Forex News

• Gold breaks 50-day SMA, surging toward a seven-week high before NFP.
• Soft ADP jobs and weaker Dollar fuel bullion’s breakout momentum.
• Hawkish Fed voices and NFP risk may test Gold bulls.

Gold (XAU/USD) price surges to its highest level in nearly seven weeks, gaining nearly 3.80% on Wednesday as the Greenback loses ground and US Treasury yields fail to gain traction. The XAU/USD pair trades at $4,232, its highest level since June 18, after bouncing off daily lows of $4,065.

Bullion clears $4,200 on USD weakness, soft ADP data and Hormuz deal hopes

The yellow metal strengthened sharply as it cleared the 50-day Simple Moving Average (SMA) at $4,161, clearing on its way north the $4,200 mark. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is down 0.12% at 99.76.

The US economic docket is busy this week, with traders eyeing the release of the July Nonfarm Payrolls figures on Friday. Economists expect job creation of 80K and the Unemployment Rate to remain steady at around 4.2%.

Earlier, the July ADP Employment Change report was weaker than anticipated, dropping from 98K to 44K, below the forecast of 70K. The data indicated that education and health services increased their workforce by 36K, whereas leisure and hospitality decreased by 11K.

At the same time, business activity in the services sector remained strong in July, according to the Institute for Supply Management (ISM). The ISM Services PMI improved from 54 to 54.1, though it missed estimates by 0.4 points. The sub-components of employment and prices paid contracted and expanded, respectively. The Employment diffusion index dipped from 51.2 to 47.4, while the Prices Paid rose from 67.7 to 70.3, extending the trend to 110 months.

Fed Regional Bank Presidents remain hawkish amid a split FOMC

Minneapolis Federal Reserve (Fed) President Neel Kashkari stated that it is now appropriate to start gradually raising rates, emphasising moderate increases rather than dramatic hikes. Meanwhile, Jeffrey Schmid of the Kansas City Fed indicated that a strict monetary policy is necessary to address inflation considered "too high."

The de-escalation of the Gulf War is a tailwind for the non-yielding metal. Although crude prices are edging lower and easing inflationary pressures, investors remain skeptical of a positive outcome, as they expect a 25-basis-point rate hike by the Federal Reserve at the September meeting, according to Prime Terminal.

A report by N12, citing American officials, commented that the signing of an agreement to reopen the Strait of Hormuz would be possible as early as Wednesday.

XAU/USD technical outlook: Gold clears the latest cycle high, as market structure shifts neutral

Gold price has shifted to a neutral stance after the yellow metal surpassed the 50-day Simple Moving Average (SMA) at $4,161, opening the door for further gains. Momentum has shifted bullishly, as indicated by the Relative Strength Index (RSI), meaning that in the near term, the path of least resistance is upward.

XAU/USD’s first resistance is the $4,300 mark. Above lies the June 17 cycle high of $4,382, ahead of reaching the 100-day SMA at $4,499 near the psychological $4,500 mark.

On the flip side, the first support is the July 6 high, which turned into support at $4,202. A breach of the latter will expose the 50-day SMA, followed by the $4,100 mark. Beneath is the August 3 daily low of $4,019. Breaking that level could lead to a decline to $4,000.

• WTI stays near a three-week low as traders await confirmation that shipping through the Strait of Hormuz will resume.
• EIA data show an unexpected build in US crude inventories.
• The technical outlook stays bearish below the major daily moving averages, with the $67.00-$70.00 zone offering support.

West Texas Intermediate (WTI) Crude Oil remains under pressure on Wednesday but struggles to attract fresh selling as traders await confirmation that commercial shipping through the Strait of Hormuz will resume. At the time of writing, WTI trades around $74 per barrel, hovering near three-week lows.

Iran and Oman have reached an understanding on the geographic coordinates of a proposed shipping route through the waterway. Iran’s Foreign Ministry said a joint statement is in the final stages of review and drafting, provided “third parties” do not interfere.

However, an informed source told Fars News that an agreement between Iran and Oman would not automatically reopen the Strait. Separate arrangements would still be required, including the fulfilment of US commitments.

Until a final agreement is reached and shipping resumes, a geopolitical risk premium is likely to remain embedded in Oil prices, limiting the scope for a deeper decline.

