Forex News
- USD/CHF rises as the US Dollar struggles after Fed Governor Waller signals a potential rate pause.
- Market probability for a September Fed rate hike fell to 50.2% following the remarks.
- Brown Brothers Harriman notes Swiss CPI rose to 0.8% YoY, beating the SNB’s 0.6% forecast and signaling firming inflation.
USD/CHF gains ground after registering losses in the previous day, trading around 0.8080 during Asian hours on Friday. The pair appreciates as the US Dollar (USD) holds gains after recovering daily losses; however, the upside of the Greenback could be limited due to easing hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. Swiss Unemployment Rate would be eyed later in the day.
Federal Reserve (Fed) Governor Christopher Waller indicated a preference for keeping interest rates unchanged at the upcoming September meeting, provided upcoming inflation data contains no major surprises.
Fed Waller's dovish tone stood in sharp contrast to the hawkish stance delivered by Chairman Kevin Warsh just a week earlier. In response to these remarks, market expectations shifted significantly, with the CME FedWatch tool indicating that the probability of a September rate hike dropped to 50.2%, down sharply from 63.2% the previous day.
Investors and market participants are now shifting their focus toward the release of the US August employment report for further clues on monetary policy trajectory. Current market consensus projects Nonfarm Payrolls to increase by 56,000 jobs, while the Unemployment Rate is forecasted to remain steady at 4.1%.
Franc could find support as Swiss inflation tops SNB forecast
Analysts at Brown Brothers Harriman highlight that the latest Swiss data delivered a clear upside surprise, with headline CPI rising to “0.8% y/y (consensus: 0.5% y/y) vs. 0.4% in July.” They note this is “the highest since September 2024” and, importantly, it stands “above the SNB’s Q3 forecast of 0.6% y/y,” reinforcing the perception that underlying price pressures are firming. BBH adds that core inflation also moved higher, with “core CPI inflation also surprised to the upside at 0.4% y/y (consensus: 0.3%), following four straight 0.3% readings,” underscoring a gradual but broad-based pickup in Swiss inflation.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- WTI sticks to a bullish bias as US-Iran tensions keep the geopolitical risk premium in play.
- Clashes over the Strait of Hormuz fuel supply concerns and also support the black liquid.
- The technical setup backs the case for an extension of an over one-week-old uptrend.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – trades below the $90.00 mark during the Asian session on Friday and remains close to its highest level since July 24, touched earlier this week. The commodity remains on track to register its steepest weekly gains since mid-July amid renewed US-Iran hostilities and supply concerns due to clashes over the Strait of Hormuz.
In further developments surrounding the Middle East crisis, Iran targeted US military bases in Kuwait and the United Arab Emirates (UAE) on Thursday. Meanwhile, South Korea is reportedly preparing to deploy military assets to support freedom of navigation in the strategic Strait of Hormuz and aims to dispatch them before the end of the year. This keeps the geopolitical risk premium in play and validates the near-term positive outlook for crude oil prices.
Even from a technical perspective, the near-term bias stays bullish as the black liquid holds above the 50% Fibonacci retracement level of the April-July decline and the 100-day Simple Moving Average (SMA). Moreover, constructive momentum indicators suggest a firm underlying floor after the latest advance. The Relative Strength Index (14) is hovering near 63, while the Moving Average Convergence Divergence (MACD) line remains in positive territory.
This, in turn, hints that buyers retain the upper hand even as conditions edge toward overbought. However, a move beyond the initial hurdle near the 61.8% Fibo. retracement at $92.01 is needed to back the case for additional gains towards the next barrier near $98.76 at the 78.6% retracement. A sustained break higher would expose the prior swing high around $107.36.
On the downside, immediate support comes at the 50% retracement at $87.26, followed by the 100-day SMA near $85.17. A deeper pullback would find additional demand around $82.52 and then $76.65, where lower Fibonacci levels converge to reinforce the broader uptrend.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI daily chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- AUD/JPY gains traction to around 112.80 in Friday’s early European session.
- The cross retains a bearish tone below the 100-day SMA.
- The first upside barrier emerges at 113.20; the initial support level to watch is 111.80.
