Forex News

• WTI is seen consolidating its recent move higher to a two-week top, set earlier this Tuesday.
• Supply concerns stemming from the  US-Iran standoff over the Strait of Hormuz lend support.
• The bullish technical setup backs the case for an extension of the recent upward trajectory.

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – enters a bullish consolidation phase after hitting an over two-week high during the Asian session on Tuesday and currently trades around the $84.20 region. Uncertainties stemming from the US-Iran standoff over the Strait of Hormuz keep the geopolitical risk premium in play and continue to act as a tailwind for the black liquid.

From a technical perspective, WTI maintains a near-term bullish bias above the 38.2% Fibonacci retracement level of the July-August slide. Moreover, momentum indicators stay constructive and back the case for a further near-term appreciating move. In fact, the Relative Strength Index (RSI) is around 56, and the Moving Average Convergence Divergence (MACD) is above zero and edging higher.

Bullish pressure, however, still needs to clear a key structural barrier near the $86.65-$86.70 confluence – comprising the 100-day Simple Moving Average (SMA) and a downward-sloping trend line. The 50.0% Fibo. level reinforces the overhead hurdle at $87.23, which, if cleared, should pave the way for an extension of the upward trajectory towards the stronger resistance near the 61.8% Fibo. level, at $91.93.

On the downside, initial support emerges at the 38.2% Fibo. retracement near $82.53, followed by the 23.6% retracement at $76.72 if sellers regain control. Some follow-through selling would expose the monthly swing low, around mid-$73.00s, before WTI eventually drops to test sub-$70.00 levels.

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

WTI daily chart

• Gold struggles to capitalize on a two-day uptrend amid the emergence of some USD buying.
• Rising oil prices keep inflation risks and Fed rate hike bets on the table, underpinning the buck.
• The US-Iran standoff further benefits the USD’s safe-haven status and weighs on the commodity.

Gold (XAU/USD) attracts some sellers following a modest Asian session uptick on Tuesday, stalling a two-day move higher from the $4,300 neighborhood. The US Dollar (USD) builds on the overnight bounce from a two-month trough as inflation risks stemming from higher crude oil prices underpin prospects for at least one interest rate hike by the US Federal Reserve (Fed) in 2026. Adding to this, the US-Iran standoff keeps the geopolitical risk premium in play and further underpins the safe-haven Greenback, which, in turn, is seen exerting pressure on the precious metal.

In the latest developments surrounding the Middle East crisis, US President Donald Trump said that Iran should surrender to end a nearly six-month-long war. Trump added that the US is not seeking an extension of the Memorandum of Understanding (MoU) with Iran, which expired on Monday. Furthermore, Trump repeated his idea of declaring the critical Strait of Hormuz as a US territory and warned that he would target Oman if it hindered actions to reopen the strategic waterway. This comes as the Iran-backed Houthi rebels in Yemen escalated their campaign against Saudi Arabia.

Houthi military spokesperson Yahya Saree said the group used several ballistic missiles to target a Saudi military landing ship and four accompanying patrol boats off the coast of Mokha. This could further disrupt commercial shipping traffic through the Bab al-Mandeb Strait – one of the world's most important trade routes – and fuel energy supply concerns, lifting crude oil prices to a two-week high. Investors remain worried that higher energy prices would rekindle inflationary pressures, which, along with hawkish Fed expectations, remain supportive of elevated US Treasury bond yields.

According to TD Securities, the Fed is likely to "remain on hold over our forecast horizon," with the policy stance anchored by the view that "inflation should remain high for the rest of the year" and that "the labor market has stabilized, allowing the FOMC to shift focus to its inflation mandate." The bank adds that, "if the Fed were to move this year, we believe that move is more likely to be a hike than a cut," noting that under "a new management that espouses a blurrier reaction function, data dependence will likely gain prominence for determining the path ahead for monetary policy."

This offsets last week's soft US inflation and Retail Sales data, which forced investors to scale back their bets for an imminent Fed rate hike. According to CME Group's FedWatch Tool, traders are assigning around a 64% chance that the US central bank will keep rates unchanged at the September 2026 meeting. Investors, however, are still pricing in a greater possibility that the Fed will raise borrowing costs at least once by the end of this year. The outlook helps revive demand for the Greenback and prompts some intraday selling around the non-yielding Gold, though the downside seems limited.