Meanwhile, data from the US Energy Information Administration (EIA) showed that Crude Oil inventories unexpectedly rose by 2.479 million barrels, compared with expectations for a 1.5 million-barrel decline. Stocks had fallen by 7.167 million barrels in the previous week.

Technical analysis

On the daily chart, the near-term bias remains bearish as the price holds well below the 21-day, 50-day and 100-day Simple Moving Averages (SMAs).

Momentum indicators reinforce the corrective tone, with the Relative Strength Index (RSI) lingering below the neutral 50 mark around 42 and Moving Average Convergence Divergence (MACD) staying below the zero line with a negative reading, hinting that sellers still retain control.

On the topside, initial resistance is seen at the 50-day SMA near $79.58, followed closely by the 21-day SMA at $80.27, forming a nearby supply zone that could cap any extension of the recovery, with the 100-day SMA higher up at $87.43 acting as a more distant barrier.

On the downside, the $67.00-$70.00 zone offers immediate support. A decisive break below this area could open the door to a deeper decline.

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

• The Swiss Franc gains against the US Dollar after softer US employment and services data.
• Lower Oil prices ease inflation concerns and prompt traders to trim bets on a September Fed rate hike.
• Traders await Friday’s US Nonfarm Payrolls report for fresh monetary policy clues.

The Swiss Franc (CHF) strengthens against the US Dollar (USD) on Wednesday as weaker-than-expected US economic data pressures the Greenback, while traders closely follow efforts to reopen the Strait of Hormuz. At the time of writing, USD/CHF trades around 0.8078, down nearly 0.18% on the day.

US ADP Employment Change rose by 44K in July, missing expectations of 70K and slowing from 98K in June. Meanwhile, the ISM Services Purchasing Managers Index (PMI) edged up to 54.1 from 54 but fell short of the 54.5 market forecast.

Oil prices stay under pressure as hopes build that commercial shipping through the Strait of Hormuz could resume soon. Iran and Oman have reached an understanding on the geographic coordinates of a proposed shipping route through the waterway. Iran’s Foreign Ministry said a joint statement is in the final stages of review and drafting, provided “third parties” do not interfere.

Lower energy-driven inflation risks and weaker US labor market data have reduced expectations that the Federal Reserve (Fed) will raise interest rates this year. According to the CME FedWatch Tool, markets now price in around a 56% chance of a September rate hike, down from 67% a day earlier. Traders now turn their attention to Friday’s Nonfarm Payrolls (NFP) report for further clues about the Fed’s next policy move.

However, an informed source told Fars News that an agreement between Iran and Oman would not automatically reopen the Strait. Separate arrangements would still be required, including the fulfillment of US commitments. This keeps uncertainty alive and may discourage traders from placing aggressive directional bets until a final agreement is reached.

On the Swiss side, inflation remains near the lower end of the Swiss National Bank’s (SNB) 0%-2% price stability range. Data released on Monday showed that the Consumer Price Index (CPI) rose 0.4% YoY in July, easing from 0.5% previously. The subdued inflation backdrop reinforces expectations that the SNB will keep its policy rate at zero.

• DJIA trades near 54,500 at a record, roughly 1,400 points above the July high.
• Private payrolls added 44K in July against 70K expected, down from 98K.
• Draft Hormuz terms carry Iranian transit fees of 5% to 7% of cargo value.

The Dow Jones Industrial Average (DJIA) trades near 54,500 on Wednesday, 0.76% higher and at a fresh record, roughly 1,400 points above the high it set in early July. The bid rests on the Strait of Hormuz reopening within days, after Washington called off a fresh round of strikes and pointed at talks. The draft terms of that reopening, reported during the same session, would route inbound traffic through Iranian waters and attach a fee to cargo that has never paid one.

A reopening with a price attached

The negotiation runs between Tehran and Muscat rather than Tehran and Washington, and the text on the table sets up a temporary 60-day arrangement in which ships entering the Gulf transit a northern lane inside Iranian territorial waters while outbound traffic runs south through Omani waters, coordinated with Iran. Tehran is seeking a transit fee of 5% to 7% of cargo value. Muscat has floated something nearer 3%, and Washington wants no fee at all.