The AUD/JPY cross trades in positive territory near 112.80 during the early European trading hours on Friday. However, the potential upside for the cross might be limited as traders ramped up bets on a Bank of Japan (BoJ) interest rate hike, boosting the Japanese Yen (JPY).
BoJ board member Hajime Takata said on Wednesday that the central bank should conduct interest rate hikes nimbly to counter intensifying inflationary pressures, rather than adhere to a fixed semiannual pace anticipated by markets. Analysts believe the Japanese central bank could be more hawkish than previously expected when it meets on September 17 to 18.
“This feels less like a short squeeze and more like the market cautiously reassessing a more hawkish BOJ path,” said Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo. “Markets are finally starting to buy into the idea that Japan may continue normalizing policy into 2027,” Loo added.
Yen outlook tempered as BNY questions power of intervention alone
Strategists at BNY caution that, despite recent official action, they "remain skeptical that Japanese authorities can generate sustained JPY appreciation through intervention alone." They argue that the government’s policy stance "remains reflationary," and that "today’s backdrop is very different from the early Abenomics period: inflation is already materially higher and structural reform is less prominent." Even so, BNY stresses that this does not automatically imply further currency weakness, noting that "does not mean the yen must weaken further."
Technical Analysis: AUD/JPY remains capped under the 100-day SMA
In the daily chart, AUD/JPY holds a bearish near-term tone as it slips beneath the 100-day simple moving average (SMA) and the Bollinger middle band. This positioning suggests rallies are being capped by the cluster of overhead averages, while the Relative Strength Index (14) around 45 hints at fading upside momentum rather than outright oversold conditions.
On the topside, initial resistance comes at the 100-day SMA around 113.20, followed closely by the Bollinger middle band near 113.40. A sustained break above these levels would be needed to ease the current downside pressure, with the upper Bollinger band near 115.05 as a more distant cap.
On the downside, the lower Bollinger band, now sitting near 111.80, acts as the next key support zone. Any follow-through selling below this level could expose the July 3 low of 111.33, followed by the August 4 low of 110.01.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Gold prices fell in India on Friday, according to data compiled by FXStreet.
The price for Gold stood at 13,574.68 Indian Rupees (INR) per gram, down compared with the INR 13,588.81 it cost on Thursday.
The price for Gold decreased to INR 158,332.40 per tola from INR 158,497.20 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 13,574.68 |
10 Grams | 135,746.20 |
Tola | 158,332.40 |
Troy Ounce | 422,220.10 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
- Gold bulls turn cautious as the USD recovers slightly ahead of the crucial US NFP report.
- Energy-driven inflation fears underpin Fed tightening prospects and further cap bullion.
- Receding Fed hike bets and soft US bond yields cap the USD, supporting the commodity.
Gold (XAU/USD) struggles to capitalize on its strong gains registered over the past two days and consolidates below the $4,500 mark during the Asian session on Friday. The commodity, however, remains close to the weekly high, which it touched the previous day, as traders keenly await the release of the closely watched US monthly employment details. The popularly known US Nonfarm Payrolls (NFP) report will be looked upon for more cues about the Federal Reserve's (Fed) policy path amid receding bets for a rate hike in September. The outlook, in turn, will play a key role in influencing the US Dollar (USD) price dynamics and provide some meaningful impetus to the non-yielding bullion.
Gold traders eye US jobs data as Fed tone turns more hawkish
According to TD Securities, "Non-farm payrolls this Friday will be the next piece of data with keen interest for precious metals" as markets grapple with "the renewed hawkish tone from the Fed and the latest escalation in the energy market." However, the bank strikes a more constructive note beyond the immediate data risk, adding that "looking forward, we do not anticipate material downside as the landscape for precious metals has improved amid a renewed dollar debasement theme, while Fed hikes remain far from certain."
Heading into the key data release, Governor Christopher Waller stated on Thursday that he is leaning toward keeping interest rates steady at the September FOMC meeting, provided there are no surprises from upcoming inflation data. Investors responded by pushing US bond yields and the USD sharply lower, which, in turn, assisted the Gold price to build on its recovery from a four-week low touched on Wednesday. However, inflation risks stemming from higher energy prices leave the door open for a rate hike later this month. This helps the USD Index (DXY), which tracks the Greenback against a basket of currencies, bounce off a one-and-a-half-week low and cap the upside for the commodity.