Traders might refrain from placing aggressive directional bets and opt to wait for more cues about the Fed's future policy path. Hence, the focus will remain glued to the release of FOMC Minutes on Wednesday, which will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the precious metal. In the meantime, the mixed fundamental backdrop warrants some caution before positioning for any further depreciation.

XAU/USD daily chart

Technical Analysis

From a technical perspective, the precious metal continues its struggle to find acceptance above the 50% retracement level of the April-June decline. Momentum indicators, however, stay constructive. In fact, the Relative Strength Index (RSI) at 63.47 holds in bullish territory, while the Moving Average Convergence Divergence (MACD) indicator remains positive, hinting that selling pressure is corrective rather than impulsive. However, it will still be prudent to wait for a move beyond last week's swing high, around $4,450, before positioning for further gains toward the 200-day Simple Moving Average (SMA) at $4,508.

On the downside, first support is seen at the 38.2% retracement at $4,302.33, with further demand expected at the 23.6% level at $4,164.44 and then around the structural floor anchored near $3,941.54, where buyers would likely attempt to arrest a deeper correction.

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

The UK Maritime Trade Operations (UKMTO) said that it has received a report of an incident in the Strait of Hormuz, Reuters reported on Tuesday.

UKMTO said that company security officer has reported that the vessel was struck by an unknown projectile while conducting an outbound transit of the critical waterway.

The agency stated impact caused damage to the engine room and resulted in a crew casualty, adding that remaining crew are currently being assisted by the omani coast guard.

Market reaction

At the time of writing, the West Texas Intermediate (WTI) is up 0.15% on the day at $84.25.

• The Japanese Yen holds onto two-week losses near 159.50 against the US Dollar.
• The BoJ is highly anticipated to raise interest rates in the September policy meeting.
• Investors await FOMC minutes, which will be released on Wednesday.

The Japanese Yen (JPY) trades close to its two-week low against the US Dollar (USD) in the Asian trading session on Tuesday at around 159.50. The USD/JPY pair is under pressure even as financial markets are confident about a Bank of Japan (BoJ) interest rate hike in the September meeting.

Yen outlook steadies as MUFG flags elevated BoJ hike odds

Analysts at MUFG highlight that market expectations for further BoJ tightening remain robust, with “the pricing for a 25bp hike at the next meeting in September remains elevated, implying around an 80% probability of a hike.” They argue that this firm rate-hike pricing, set against the backdrop of softer US data, should help limit renewed Yen selling in the near term despite Japan’s weaker-than-expected GDP.

In the latest BoJ Summary of Opinions (SoP), several board members favored further monetary tightening in the near term after leaving interest rates unchanged at 1%. One board member said that the central bank should increase the monetary tightening pace, citing upside inflation risks.

Meanwhile, Japan’s preliminary Q2 Gross Domestic Product (GDP) data has come in weaker-than-expected, an event that could act as headwind for firm BoJ hawkish bets.

Japan growth disappoints as net exports and government spending prop up GDP

Brown Brothers Harriman’s Elias Haddad notes that Japan’s Q2 performance was weaker than expected, with "real GDP rose 0.3% q/q (consensus: 0.5%) vs. 0.5% in Q1" and growth largely reliant on external and public sector support. He points out that the expansion was "driven by net exports (+0.5ppt), government consumption (+0.3ppt), and private inventories (+0.3ppt)," underscoring how net exports and fiscal spending are offsetting softer underlying domestic demand.

On the US Dollar front, the currency is expected to trade sideways as Federal Open Market Committee (FOMC) minutes of the July policy meeting takes the centre stage, which will be released on Wednesday.

In the policy meeting, the Fed left interest rates unchanged in the range of 3.50%-3.75%, as expected and didn’t deliver any forward-guidance on policy rates.

Investors will pay attention to FOMC minutes to get fresh cues regarding inflation and the economic outlook.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 159.51, holding below a dense Fibonacci retracement cluster that keeps the pair capped in the near term. Price sits under the 50.0% retracement at 159.64 and the 61.8% level at 160.67, suggesting topside attempts are vulnerable while these barriers remain intact.

The Relative Strength Index (14) at 44.70 is below the midline, hinting at waning bullish momentum and reinforcing a cautious, mildly bearish bias as the market consolidates after the recent pullback.