Before the war, the Strait was open to all shipping at no charge, so the reopening now being bought as relief would convert the most important chokepoint on the map into a metered one, run by the party that shut it. Regional officials pushed back in wire reporting on the claim that agreement is close, saying the definition of control and the fee mechanism are both open. Equities looked through five months of a shut Strait as though the closure cost nothing, and are paying a record for the reopening.

The concession reads better alongside the supply position. Commanders advised in July that the campaign was running short of munitions, and wire reporting now has the US Army down to the last of its long-range precision missiles. A pause sourced to magazine depth was already an inventory problem rather than an agreement, and these terms are what that becomes once the counterparty prices it.

Hiring cracked and prices did not

Private payrolls added 44K in July against a 70K consensus, from 98K, and the Institute for Supply Management (ISM) services survey said the same thing from the other side. The headline Purchasing Managers Index (PMI) held expansion at 54.1 against 54.5 expected, from 54, and new orders strengthened to 57.2 from 55.1. The employment index fell to 47.4 from 51.2, into contraction and the weakest reading since March.

Prices went the other way inside the same release, with the ISM prices paid index rising to 70.3 from 67.7 and its twelve-month average reaching the highest since April 2023. Demand firming while hiring contracts and input costs accelerate is the whole services economy in one survey, and it is not the survey that pairs with an all-time high.

A soft labour print usually buys a cut, and this strip has none to give, with the 30 July capture pricing zero cut probability at every 2026 meeting and at least one hike at 59.2% by 16 September. The calendar scored two Fed speeches before the New York open, one hawkish and one neutral, and the neutral score belonged to a July dissenter who spent the session arguing that policy is not restrictive and that the time has come to start moving up.

A record built out of thirty share prices

The averages stopped agreeing as the session matured. All three were higher at their peaks, the blue-chip index by more than 1%, only for the S&P 500 to flatten and the Nasdaq Composite to turn lower while the Dow Jones Industrial Average held three quarters of a percent.

Inside the index, the artificial intelligence (AI) trade netted out, with Alphabet (GOOGL) falling significantly after confirming a reshuffle of its AI divisions and the departure of its chief scientist after 27 years, against Nvidia (NVDA) rising significantly after SpaceX (SPCX) said it would build its AI computing infrastructure exclusively on Nvidia processors. Both are components.

The two heaviest declines of the day sat outside the index, with Advanced Micro Devices (AMD) dropping significantly on adjusted earnings that only edged estimates and SpaceX dropping significantly on its first quarterly report since June's listing, in which second-quarter capital expenditure jumped sixfold to 18.4 billion Dollars. The price-weighted structure blamed for this index lagging the technology trade sorted the day's largest losers out and kept the winner in.

Friday is the number that matters

Nonfarm payrolls land Friday at 12:30 GMT with an 80K consensus against 57K prior, the unemployment rate at 4.2% from 4.2%, average hourly earnings at 0.3% MoM and 3.5% YoY, participation last at 61.5% and the broader underemployment measure last at 7.9%. Thursday brings initial jobless claims at 202K from 197K, with preliminary second-quarter productivity and unit labour costs alongside them.

Given private payrolls at 44K and a services employment index in contraction, an 80K consensus is the number to fade, and the earnings line matters more because it feeds the cost story the services survey has just printed. There is no meeting this month, so two payroll reports arrive before the September decision.

Levels

Resistance: Nothing sits above the tape, so the session high just short of 54,750 is the first mark, with 55,000 the next round objective above it.

Support: The session low near 54,200 is the first shelf, with the 54,000 handle beneath it and the early-July record near 53,300 the reclaim line under that. The 50-day Exponential Moving Average (EMA) near 51,900 sits more than 2,500 points below spot and is not in play this week.

Bias: Bullish above 54,000. The daily Stochastic Relative Strength Index (Stoch RSI) near 37 leaves an index at an all-time high with its momentum oscillator in the lower half of its range, which reads as unspent rather than exhausted after the July flush. Invalidation on a daily close beneath 54,000, and the risk to this call is a headline rather than a level, because the same peace trade has been sold back four times since April.