In fact, crude oil prices sit near their highest levels since July 24 amid renewed US-Iran hostilities and clashes over the Strait of Hormuz. In further developments surrounding the Middle East crisis, Iran targeted US military bases in Kuwait and the United Arab Emirates (UAE) on Thursday. Meanwhile, US Vice President JD Vance said that US President Donald Trump has a series of options available at his disposal to deal with Tehran, including economic, military, diplomatic, and covert measures. Adding to this, South Korea is reportedly preparing to deploy military assets to support freedom of navigation in the strategic Strait of Hormuz and aims to dispatch them before the end of the year.
This keeps geopolitical risk premium in play, which supports crude oil prices and might continue to underpin the safe-haven USD. However, the near-term direction hinges on the highly anticipated US jobs report. Nevertheless, the XAU/USD pair, for now, seems to have stalled its recent corrective decline from the vicinity of the $4,700 mark, or the highest level since May 14, and remains on track to register modest weekly gains. That said, sustained strength and acceptance above the $4,500 round figure is needed to back the case for any meaningful appreciating move.
XAU/USD 4-hour chart
Technical Analysis
The precious metal maintains a constructive near-term tone above the 200-day Simple Moving Average (SMA) on the 4-hour chart and the 38.2% Fibonacci retracement level of the recent leg down. The Relative Strength Index (RSI) near 56 and the Moving Average Convergence Divergence (MACD) line lodged above zero with a positive histogram suggest firm but not overextended bullish momentum while the Gold presses into the nearby 50% retracement barrier ahead of $4,500.
Further up, the 61.8% level near $4,540, followed by the 78.6% retracement at $4,609 and the swing high cluster around $4,698 could be key hurdles. On the downside, initial support is seen at the 38.2% retracement at $4,442, ahead of the 23.6% level near $4,381, with the 200-period SMA at $4,322 and the structural floor around $4,283.63 reinforcing a broader bullish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- EUR/JPY could find immediate support at the lower boundary of the channel around 180.70.
- The 14-day Relative Strength Index above 30 indicates lingering bearish momentum.
- The currency cross could target the initial barrier at the nine-day EMA of 183.74.
EUR/JPY gains ground after two days of losses, trading around 181.50 during the Asian hours on Friday. Technical analysis of the daily chart indicates the currency cross remains within the descending channel pattern, signalling a bearish bias.
However, the EUR/JPY cross is maintaining a bearish near-term bias as it remains below the nine- and 50-day Exponential Moving Averages (EMAs). The pair has retreated from recent highs with price now trapped under this clustered dynamic resistance, while the 14-day Relative Strength Index (RSI) is hovering just above 30, hinting at lingering downside pressure despite approaching oversold conditions.
The EUR/JPY cross may test the immediate support at the lower boundary of the descending channel around 180.70. A break below the channel would strengthen the bearish bias and put downward pressure on the cross to navigate the region around the nine-month low of 179.37, recorded on August 3.
On the upside, the EUR/JPY cross could target the initial barrier at the nine-day EMA of 183.74, followed by the 50-day EMA of 184.56. Further resistance lies at the upper boundary of the descending channel around 185.80. A break above the channel could support the currency cross to reach the all-time high of 187.95 set on April 17.
Yen surge fuels talk of BoJ intervention
Strategists at Scotiabank highlight that the Yen has mounted a sharp rebound against the Dollar, noting that “the yen is up a shocking 1.5% vs. the USD, building on Wednesday’s impressive gains that sparked renewed speculation around the possibility of official intervention.” They point out that the latest advance extends the recent bout of Yen strength and is reinforcing market chatter that Japanese authorities may be edging closer to stepping in if currency moves become disorderly.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.00% | -0.03% | 0.20% | -0.03% | -0.08% | -0.29% | 0.07% | |
| EUR | 0.00% | -0.04% | 0.20% | 0.00% | -0.10% | -0.26% | 0.07% | |
| GBP | 0.03% | 0.04% | 0.23% | 0.04% | -0.05% | -0.23% | 0.10% | |
| JPY | -0.20% | -0.20% | -0.23% | -0.21% | -0.30% | -0.48% | -0.15% | |
| CAD | 0.03% | -0.00% | -0.04% | 0.21% | -0.09% | -0.28% | 0.07% | |
| AUD | 0.08% | 0.10% | 0.05% | 0.30% | 0.09% | -0.18% | 0.15% | |
| NZD | 0.29% | 0.26% | 0.23% | 0.48% | 0.28% | 0.18% | 0.33% | |
| CHF | -0.07% | -0.07% | -0.10% | 0.15% | -0.07% | -0.15% | -0.33% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- EUR/USD clings to gains near 1.1630 as Fed’s Waller is seen supporting holding interest rates steady this month.