On the topside, immediate resistance is located at the 50.0% Fibonacci retracement at 159.64, followed by the 61.8% level at 160.67. Above there, the 78.6% retracement at 162.14 and the cycle high area marked by the 100.0% level at 164.01 define the next barriers. On the downside, initial support emerges at the 38.2% retracement at 158.61 ahead of the 23.6% level at 157.33, with deeper structural support anchored much lower by the extended Fibonacci projection near -46.01, which serves more as a distant reference than a practical downside target.

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

• The US Dollar Index steadies as Trump’s refusal to renew the Iran deal and naval blockades elevate global geopolitical tensions.
• Weak payrolls and modest inflation data reduce Fed rate hike bets.
• CME FedWatch shows Fed rate hike expectations falling to 35% for the September meeting, down from 47% last month.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is inching higher after three days of losses and trading around 99.60 during the Asian hours on Tuesday. The DXY receives minor support from safe-haven demand, which could be attributed to the geopolitical tensions between the United States (US) and Iran.

US President Donald Trump announced he has no interest in renewing the expiring agreement with Iran, citing the ongoing naval blockade of Iranian ports as evidence of Washington's leverage and reiterating his idea of declaring the critical waterway as US territory under total American control. Moreover, Iranian Foreign Ministry spokesman Esmail Baghaei asserted that an agreement remains elusive due to security complexities and the "obstructionist behavior of destructive elements," demanding that the US first lift its blockade.

The Greenback may face challenges as hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook fades. A recent, unexpected decline in July US Nonfarm Payrolls, combined with last week's modest consumer price inflation data, has significantly reduced market anticipation of an interest rate increase next month. Consequently, expectations for a Fed rate hike at the upcoming policy meeting have dropped to 35%, down from 47% a month earlier, according to the CME FedWatch Tool.

Strategists at Scotiabank report that the "USD got roughed up a bit last week and Dollar trends continue to soften broadly on Monday," pushing the DXY "just below the base of the August consolidation range and to the lowest point since early June." They note that "soft US data reports are dampening Fed tightening expectations" and argue that "the 25bps of tightening still priced in by year-end is too much from our perspective." At the same time, Scotiabank highlights "clear signs of market angst about US fiscal dynamics," a concern they say is "reflected in the steepening US yield curve."

Technical Analysis:

United States Dollar Index Spot trades around 99.60, maintaining a bearish near-term bias as price holds beneath both the nine-period exponential moving average (EMA) at 99.79 and the 50-period EMA at 100.21. The configuration of short- and medium-term EMAs above spot suggests the index remains capped, while the 14-day Relative Strength Index (RSI) at 37.51 stays below the midline, hinting at lingering downside pressure despite a lack of outright oversold readings.

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

• NZD/USD softens to near 0.5895 in Tuesday’s Asian session. 
• China’s Retail sales grew 0.6% YoY in July; Industrial production expanded 4.5% YoY during the same period. 
• Expectations of a US interest rate hike next month eased.  

The NZD/USD pair declines to around 0.5895 during the Asian trading hours on Tuesday. Weaker-than-expected Chinese Retail Sales and Industrial Production data weigh on the China-proxy New Zealand Dollar (NZD) against the US Dollar (USD). 

China’s Retail Sales arrived at a 0.6% growth from a year earlier, according to the National Bureau of Statistics on Monday. This figure came in worse than the estimated 1.5% and slowed from the 1.0% growth in June. Additionally, Industrial Production rose 4.5% YoY in July, versus 5.3%, falling for the first time in three months and missing expectations. 

Statistics Bureau spokesperson Fu Linghui said that geopolitical pressure abroad and high temperatures domestically impacted China’s economy last month. The report indicated China’s economy lost momentum across the board in July, which dragged the Kiwi lower as China is a major trading partner of New Zealand.

However, lower bets for a US Federal Reserve (Fed) rate hike could undermine the Greenback and act as a tailwind for the pair. Markets are now pricing in a September quarter-point hike, flipped to a near-65% chance of a hold, after softer consumer price inflation and weaker retail sales.

Kiwi support tempered as RBNZ seen pausing after July hike

Commerzbank’s Volkmar Baur notes that “in about two weeks, the Reserve Bank of New Zealand will hold its next monetary policy meeting,” and, based on the softer inflation indicators released this morning, “it seems unlikely that it will raise interest rates for a second consecutive time following the July hike.” While the latest data argue for a pause after July’s move, Baur expects the RBNZ to retain a hawkish tone given ongoing Middle East risks, which should offer some near-term support to the Kiwi even as a weak domestic economy weighs on the longer-term outlook.