Dow Jones daily chart

• USD/JPY trades around 157.65 on Wednesday, little changed on the day despite broad US Dollar weakness.
• US private employment disappoints while US services sector activity slows slightly.
• Markets are monitoring progress in US-Iran negotiations, while the Japanese Yen remains supported by Bank of Japan expectations.

USD/JPY trades around 157.65 on Wednesday at the time of writing, little changed on the day, as weakness in the US Dollar (USD) is offset by investors' cautious stance toward the Japanese Yen (JPY).

The US Dollar remains under pressure after a series of weaker-than-expected US economic releases. The Automatic Data Processing (ADP) report showed that the US private sector added 44K jobs in July, below the market consensus of 70K and following a gain of 98K in June. Meanwhile, the Institute for Supply Management (ISM) reported that its Services Purchasing Managers Index (PMI) came in at 54.1 in July, slightly below expectations of 54.5. Although the services sector continues to signal expansion, the Employment Index fell to 47.4 from 51.2 previously, highlighting softer hiring conditions.

The Greenback is also weighed down by reports that the US Treasury Department has lifted selected Iran-related sanctions, removing restrictions on two aircraft and three airlines. The move is viewed as a sign of progress in negotiations between the United States (US) and Iran. Separate reports also suggest that a draft agreement between Oman and Iran has been finalized and is now awaiting approval from Tehran, improving overall market sentiment.

On the Japanese side, investors continue to assess the Minutes of the Bank of Japan (BoJ) June policy meeting. Although the document predates the latest monetary policy developments, it shows that policymakers were already debating the need for further rate hikes in response to inflation risks. BoJ Governor Kazuo Ueda has also repeatedly stated that the central bank is prepared to continue normalizing monetary policy if economic conditions allow, providing underlying support for the Japanese Yen.

At the same time, a Reuters poll showed that the vast majority of foreign exchange strategists believe that further intervention by the Japanese authorities alone would not be enough to sustainably support the JPY. This reinforces the view that the currency's longer-term direction will depend primarily on the Bank of Japan's monetary policy outlook and the interest rate differential with the United States.

Japanese Yen support builds as BoJ hike odds rise and US intervention reinforces USD/JPY ceiling

Strategists at Brown Brothers Harriman note that “USD/JPY is holding just under its 200-day moving average (158.04)” as stronger wage data in Japan bolster expectations for further BoJ tightening. They point out that “faster Japan wage growth lifted BoJ rate hike bets,” with June total nominal wage growth matching consensus at “3.4% y/y vs. 3.2% in May,” while the less volatile scheduled pay for full-time workers “quickened more than expected to a four-month high at 2.9% y/y (consensus: 2.7%) vs. 2.5% in May.”

In rates pricing, BBH highlights that “implied odds of a 25 bps BoJ rate hike to 1.25% at the next September 18 meeting rose to 60% from a low of nearly 40% ahead of the wage data.” They acknowledge that “underlying inflation in Japan remains subdued,” but argue that “risks are skewed towards further hawkish BoJ repricing in favor of JPY,” noting that “the policy rate is near the lower end of the bank’s neutral range (1.10%-2.50%) while the economy is operating above potential.”

On the policy front, BBH also flags the signal from recent official action. They report that “yesterday, US Treasury Secretary Scott Bessent implicitly confirmed that as part of Friday’s joint intervention with Japan, the US bought yen for euros, rather than buying yen and selling dollars.” According to BBH, Bessent “said he assured Europeans the intervention was just a reallocation of the US reserves, adding it ‘seems to me the euro is much closer to an equilibrium price’.”

While BBH concedes that “these FX holdings are too small to be a game changer for the yen given daily JPY turnover of $1.61 trillion,” they stress that “the policy signal is powerful.” In their view, this stance “significantly raises the cost of fighting a stronger yen and puts a much firmer ceiling on USD/JPY.”

• The US Dollar Index eases 0.15% to 99.71 after private hiring undershoots expectations.
• ADP Employment Change rose just 44K in July, less than half the 70K forecast and down from 98K.
• The ISM Services PMI missed consensus at 54.1, with the Employment Index sliding into contraction at 47.4.

The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against a basket of six major currencies, trades modestly lower near 99.80 on Wednesday, shedding around 0.15% after a stagflationary batch of United States (US) data. The Greenback holds below the 100.00 threshold for a fourth consecutive session, although losses remain contained as firmer price components complicate the dovish read.

