughly $1.2 trillion last year, with China above $200 billion of it.
The second leg of the decline began within minutes of the post, running from the 53,500 area to the session low just under 53,300 by 15:00 GMT. A two-year yield climbing all morning could have produced that leg alone, but an index whose products are built in the countries named cannot file the threat under noise. The mechanics also run against the demand: an embargo is a supply shock, a supply shock lifts prices, and higher prices argue for a higher policy rate, so the remedy would deliver the outcome it is meant to prevent.
Next week's prices decide September 16
The Producer Price Index (PPI) lands Thursday, September 10 at 12:30 GMT with the headline forecast at 0.3% MoM after a flat July and the core measure at 0.3% after 0.2%, against 4.7% and 4.2% YoY. The Consumer Price Index (CPI) follows Friday, September 11 at 12:30 GMT with the headline seen at 0.4% MoM after 0.1% and 3.4% YoY, and core at 0.2% after 0.2% and 2.5% YoY.
The governors who leaned toward a hold made it conditional on monthly inflation moderating, and a 0.4% headline consensus is not moderation but the energy channel. Diesel reached a record $5.85 a gallon nationally on Friday, close to 60% above a year ago, with refining capacity knocked out in Russia by Ukrainian drones and in the Gulf by a war that resumed American strikes on Iran this week, while Brent Crude Oil trades near $95.00. A core print at 0.2% is the hold's last argument, and a Chair who has said the Fed has work to do is not its audience.
Levels to watch
Resistance: The 53,500 handle is the first hurdle, the shelf Thursday built on and the level the index held for an hour after the print before the second leg took it away. Beyond that sit the cash open's high just above 53,600, the session high just above 53,700 and the 53,800 band that capped every rally from August 14 through August 28, then 54,000 and the record just short of 54,750, roughly 2.5% overhead.
Support: The 53,250 area is the first floor, where Wednesday's high and Tuesday's open cluster, with the session low just under 53,300 resting on it. Beneath that is 53,000 with Thursday's low just above it, then the rising 50-day Exponential Moving Average (EMA) near 52,800, the line under the entire August advance and the one that held Tuesday's low. The 200-day EMA just above 50,000 is not in play.
Bias: Bearish while the index holds beneath 53,500, with 53,250 the first objective and 53,000 behind it, and the 50-day EMA near 52,800 the target for a CPI week that prints at consensus or hotter. The daily Stochastic Relative Strength Index (Stoch RSI) near 38 has barely moved off Wednesday's trough despite a 300-point session, so momentum has not confirmed the break yet, and the five-minute reading near 49 rising out of oversold is the bounce from the low rather than a reversal. A daily close back above 53,500 restores Thursday's breakout and puts 53,800 back on the board.
Dow Jones 5-minute chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- Silver rebounds above $66 after briefly falling below $65 in the immediate aftermath of the US jobs report.
- US employers added 162K jobs in August, almost three times the 56K expected by markets.
- The initial jump in the US Dollar loses momentum, allowing the precious metal to recover some ground.
Silver (XAG/USD) trades around $66.20 at the time of writing on Friday, down 1.18% on the day, after recovering part of its sharp post-Nonfarm Payrolls (NFP) decline. The precious metal initially tumbled to an intraday low of $64.74 as stronger-than-expected United States (US) employment data boosted the US Dollar (USD) and Treasury yields, before buyers stepped back in as the initial market reaction faded.
The US economy added 162K jobs in August, comfortably exceeding market expectations of 56K. July's figure was revised to a gain of 21K from the previously reported decline of 23K, while June payroll growth was revised higher to 31K from 20K. The Unemployment Rate remained unchanged at 4.1%, in line with expectations.
The stronger labor-market figures initially triggered a sharp repricing across financial markets. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, jumped as high as 99.36 following the release, while the benchmark 10-year US Treasury yield retested the 4.81% area.
These moves weighed heavily on Silver, as a stronger US Dollar makes the USD-denominated precious metal more expensive for overseas buyers, while higher Treasury yields increase the opportunity cost of holding non-yielding assets.
However, both the US Dollar and Treasury yields subsequently lose some momentum. The DXY retreats toward 99.10, while the 10-year Treasury yield eases toward 4.77%, helping XAG/USD rebound by more than $1 from its intraday low.
The employment report also shifts expectations surrounding the Federal Reserve's (Fed) September monetary policy decision. According to the CME FedWatch Tool, markets now assign around a 60% chance to a 25-basis-point interest rate hike at the September 15-16 meeting, compared with roughly 50% before the NFP release.