Technical Analysis: NZD/USD

In the daily chart, NZD/USD holds a constructive bullish bias as spot remains above both the 100-day moving average and the Bollinger middle band. The pair is approaching the Bollinger upper band, which caps the immediate topside, while the Relative Strength Index (14) around 61 sits in bullish but not overbought territory, suggesting that buying pressure persists yet may slow as price nears overhead supply.

On the downside, initial support is offered by the Bollinger middle band at 0.5855, reinforced by the 100-day moving average at 0.5830 slightly lower, with the Bollinger lower band near 0.5765 acting as a deeper cushion in case of a broader pullback.

On the topside, a clear break above the Bollinger upper band at 0.5945 would open the door for an extension of the recovery, while failure to overcome this barrier would likely trigger consolidation or a corrective dip toward the aforementioned support cluster.

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

• Silver weakens as Trump’s refusal to renew the Iran deal and naval blockades elevate global geopolitical tensions.
• Weak US payrolls and modest inflation trim expectations for a Fed interest rate hike.
• CME FedWatch shows Fed rate hike expectations falling to 35% for the September meeting, down from 47% last month.

Silver price (XAG/USD) declines after two days of gains, trading around $65.60 per troy ounce during the Asian hours on Tuesday. Silver prices fall as traders remain wary of potential inflation risks as prospects for a new diplomatic agreement between the US and Iran dimmed following statements from both sides.

US President Donald Trump indicated he was not interested in extending the interim peace deal, citing the ongoing naval blockade of Iranian ports as evidence of Washington's leverage and reiterating his proposal to declare the critical waterway as US territory under total American control. Iranian Foreign Ministry spokesman Esmail Baghaei asserted that an agreement remains elusive due to security complexities and the "obstructionist behavior of destructive elements," insisting that the US must first lift its blockade.

However, Silver prices could rebound amid fading expectations for further interest rate hikes by the Federal Reserve (Fed). A recent, unexpected decline in July US Nonfarm Payrolls, combined with last week's modest consumer price inflation data, has significantly reduced market anticipation of a monetary tightening next month.

Consequently, expectations for a Fed rate hike at the upcoming policy meeting have dropped to 35%, down from 47% a month earlier, according to the CME FedWatch Tool. Investors are now looking ahead to the release of the minutes from the Fed’s July meeting.

According to strategists at TD Securities, a confluence of macro factors has driven a notable repositioning in precious metals. They highlight that “the combination of modest inflation, a lackluster U.S. employment environment, little market concern that oil will have another major rally, along with prices moving convincingly into a higher trading range prompted money managers to aggressively increase their long gold exposure.” This backdrop, in their view, has encouraged investors to lean more heavily into Gold as prices establish themselves in a stronger trading band.

Technical Analysis:

In the daily chart, XAG/USD trades at $65.60, holding a bullish near-term bias as price remains above both the nine-day and 50-day Exponential Moving Averages (EMAs). The alignment of the shorter EMA above the longer one reinforces a constructive trend tone, while the 14-day Relative Strength Index (RSI) at 60.51 stays in positive territory without yet signaling overbought conditions, suggesting room for further gains as long as the metal holds above these dynamic supports. The Fed Sentiment Index cooling toward 134.61 hints at a less aggressive policy backdrop for Silver.

On the downside, immediate support is located at the nine-day EMA at $64.27, followed by the 50-day EMA at $63.33, with a more distant structural floor at the horizontal line near $55.63. On the topside, the next notable barrier emerges at the horizontal resistance around $90.03, with the current configuration hinting that dips toward the clustered moving averages may attract buyers while that upper cap remains untested.

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

• USD/CAD struggles to gain any meaningful traction amid a combination of diverging forces.
• Monday’s hotter Canadian inflation figures and rising crude oil prices underpin the Loonie.
• Geopolitical risks and inflation jitters lend support to the safe-haven USD and spot prices.

The USD/CAD pair struggles to build on the overnight bounce from the 200-day Simple Moving Average (SMA) support near the 1.3845 region, or the lowest level since June 3, and is seen consolidating during the Asian session on Tuesday. Spot prices currently trade around the 1.3870 zone, unchanged for the day, amid a combination of diverging forces.

Monday's hotter Canadian consumer inflation figures and rising crude oil prices continue to underpin the commodity-linked Loonie, which, in turn, acts as a headwind for the USD/CAD pair. Meanwhile, inflation risks stemming from higher oil prices, along with the US-Iran standoff, help revive demand for the safe-haven US Dollar (USD). This holds back traders from placing fresh bearish bets on the currency pair and limits the downside.