The ADP Employment Change was the day's clearest disappointment. Private payrolls expanded by just 44K in July, less than half the 70K consensus and a sharp deceleration from the 98K recorded in June. The figure raises the stakes for Friday's Nonfarm Payrolls report and suggests hiring momentum is fading more quickly than the resilient activity surveys had implied.

The July ISM Services Purchasing Managers Index (PMI) reinforced that message beneath the surface. The headline index came in at 54.1, below the 54.5 forecast but still above June's 54, keeping the sector in expansion. The Employment Index, however, collapsed to 47.4 from 51.2, dropping into contraction territory and corroborating the weak ADP print. New Orders offered a counterweight, jumping to 57.2 from 55.1 and pointing to solid underlying demand.

The ISM Services Prices Paid index climbed to 70.3 from 67.7, moving further above the levels the Federal Reserve (Fed) should consider comfortable and signaling that cost pressure in the services sector continues to build even as the labor market cools. That combination limits the scope for markets to price additional easing and helps explain why the DXY's decline has been shallow relative to the size of the employment miss.

Attention now turns to Friday's Nonfarm Payrolls report, which will determine whether the ADP shortfall reflects a genuine turn in labor demand or the survey's well-documented tendency to diverge from the official count. The Fed's Cook is also scheduled to speak, with markets looking for an assessment of how policymakers weigh softening employment against firming services prices.

Technical Analysis:

On the 4-hour chart, US Dollar Index Spot trades at 99.71. The near-term bias remains bearish as price holds below both the 20-period and 100-period Simple Moving Averages (SMAs), which now act as dynamic resistance around 99.89 and 100.78, respectively. A cluster of horizontal barriers between 99.78 and 100.06 reinforces the topside cap, while the Relative Strength Index (RSI) at 32.37 hovers near oversold territory, suggesting persistent but somewhat stretched downside pressure.

On the topside, initial resistance is located at 99.78, followed by 99.90 and 99.95, with a stronger hurdle emerging near 100.06. Above these, the 100-period SMA at 100.78 marks a more significant medium-term ceiling that would need to be reclaimed to ease the prevailing bearish tone.

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

• GBP/USD advances as ADP miss pressures the US Dollar for the second day.
• ISM Services expands, but employment weakness raises labor-market concerns.
• Fed officials remain hawkish as traders await Friday’s NFP.

The Pound Sterling (GBP) advances some 0.12% on Wednesday as the US Dollar (USD) registers back-to-back days of losses, after US jobs data was softer than expected, even though business activity in the services sector continues to expand solidly. The GBP/USD pair trades at 1.3467.

GBP/USD gains as weak US hiring data offsets resilient services activity

The ADP Employment Change report in July was softer than expected, with the print easing from 98K to 44K, below forecasts of 70K. The data showed that education and health services added 36K people to the workforce, while leisure and hospitality cut 11K, mostly due to the recently finished World Cup.

Aside from this, the ISM Services PMI in July remained in expansion territory, up from 54 to 54.1, below forecasts of 54.5. The sub-components of employment and prices paid contracted and expanded, respectively. The Employment diffusion index dipped from 51.2 to 47.4, while the Prices Paid rose from 67.7 to 70.3, extending the trend to 110 months.

Now eyes turn to the Nonfarm Payrolls figures on Friday. Market participants estimate that the US economy created 80K jobs in July, up from June's 57K. The Unemployment Rate is expected at 4.2%, unchanged from the previous month.

Federal Reserve officials remain split

Minneapolis Federal Reserve (Fed) President Neel Kashkari said that now is the time to begin slowly increasing rates, as he advocates not dramatic rate hikes. At the same time, Jeffrey Schmid of the Kansas City Fed stated that tight monetary policy is needed to tackle “too high” inflation.

Aside from this, geopolitics are playing a critical role. The de-escalation of the conflict between the US and Iran and the resumption of talks are a tailwind for risk-sensitive currencies like the Pound Sterling.

In the UK, a report from The Times revealed that officials at the UK Treasury are looking for ways to raise billions of GBP, using flexibility, within the government´s fiscal rules.