The stronger jobs data put additional emphasis on next week's US inflation figures. The Consumer Price Index (CPI) and Producer Price Index (PPI) could prove decisive for the Fed after Governor Christopher Waller said on Thursday that the September decision hinges on August inflation.
Waller noted that he is "finally seeing some signs of disinflation" and that the current interest-rate setting could bring inflation back toward the Fed's 2% target. However, he also warned that hotter-than-expected August inflation data could lead him to consider an interest rate hike.
Silver therefore remains caught between renewed expectations of tighter US monetary policy and the fading initial reaction in the US Dollar and Treasury yields. While the strong NFP report keeps pressure on the white metal on Friday, the retreat from the post-release peaks in both the Greenback and yields allows XAG/USD to recover a significant portion of its initial losses.
XAG/USD technical analysis
In the one-hour chart, XAG/USD trades at $66.35. The near-term tone remains capped, as price holds below the 200-hour Simple Moving Average (SMA) at $67.10 while only marginally above the 100-hour SMA at $65.73, suggesting a fragile consolidation under broader overhead supply. The Relative Strength Index (RSI) at 49.22 sits near neutral, hinting that momentum has cooled after the latest pullback and leaving the metal vulnerable to renewed downside if sellers return.
On the topside, immediate resistance emerges at the 200-hour SMA near $67.10, with the next barrier at the horizontal level around $67.50, where fresh selling could be expected on an initial test. On the downside, initial support is provided by the 100-hour SMA at $65.73, ahead of a more notable floor at $64.74 and then $63.32, where a break would reinforce the bearish bias and open the door to a deeper correction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- EUR/USD recovers most of its NFP-driven decline as the US Dollar loses momentum.
- The 200-day Simple Moving Average at 1.1634 caps the immediate upside.
- Momentum indicators lean mildly bullish, with the RSI holding above the neutral 50 level.
EUR/USD sees sharp two-way price swings on Friday after a stronger-than-expected United States (US) employment report triggers fresh volatility. The pair initially fell to an intraday low of 1.1585 before recovering as the US Dollar (USD) struggled to sustain its gains. At the time of writing, EUR/USD trades around 1.1620.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.10 after climbing as high as 99.36 following the employment report.
Technical analysis
On the daily chart, EUR/USD remains trapped between the 100-day Simple Moving Average (SMA) and the 200-day SMA, leaving the pair in a narrow consolidation range.
The broader price structure retains a modest bullish bias. EUR/USD has formed a sequence of higher highs and higher lows since recovering from below 1.1400 in late July and reaching 1.1711 on August 21. The latest price action suggests that another higher low may be developing above the 100-day SMA, although buyers still need to clear the 200-day average to regain control.
The Relative Strength Index (RSI) has eased from the overbought levels reached around the August 21 high but holds above the neutral 50 mark at approximately 56, indicating that bullish momentum has weakened without disappearing entirely.
Meanwhile, the Moving Average Convergence Divergence (MACD) remains marginally below zero, pointing to a mild bearish bias. However, the fading red histogram bars suggest that downside momentum is losing strength.
On the upside, a break above the 200-day SMA near 1.1634 could pave the way toward the 1.1700 mark, followed by the more distant resistance zone around 1.1800.
On the downside, immediate support emerges at the 100-day SMA around 1.1564, followed by the 50-day SMA near 1.1508. A deeper decline would expose the horizontal support region around 1.1400.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Commerzbank’s Commodity Research team, led by Barbara Lambrecht, notes that uncertainty over crude flows through the Strait of Hormuz and conflicting transit data are clouding the outlook for Brent. Upcoming reports from the EIA, IEA and OPEC, plus China’s trade figures, will clarify both supply and demand. The bank highlights that a continued recovery in China’s crude imports would support higher flows and likely cap Brent prices.
Hormuz disruptions and China demand
"The situation in the Strait of Hormuz remains unclear in many respects. Among other things, there are conflicting reports regarding how much oil is currently flowing through the strait each day. Market reports from energy agencies and China’s trade balance figures next week promise to provide some clarity."
"A month ago, the US Energy Information Administration (EIA), which will kick things off on Wednesday, lowered its expectations for shipments through the Strait of Hormuz. For the third quarter as a whole, it even projected larger production losses in the Gulf region than those recorded in July."
"Given the growing number of reports about “workarounds” such as ship-to-ship transfers, the EIA could now take a more optimistic view. At the same time, it had slightly raised its forecast for US oil production next year, primarily reflecting higher oil price assumptions."