- Fed’s Waller said he is finally seeing some signs of progress in inflationary pressures.
- Investors keenly await the US NFP data for August.
The Euro (EUR) holds onto previous day’s gains at around 1.1630 against the US Dollar (USD) during the Asian trading session on Friday. The major currency pair gained significantly on Thursday as the US Dollar faced sharp selling pressure, following dovish remarks from Federal Reserve (Fed) Governor Christopher Waller.
At press time, the US Dollar Index (DXY), which gauges the Greenback's value against six major currencies, trades close to Thursday’s low near 99.00.
On Thursday, Fed’s Waller said in the Reuters NEXT Newsmaker event that he would support holding the policy rate steady at the September policy meeting if August inflation data shows progress towards the 2% target.
Fed’s Waller didn’t rule out the possibility of hiking interest rates this month if inflation figures come in hot, but his remarks that he is “finally seeing some signs of disinflation in recent data”, indicated that he could incline towards maintaining the status quo.
Meanwhile, investors await key United States (US) Nonfarm Payrolls (NFP) data for August, which will be published at 12:30 GMT.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1630. The pair holds above the 100-day simple moving average (SMA) at 1.1564, keeping the near-term bias mildly bullish as recent gains remain supported by this underlying trend indicator.
The Relative Strength Index (RSI) around 57 suggests positive but not overstretched momentum, hinting that buyers retain the upper hand while avoiding overbought conditions.
On the downside, initial support is seen at the 100-day SMA near 1.1564, where a break would expose a deeper pullback toward prior daily lows. Looking up, the major currency pair could extend its upside towards the August high at 1.1720.
(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.
- NZD/USD gains ground to around 0.5895 in Friday’s Asian session.
- Fed's Waller said open to holding rates if August inflation shows progress.
- RBNZ’s Silk said the central bank is more likely to wait until December before raising interest rates again.
The NZD/USD pair gathers strength to near 0.5895 during the Asian trading hours on Friday. The US Dollar (USD) softens against the New Zealand Dollar (NZD) following Federal Reserve (Fed) Governor Christopher Waller’s remarks. Traders brace for the US August employment report later on Friday.
Waller said on Thursday that he is leaning toward keeping interest rates steady at the Fed’s September meeting, provided there are no surprises from upcoming inflation data. Traders trimmed bets on a US rate hike at this month's meeting after Waller’s speech, weighing on the Greenback.
Markets are now pricing in nearly 50.2% odds of a quarter-point hike in September, down from 63.2% on Wednesday, according to the CME’s FedWatch tool.
On the other hand, the Reserve Bank of New Zealand's (RBNZ) dovish hike could undermine the Kiwi. The RBNZ decided to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 2.75% on Wednesday, as was widely expected. RBNZ Governor Anna Breman stated that it’s likely there will be a further increase, but policymakers want to take time to assess the impact of the increases to date.
RBNZ Assistant Governor Karen Silk said on Friday that the central bank is more likely to wait until December before raising interest rates again.
Kiwi outlook stays data dependent as RBNZ keeps options open
Analysts at Commerzbank highlight that the RBNZ was careful not to lock itself into a fixed trajectory, noting that the central bank "stressed that the future rate path is not pre-determined," and instead signalled that "further tightening is possible but will depend on the persistence of inflation and the strength of the recovery." This, they argue, underscores a deliberately data-dependent stance, with policymakers keeping the door open to additional hikes while tying any move explicitly to how inflation and growth dynamics evolve.
