Forex News

• Silver price faces pressure in extending the opening advance above $58.70.
• Oil prices decline significantly on US-Iran ceasefire 2.0.
• The Fed is expected to hike interest rates in the September policy meeting.

Silver price (XAG/USD) opens strongly due to a sharp decline in oil prices, but struggles to extend gains beyond $58.68 during the day. At press time, the Silver price is up 1% to near $58.20.

The white metal has started the week on a firm footing as lower oil prices due to the announcement of a ceasefire 2.0 between the United States (US) and Iran have anchored global inflation expectations.

Over the weekend, US President Donald Trump announced, through a post on Truth Social, that planned attacks on Iran have been suspended as Tehran has agreed to the nuclear deal and the reopening of the Strait of Hormuz, a vital passage to almost 20% of global energy supply.

The Silver price has underperformed significantly in the past few months as oil prices fuelled global inflation projections, a scenario that forces central banks to tighten monetary conditions. Such a case bodes poorly for non-yielding assets, like Silver.

It is highly likely that the hawkish Federal Reserve (Fed) will restrict Silver’s upside. Analysts at Deutsche Bank expect two further 25bps increases this year. According to the CME FedWatch tool, the odds of the Fed hiking interest rates next month are 64.5%.

Silver technical analysis

Bias: XAG/USD trades higher at around $58.20, but is keeping a bearish near-term tone as it holds beneath the 20-day Exponential Moving Average (EMA) at $58.79.

Momentum: The price's failure to reclaim this short-term EMA suggests rallies remain capped for now, while the Relative Strength Index (RSI) at 46 stays in neutral territory on the daily chart, hinting at modest downside pressure rather than a decisive trend move.

Resistance: On the topside, initial resistance is located at the 20-day EMA at $58.79, and a sustained break above this barrier would be needed to ease the current bearish bias and open the way for $60.00.

Support: Looking down, the July 17 low at $54.77 is the key support zone.

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

Commerzbank strategists report that Brent Oil opened over 7% lower under USD84 into the Asian session after President Trump said the United States (US) would hold off on new strikes against Iran. Despite OPEC+ approving a modest output increase for September, the Strait of Hormuz remains effectively closed, keeping Persian Gulf export disruptions and inflation concerns in focus.

Trump decision hits Brent sharply

"The dominant story heading into the Asian open is that Brent oil prices have opened lower by over 7% to under USD84. This followed reports over the weekend that President Donald Trump said the US would hold off on new strikes against Iran. Iran and other Gulf nations indicated they are working toward a deal."

"President Trump posted on social media that he had agreed to cancel the attack “subject to being able to rapidly make a DEAL”, adding “Get to work, everybody, and get it DONE”. Saudi Arabian Crown Prince Mohammed bin Salman had reportedly urged Trump to refrain from further military action."

"On the energy front, OPEC+ approved a further increase of 188k barrels a day to collective output targets for September on Sunday, completing the theoretical unwinding of the 1.65mn barrels a day in voluntary cuts made in April 2023."

"The Strait of Hormuz remains effectively closed, continuing to disrupt Persian Gulf oil exports and stoking inflation concerns across Asia and Africa."

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

• July Swiss CPI rose just 0.4% year-on-year, marking the slowest price growth since March.
• Switzerland's SVME Manufacturing PMI fell to 53.2 in July, hitting a six-month low.
• USD upside remains capped by joint US-Japan intervention and easing Middle East geopolitical tension.

USD/CHF extends its gains for the second successive day, trading around 0.8090 during the European hours on Monday. The pair remains on a stronger footing as the Swiss Franc (CHF) holds onto losses following the release of soft domestic inflation and manufacturing data.

In July, Swiss consumer prices rose by just 0.4% year-on-year, marking the slowest pace of growth since March and easing from a 0.5% gain in June. Annual core inflation, which excludes volatile items like unprocessed food and energy, held steady at 0.3%. On a monthly basis, consumer prices slipped by 0.1%, the first contraction in six months after a flat reading in June.

Franc outlook softens as Nomura sees Swiss inflation undershooting SNB

Strategists at Nomura highlight that “car fuel prices contributed to the slowdown in Swiss inflation in July,” reinforcing the recent disinflationary trend. Against this backdrop, they add that “we expect inflation in Q3 to print below the SNB’s forecast,” suggesting a softer fundamental environment for the Swiss Franc.