"If this trend continued, it would at least confirm that the Strait of Hormuz has become increasingly passable. Oil prices would then be more likely to decline."
"Of particular interest will be the development of OECD inventories and the outlook for global oil demand. In China especially, the current energy crisis has accelerated the shift towards electric mobility, increasingly dampening Chinese oil demand."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Rabobank's Senior Macro Strategist Bas van Geffen expects the European Central Bank (ECB) to hike its deposit rate by 25bp to 2.50% next week and then hold at that level for an extended period. They note markets are pricing a more adverse path with a 3.00% terminal rate, while stressing upside risks if inflation broadens and growth stays resilient.
Markets see higher terminal rate risk
"The ECB will almost certainly hike rates next week, and the markets’ focus is on the path for policy rates after September. We maintain that policymakers will probably hold rates at 2.50% for an extended period, but risks are skewed to further hikes. Those hikes will only materialise if price pressures spreads beyond energy inflation and the economy remains resilient."
"The recent increase in energy prices cements the case for another rate hike when the ECB meets next week. The ECB will remain vigilant, but we expect a more restrained tone for the road ahead than current market pricing."
"So, President Lagarde will reaffirm that the ECB stands ready to act again if this is necessary, but she has little to gain from any stronger pre-commitment. We believe that the market could construe her attempts to keep all options open as somewhat dovish. The ECB would probably not mind that, given current market pricing."
"Current money market pricing is consistent with an ECB that maintains its “measured pace” of tightening, but in a scenario where policymakers are forced to take policy rates into restrictive territory. The OIS curve embeds 85% probability that the ECB will have to hike once more before the end of the year, with a 15-20% tail risk that the ECB may need to accelerate the pace of hikes in October. Furthermore, traders currently price a terminal rate of around 3%."
"Having said that, risks are firmly to the upside. In June, the ECB has proven that it has limited tolerance for inflation risk. If inflation expectations are at risk of accelerating or if there are signs that inflation is starting to spread beyond the direct and indirect effects of higher energy prices, the ECB will not hesitate to hike again."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- DXY rebounds as August NFP crushes expectations with 162K jobs.
- Strong labor market lifts September Fed hike odds to 63%.
- Next week’s CPI and PPI could confirm tightening risks.
The United States Dollar Index (DXY) rises some 0.17% on Friday following a stellar Nonfarm Payrolls (NFP) report, with the economy creating nearly three times as many jobs as expected by most economists, as reported by the Bureau of Labor Statistics (BLS). At the time of writing, the DXY trades at 99.17, after bouncing off a daily low of 98.91.
DXY gains after strong jobs data lift September hike expectations
Data from the US showed the economy added more people to the workforce than expected. Over 162K Americans entered the workforce in August, well above estimates of 56K and crushing July’s upwardly revised report from -23K to 21K. The same report showed the Unemployment Rate stood at 4.1%, beneath Fed officials' estimates of 4.5% towards the end of the year.
Immediately after the data, DXY jumped towards the high of the day at 99.39, before trimming some of its gains. US Treasury yields followed suit, but the move faded.
A stronger labor market increased the chances of a Fed rate hike at the September 16 meeting. The swaps market shows a 63% probability of a 25-bps increase in the Fed funds rate, up from 54% a day ago, according to Prime Terminal.
Now with US jobs data in the rearview mirror, traders are set for next week’s inflation reports, first on the producer and then on the consumer side. If both show the disinflation process is not evolving, this could warrant a rate hike.
On Thursday, Fed Governor Christopher Waller stated that the Fed is in no rush to raise rates if inflation cools down. However, a bad print next week could keep the next Federal Open Market Committee meeting open.
US Dollar Index Price Forecast: Technical outlook
In the daily chart, Dollar Index Spot trades at 99.09. The near-term tone is bearish as price holds below the clustered 50-, 100- and 200-day simple moving averages around 100.22 and also beneath the previously supportive primary uptrend line now referenced near 100.15, while a descending trend line from 101.80 keeps the broader recovery attempt capped around 101.26. The Relative Strength Index (14) at about 42 sits below the midline, hinting at lingering downside pressure rather than an imminent bullish reversal.
On the topside, initial resistance is seen at the broken trend-line region around 100.15, followed closely by the dense simple moving average cluster near 100.22, with the downtrend reference level at 101.26 acting as a more distant cap if a bounce extends. On the downside, the first notable support is the secondary rising trend line projecting near 98.72, where failure would expose lower levels in the broader range and reinforce the prevailing bearish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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