UK data released by S&P Global showed that the services sector expanded last month, after contracting in June.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3463. The pair maintains a constructive bullish bias as it holds above the clustered simple moving averages (SMA) around 1.3364 and has pushed beyond the prior descending trend-line break near 1.3443, which now acts as nearby support. Daily Relative Strength Index (RSI) at about 57 stays in positive territory without yet signaling overbought conditions, suggesting room for further upside while the broader structure remains supported above the 1.33 area.

On the topside, initial resistance emerges at the descending trend line stemming from 1.3653, whose break level sits near 1.3525, ahead of the higher former support trend-line break around 1.3551. On the downside, immediate support is seen at the reclaimed downtrend break near 1.3443, followed by the SMA cluster around 1.3364, with a deeper structural floor coming in at the earlier rising trend-line break close to 1.3312; a daily close below this latter zone would significantly undermine the current bullish tone.

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

• Silver climbs more than 4% on softer US jobs data and lower inflation concerns.
• The daily chart shows improving momentum as XAG/USD challenges the 50-day SMA at $62.65.
• Weekly indicators remain bearish as XAG/USD stays below key moving averages.

Silver (XAG/USD) jumps more than 4% on Wednesday as weaker-than-expected US ADP employment data and easing energy-driven inflation prompt traders to scale back expectations for Federal Reserve (Fed) rate hikes. At the time of writing, XAG/USD trades around $62.30, near its highest level in a month.

From a technical perspective, the latest leg higher has improved the near-term outlook. However, the broader trend remains cautious as Silver approaches key resistance levels.

On the daily chart, XAG/USD has reclaimed the 21-day Simple Moving Average (SMA) at $58.31 and is now challenging the 50-day SMA at $62.65.

The Relative Strength Index (RSI) has risen to 56, while the Moving Average Convergence Divergence (MACD) stays above zero. Both indicators suggest that bullish momentum is building.

Immediate resistance is located at the 50-day SMA near $62.65. A daily close above this level would open the way toward the $65.00 barrier, followed by the 100-day SMA at $69.22. On the downside, the 21-day SMA at $58.31 offers initial support, ahead of the horizontal floor near $55.50.

Weekly chart

On the weekly chart, XAG/USD trades below the 50-week SMA at $65.94 and the 21-week SMA at $68.64, keeping the broader outlook bearish. The weekly RSI stands at 45, while the MACD remains below zero, suggesting that the latest advance has yet to develop into a broader bullish reversal.

On the upside, the $65.00 mark offers initial resistance, followed by the 50-week SMA at $65.94. A sustained break above this zone would bring the 21-week SMA at $68.64 into focus. On the downside, support is located near $55.50, followed by the 100-week SMA at $49.51.

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

• EUR/JPY consolidates around 181.94 after recovering roughly 200 pips from the intervention-driven lows.
• Eurozone services activity surprised to the upside in July with Spain's HCOB Services PMI jumping to 58.3.
• Eurozone Retail Sales are forecast to slow to 1% YoY in June from 1.6%, tempering the improved sentiment.

EUR/JPY trades broadly flat near 181.94 on Wednesday, up a marginal 0.01% as the cross pauses after a steady four-session recovery. The pair has clawed back a significant portion of the collapse triggered by last week's Japanese intervention and the Bank of Japan's (BoJ) hawkish hold, with buyers gradually restoring a series of higher lows.

The Euro (EUR) drew support from a stronger-than-expected batch of final services surveys. Spain's HCOB Services Purchasing Managers Index (PMI) surged to 58.3 in July, comfortably above the 55.3 preliminary estimate and well up from the previous 54.2. Germany's Services PMI was revised higher to 49.8 from 49.6, although it remains below the 50 threshold that separates expansion from contraction, while the German Composite PMI gauge improved slightly to 51.3. The Eurozone Composite PMI rose modestly to 52 from the 51.9 flash reading, pointing to a gradual private-sector recovery led by the periphery.