Technical Analysis: NZD/USD
In the daily chart, NZD/USD holds a mild bullish bias as spot remains above the 100-day simple moving average (SMA) and the lower Bollinger Band, suggesting underlying demand on dips. However, price is still just under the Bollinger 20-period SMA, while the Relative Strength Index (RSI) near 51 hints at only modest positive momentum rather than an impulsive advance.
On the topside, initial resistance is the Bollinger middle band at 0.5910, with the upper band around 0.5985 acting as the next upside barrier if buyers extend the recovery. On the downside, immediate support is seen at the 100-day SMA near 0.5845, followed by the lower Bollinger Band around 0.5832, where a break would weaken the current constructive tone and expose deeper retracements.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Japanese Finance Minister (FM) Satsuki Katayama said on Friday that the officials will closely monitoring bond markets with heightened urgency.
Key quotes
Interest rate shifts driven by multiple market factors.
Closely monitoring bond markets with heightened urgency.
No comment on specific levels.
Will aim to gradually lower debt-to-GDP ratio.
Have emphasized to global leaders our goal to maintain fiscal sustainability.
Will keep thoroughly explaining stance to markets to maintain credibility.
Taking note of prime minister Takaichi's comments on new government bond issuance near 40 trillion yen.
Takaichi's remarks hold major importance.
Always enjoy speaking with US Bessent, have explained Japan's efforts to target fiscal sustainability and growth.
Bessent said "good" when explained, didn't get demand as reported by media.
Bessent understands, supports our position.
Bessent has long believed yen undervalued due largely to interest rate gaps.
Market reaction
At the time of writing, the USD/JPY pair is up 0.10% on the day at 155.95.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- US Dollar Index struggles as Fed Governor Waller signals potential rate pause, contrasting with Warsh's hawkish tone.
- Market probability for a September Fed rate hike fell to 50.2% following the remarks.
- Investors await US August payrolls data, expected to add 56,000 jobs, with unemployment at 4.1%.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground for the third consecutive day and trading around 99.00 during Asian hours on Friday.
The Greenback is facing notable downward pressure following comments from Federal Reserve (Fed) Governor Christopher Waller, who indicated a preference for keeping interest rates unchanged at the upcoming September meeting, provided upcoming inflation data contains no major surprises.
Fed Waller's dovish tone stood in sharp contrast to the hawkish stance delivered by Chairman Kevin Warsh just a week earlier. In response to these remarks, market expectations shifted significantly, with the CME FedWatch tool indicating that the probability of a September rate hike dropped to 50.2%, down sharply from 63.2% the previous day.
Investors and market participants are now shifting their focus toward the release of the US August employment report for further clues on monetary policy trajectory. Current market consensus projects Nonfarm Payrolls to increase by 56,000 jobs, while the Unemployment Rate is forecasted to remain steady at 4.1%.
Adding further headwinds to the Greenback is a surging Japanese Yen, as traders remain on high alert for potential official currency interventions and continue to price in the possibility of more aggressive policy tightening by the Bank of Japan later this year.
Yen extends sharp gains as intervention speculation intensifies
Strategists at Scotiabank highlight that the Japanese currency has staged an outsized move, noting that “the yen is up a shocking 1.5% vs. the USD, building on Wednesday’s impressive gains that sparked renewed speculation around the possibility of official intervention.” They point out that the latest advance comes on top of prior strength, reinforcing market focus on whether authorities may step in to curb further Dollar weakness against the Yen.
Technical Analysis: DXY struggles as bearish bias prevails
In the daily chart, Dollar Index Spot trades at 98.98, extending a bearish near-term tone as it holds beneath both the nine- and 50-period Exponential Moving Averages (EMAs), which now act as overhead barriers. The 14-day Relative Strength Index (RSI) sits below the midline near 40, hinting that downside pressure persists even as the latest pullback slows, while the softening FXS Fed Sentiment Index suggests a waning policy-support backdrop for the dollar.
On the topside, initial resistance emerges at the 9-period EMA around 99.26, with the 50-period EMA near 99.79 reinforcing a broader supply zone above current levels. A daily close back above these clustered EMAs would be needed to ease the immediate downside bias; failing that, the index remains vulnerable to further slippage toward prior lows not yet reclaimed on the daily chart.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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