Compounding the Franc's weakness, Switzerland’s SVME Manufacturing PMI fell to 53.2 in July from 54.3 in June, missing market expectations of 55.0 and recording its lowest level since February.

However, the upside for the USD/CHF pair may be constrained by broad-based weakness in the US Dollar (USD) following official confirmation of joint foreign exchange interventions by Japan and the United States. Japanese authorities confirmed coordinated yen-buying operations, with Bank of Japan data revealing expenditures reaching up to $58.97 billion. Tokyo signaled a readiness to intervene further if necessary, emphasizing ongoing, close communication with US counterparts.

Moreover, the Greenback faces challenges amid easing market risk aversion, driven by potential diplomatic progress between Washington and Tehran. Market sentiment brightened after US President Donald Trump announced a pause on planned military strikes. In a post on Truth Social, President Trump noted that Iran and regional partners had requested time to negotiate a deal aimed at fully reopening the Strait of Hormuz and addressing concerns over Iran's nuclear program.

US data in focus as markets weigh Fed reaction and credibility

Strategists at BNY Mellon argue that the coming week will "test whether markets can keep looking through policy uncertainty while demanding firmer evidence from data and earnings," with U.S. nonfarm payrolls singled out as "the main event." They note that "the Fed’s reaction function is harder to read," leaving "its credibility tied to incoming data" as investors assess how labor-market prints and corporate results shape expectations for the policy path.

• The Indian Rupee starts the week on a strong note against the US Dollar due to multiple tailwinds.
• US President Trump halts attacks on Iran as it agrees to the nuclear deal and the Hormuz reopening.
• Investors await the RBI’s policy, which will be announced on Wednesday.

The Indian Rupee (INR) trades firmly during the day against the US Dollar (USD) at the start of the week. The USD/INR extends its losing streak for the third trading day, is down 0.25% to near 95.15, the lowest level seen in over three weeks.

The Indian currency is strengthening as the announcement of a ceasefire between the United States (US) and Iran after renewed hostilities in the Middle East in July has pushed oil prices sharply lower.

In the opening trade, the MCX Crude Oil contract expiring on August 19 trades over 6% lower to near Rs. 7,600.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

US pauses Iran attacks

Over the weekend, US President Donald Trump announced that planned attacks on Iran have been suspended as the nation has agreed to the nuclear deal and the reopening of the Strait of Hormuz, a vital passage for almost 20% of the global energy supply.

“We have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to. This would include the Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat,” Trump wrote on Truth Social.

The renewed US-Iran peace hopes appear to have given a lifeline to Indian stock markets. At press time, the Nifty50 Index is up 0.7% at around 24,555.

RBI policy in focus

On the domestic front, the major event for the Indian currency this week will be the Reserve Bank of India’s (RBI) monetary policy announcement on Wednesday.

Economists at ING expect the Reserve Bank of India to leave the policy stance unchanged at its upcoming meeting, stating that “we expect the Reserve Bank of India to keep the repo rate unchanged at 5.25% on Wednesday.” They acknowledge that “headline inflation surprised to the upside in June, largely due to higher fuel prices,” but stress that “underlying price pressures remain contained.” In their view, “core inflation continues to run below the RBI's target, providing policymakers with sufficient room to keep policy rates unchanged while monitoring evolving risks to the inflation outlook.”

US Dollar drops despite firm Fed interest rate hike prospects

The US Dollar Index (DXY) continues last week’s underperformance, trading 0.1% lower at around 99.70 in the Asian session. The Greenback faces pressure even as traders are confident that the Federal Reserve (Fed) will deliver an interest rate hike at the September policy meeting.

According to the CME FedWatch tool, the odds of the Fed hiking interest rates next month are 67.7%.

This week, investors will focus on a slew of US economic data, especially the US Nonfarm Payrolls (NFP) data for July, which will be released on Friday. Later in the day, investors will focus on the US ISM Manufacturing PMI data for July. The Manufacturing PMI is expected to arrive at 54.0, up from 53.3 in June.