Statistics Canada reported that Canada’s headline Consumer Price Index (CPI) increased 0.5% in July and the yearly rate rose to 3%, above the 2.9% market forecast and up from 2.8% in June. Adding to this, the Bank of Canada’s (BoC) core CPI measure rose 2.3% YoY, up from 2.1%, while the monthly reading increased 0.2% following a 0.1% rise previously.  However, the BoC is likely to keep its key policy rate on hold for the rest ‌of this year.

On the geopolitical front, President Donald Trump repeated his idea of declaring the critical Strait of Hormuz as a US territory and threatened to bomb Oman if it gets in the way. Trump added that the US is not seeking an extension of the Memorandum of Understanding (MoU) with Iran, which expired on Monday, keeping the geopolitical risk premium in play. This, along with inflation risks stemming from higher oil prices, supports the USD.

Investors remain worried that volatile energy prices would rekindle price pressures and force the US Federal Reserve (Fed) to adopt a more hawkish stance. Hence, FOMC Minutes, due for release on Wednesday, will be looked upon for more cues about the Fed's future policy path, which will drive the USD. Apart from this, the incoming geopolitical headlines and oil price dynamics should provide some impetus to the USD/CAD pair.

USD/CAD daily chart

Technical Analysis

The USD/CAD pair defends the 200-day SMA at 1.3848, which keeps the broader bias modestly bullish. Although downside attempts are being absorbed near the said support, a clean break beneath would be seen as a key trigger for bearish traders and open the door to a deeper correction. However, holding above it would keep the path of least resistance tilted higher in the near term.

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

• GBP/USD drifts higher to near 1.3550 in Tuesday’s early Asian session. 
• Traders expect just a 35% chance of a rate increase at the Fed's September meeting. 
• The UK jobs data will take center stage later on Tuesday. 

The GBP/USD pair gains momentum to around 1.3550 during the early Asian trading hours on Tuesday. The US Dollar (USD) softens against the British Pound (GBP) as cooler US inflation data have prompted traders to reduce bets on a US Federal Reserve (Fed) rate hike. The UK employment report will be in the spotlight later on Tuesday.

The weak US Retail Sales, along with softer-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) inflation data last week, have tempered expectations that the US central bank will raise rates at its September 15-16 policy meeting. Traders are now pricing in just a 35% probability of a September hike, alongside a 69% odds of a rate increase by December, according to the CME FedWatch tool. 

Bank of England (BoE) Chief Economist Huw Pill said last week ‌that stronger-than-expected UK economic growth readings reinforced the case for higher borrowing costs to bring inflation back to target.

Financial markets have priced in at least one interest rate increase by the Bank of England (BoE) this year, according to data compiled by LSEG. 

Traders will closely watch the UK jobs and inflation data later this week, which could offer some hints about the BoE interest rate path. The UK Unemployment Rate is projected to fall to 4.8% in June from 4.9% in May. Better-than-expected outcomes could lift the GBP against the USD in the near term. 

Uk data barrage keeps Pound traders on edge

Strategists at Scotiabank highlight a cautious tone in the market, noting that “markets are perhaps a little cautious ahead of this week’s barrage of UK data—wages, jobs, CPI, Retail Sales etc..” They suggest that the upcoming releases are encouraging investors to tread carefully around the Pound, even as it trades near recent highs against the USD.

Technical Analysis: The positive outlook of GBP/USD prevails above the 100-day SMA

In the daily chart, GBP/USD maintains a bullish near-term bias as spot holds above both the 100-day simple moving average (SMA) and the Bollinger middle band. The pair is advancing toward the Bollinger upper band, which caps the topside for now, while the Relative Strength Index (14) around 64 stays in positive territory but shy of overbought, hinting that bullish momentum is constructive yet not overstretched.

On the downside, initial demand is seen at the Bollinger middle band at 1.3440, followed by the 100-day SMA at 1.3420 as a deeper but still supportive layer, with the Bollinger lower band near 1.3275 marking a more distant structural floor. On the topside, a clear break above the Bollinger upper band at 1.3605 would open the door for further gains, while failure to overcome this barrier could trigger consolidation or a corrective pullback toward the clustered support zone in the mid-1.34s.

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

The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Tuesday at 6.7905 compared to the previous day's fix of 6.7873 and 6.7452 Reuters estimate.