On the Japanese side, the BoJ released the Minutes of its June policy meeting overnight. The document predates both the suspected intervention and last week's 8–1 vote to hold rates at 1%, limiting its capacity to move markets, but investors combed through the discussion for early evidence of the hawkish shift that has since taken hold within the board. Policymakers were debating price risks that would likely require further rate hikes even as they raised borrowing costs to a 31-year high at that same meeting. The board voted 7-1 to lift the policy rate by 0.25 percentage points to around 1%, with Asada Toichiro dissenting on the grounds that downside risks to production and employment outweighed upside price risks.

Governor Kazuo Ueda has repeatedly signaled that the central bank is prepared to accelerate the pace of normalization, and the threat of renewed official Yen buying continues to discourage aggressive positioning against the Japanese currency.

Attention now turns to Eurozone Retail Sales. Consumer spending is expected to rise just 0.1% MoM in June, down from 0.2%, with the annual pace slowing to 1% from 1.6%. A soft print would sit awkwardly alongside the upbeat services surveys and suggest that improved business sentiment has yet to translate into household demand, potentially capping the Euro's advance. A beat, by contrast, would strengthen the case that the recovery is gaining traction and give the cross room to extend toward the upper end of its range.

Short-term technical analysis:

On the 4-hour chart, EUR/JPY trades at 181.94. The cross is consolidating after its recent decline, holding just above the 20-period Simple Moving Average (SMA) at 181.70 while remaining well below the 100-period SMA at 185.09, which keeps the broader tone capped. Nearby horizontal resistance at 182.17 limits recovery attempts, and the Relative Strength Index (RSI) around 42 suggests only modest bearish momentum rather than a strongly directional move.

On the topside, initial resistance emerges at 182.17, where a break would be needed to open space toward the more distant 100-period SMA at 185.09. On the downside, immediate support is clustered around 181.75 and the 20-period SMA at 181.70; a sustained drop below this area would expose the next horizontal floors at 181.21 and 180.25, where buyers could attempt to stabilize the cross again.

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

• AUD/USD advances as the US Dollar weakens following softer-than-expected US economic data.
• The US Dollar weakens following softer-than-expected US economic data and signs of easing tensions between Washington and Tehran.
• Markets remain focused on the Reserve Bank of Australia's policy meeting scheduled for August 11.

AUD/USD trades around 0.7060 on Wednesday at the time of writing, up 0.20% on the day. The pair benefits from broad-based US Dollar (USD) weakness as investors react to softer-than-expected US economic data and improved risk sentiment driven by the latest geopolitical developments.

The US Dollar remains under pressure, with the US Dollar Index (DXY) down 0.16% on the day, trading around 99.70 at the time of press. Market participants reacted to weaker-than-expected labor market data after the ADP Employment Change report showed that private-sector employment increased by 44K jobs in July, below the market forecast of 70K and following a 98K increase in June. Meanwhile, the Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) came in at 54.1 in July, slightly below expectations of 54.5. Although the services sector continues to signal expansion, the Employment Index fell to 47.4, highlighting softer hiring conditions.

The Greenback is also weighed down by reports that the United States (US) has lifted selected Iran-related sanctions, removing restrictions on two aircraft and three airlines linked to the Islamic Revolutionary Guard Corps (IRGC). The move is seen as a potential de-escalatory step as negotiations involving the US, Oman and Iran continue to advance. Separate reports also suggest that a draft agreement between Iran and Oman has already been finalized and is awaiting final approval from Tehran.

On the Australian Dollar (AUD) side, investors remain focused on expectations surrounding the Reserve Bank of Australia (RBA) monetary policy decision on August 11, which is expected to remain the main driver of the Aussie in the near term. The Australian Dollar's upside may remain capped as markets have significantly scaled back expectations of another Reserve Bank of Australia (RBA) rate hike. According to the ASX RBA Rate Tracker, the chance of a rate increase has fallen from 43% on July 24 to just 3% currently.

Aussie edges higher as AUD/USD extends recent gains

Analysts at Commerzbank highlight that AUD/USD continued to grind higher, with the pair having "rose 50 pips to 0.7050," underscoring the Australian Dollar’s constructive tone against the USD in recent trading.

Strategists at Scotiabank add that, even as “uncertainty persists about the status of US/Iran talks, keeping oil prices firm,” the “broader risk mood looks positive, with global stocks mostly higher and high beta FX generally firm.” In this environment, Scotiabank notes that the AUD gains "support of firmer domestic yields.”