Technical Analysis: USD/INR sees more downside below 95.00

USD/INR trades lower at 95.15, keeping a bearish near-term tone as it holds below the 20-day exponential moving average (EMA) at 95.75. The EMA overhead suggests rallies remain capped for now, while the Relative Strength Index (RSI) at 42 stays below the neutral 50 line, hinting at lingering downside pressure rather than a decisive oversold condition.

On the topside, initial resistance is defined by the 20-day EMA clustered near 95.75, and a daily close above this barrier would be needed to ease the current bearish bias and open the way for a stronger recovery. On the downside, the July 7 low at 94.78 is the key support level, followed by the June 26 low at 94.15.

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

• Gold kicks off the new week on a positive note, though it lacks any follow-through buying.
• Falling oil prices ease inflation fears and temper Fed hike bets, supporting the commodity.
• A modest USD bounce from its lowest level since June 17 caps gains for the XAU/USD pair.

Gold (XAU/USD) extends its sideways consolidative price move through the first half of the European session and trades above the $4,050 level following a modest bullish gap on Monday. A goodish US Dollar (USD) recovery from its lowest level since June 17 is seen as a key factor capping the upside for the commodity. However, receding hopes for a US-Iran peace deal and receding US Federal Reserve (Fed) rate-hike expectations could cap a further USD appreciation. This, in turn, might hold back traders from placing aggressive bearish bets on the non-yielding yellow metal.

US President Donald Trump called off planned attacks on Iran over the weekend, claiming that Mideast allies have reached the parameters of a deal on Tehran's nuclear program and the full reopening of the Strait of Hormuz. Trump further told reporters that the US and Iran are set to resume negotiations Monday afternoon, fueling optimism over a diplomatic resolution to end the five-month-old war. Adding to this, the OPEC+ decision on Sunday to increase production in September triggered a steep decline in crude oil prices. This eases inflation fears and tempers bets for a more aggressive Fed policy tightening, which should keep a lid on any meaningful USD appreciation and support the Gold price.

Traders, however, seem hesitant to place fresh bearish bets around the USD and opt to wait for further developments around the Middle East crisis. Hence, the focus remains glued to incoming geopolitical headlines, which might continue to infuse volatility in financial markets and drive the USD demand. Apart from this, traders will take cues from important US macro data, scheduled at the start of a new month, for some meaningful impetus. A busy week kicks off with the release of the US ISM Manufacturing PMI later this Monday. The market attention, meanwhile, stays on the crucial US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday.

XAU/USD daily chart

Technical Analysis: Gold seems vulnerable within a familiar range below 200-day SMA

From a technical perspective, nothing seems to have changed much as the XAU/USD pair remains confined in a familiar range below the 200-day Simple Moving Average (SMA). Against the backdrop of the recent downfall, this might still be categorized as a bearish consolidation phase and suggests that the path of least resistance for the Gold price remains to the downside.

Meanwhile, the Moving Average Convergence Divergence (MACD) indicator (12, 26, close, 9) stays in positive territory with a reading near 11.6, hinting at tentative upside momentum. However, the Relative Strength Index (14) at 47.1 remains neutral and suggests only limited directional conviction. Hence, any further move up might struggle to find acceptance above $4,100.

The said handle is followed by the top boundary of the trading range, just ahead of the $4,200 mark, which, if cleared decisively, could lift Gold to the 200-day SMA near $4,490.33. Bulls would need to reclaim a technically significant barrier to alleviate the prevailing bearish tone and reopen the path toward higher highs.

On the downside, immediate support is inferred from recent swing lows around the $3,976–$4,000 area, where buyers previously emerged. A convincing break below would be seen as a fresh trigger for bearish traders and turn the XAU/USD pair vulnerable to further declines.

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

Rabobank's Senior FX Strategist Jane Foley discusses recent joint intervention by Japan’s Ministry of Finance (MoF) and the United States (US) Treasury to support the Japanese Yen (JPY) and its implications for USD/JPY. Foley highlights use of the Federal Reserve’s (Fed) Foreign and International Monetary Authorities (FIMA) Repo Facility, questions over Bank of Japan (BoJ) rate hikes, and suggests the 200-day sma near USD/JPY158 may act as resistance, limiting further US Dollar (USD) gains.

Joint support and policy uncertainty

"The joint intervention between the MoF and the US Treasury that has played out in recent days is more like the action last seen during the Clinton Administration in 1998 when both authorities set out to support the JPY. One interesting question regarding the Treasury’s decision to act in recent days is ‘what is in it’ for the US? Another key question is whether the JPY can sustain its better tone."

"The use of the FIMA by the MoF in its support of the JPY backed up by action from the Fed may have been a useful short-term solution for both the Japanese and US authorities. That said, FX intervention will only be successful in turning a currency pair if the fundamentals are also pushing in the same direction. Whether this is the case has yet to be established."

"He stated that underlying inflation was at risk of rising above the BoJ’s 2% target and suggested that there was the possibility of speeding up the pace of hikes. That said, perhaps understandably, there was no clear commitment to do so, and this will have disappointed JPY bulls. Meanwhile, the market remains wary about the weight of government debt."

"While we are optimistic regarding the changes to Japan’s economy in recent years, the market will likely have to become more confident that the BoJ can hasten the pace of rate hikes and see more reassurances on fiscal prudence for the JPY to recover significant ground. While more economic data and news of Takaichi’s fiscal credibility is awaited, for now fear of further intervention and a weaker USD will likely be sufficient to prevent USD/JPY from pushing much higher. The 200-day sma close to USD/JPY158 is likely to act as resistance."

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

• AUD/JPY dives to its lowest level since March, though it finds some support near the 200-day SMA.
• The oversold RSI on the daily chart helps spot prices defend a technically significant SMA support.
• The broader setup favors bears and suggests that the path of least resistance is to the downside.

The AUD/JPY cross attracts heavy follow-through selling and touches its lowest level since late March, around the 109.40-109.35 region at the start of a new week. Spot prices, however, defend a technically significant 200-day Simple Moving Average (SMA) and trade around the 110.00 psychological mark during the first half of the European session, still down nearly 0.50% for the day.

The Japanese Yen (JPY) continues with its relative outperformance on the back of a joint US-Japan FX intervention on Friday and hints of further action. Furthermore, the Bank of Japan's (BoJ) readiness to continue pushing up borrowing costs lends additional support to the JPY, which, in turn, is seen as a key factor weighing on the AUD/JPY cross. Apart from this, diminishing odds of an immediate interest rate hike by the Reserve Bank of Australia (RBA) undermine the Australian Dollar (AUD) and suggest that the path of least resistance for the currency pair is to the downside.

From a technical perspective, an intraday failure near the 111.25-111.15 region reaffirms Friday's breakdown through a nearly four-month-old trading range and validates the near-term negative outlook for the AUD/JPY cross. Adding to this, the Moving Average Convergence Divergence (MACD) has turned deeper into negative ground, hinting at lingering downside momentum. However, the daily Relative Strength Index (14) has slipped to oversold territory near 27, making it prudent to wait for a break below the 200-day SMA at 109.25 before positioning for further losses.

A clear break below this floor would likely expose the AUD/JPY cross to a more decisive bearish phase. On the flip side, any attempted recovery might continue to face stiff resistance and remain capped near the 111.15-111.25 region, which, if cleared, might trigger a short-covering move. The broadly bearish technical setup, however, would warrant caution before confirming that the recent corrective decline from the vicinity of the 115.00 psychological mark has run its course and that spot prices have formed a near-term bottom.

AUD/JPY daily chart

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

• The Euro holds ground despite a 1.1% drop in German Retail Sales, boosted by stronger factory data.
• Eurozone and German PMIs rose to multi-month highs in July, showing improved manufacturing activity.
• Declining crude oil prices weigh on CAD as geopolitical tensions ease following US-Iran diplomatic talks.

EUR/CAD edges lower after opening with a bullish gap, remaining in the positive territory and trading around 1.6180 during the European hours on Monday. The currency cross is holding its ground as the Euro (EUR) remains resilient despite mixed economic data from Germany.

Germany’s consumer spending took an unexpected hit in June, with Retail Sales falling 1.1% month-on-month—steeper than the forecast 0.5% decline, following a revised 1.2% rise in May. On an annualized basis, German retail sales slipped 0.2%, dropping sharply from the revised 2.1% growth seen in the previous month.

Despite the weak retail figures, the Euro (EUR) found solid backing from upbeat industrial data. The S&P Global Germany Manufacturing PMI reached a four-month high of 52.2 in July, up from 50.3 in June, indicating a clear rebound in factory performance. This positive trend extended across the broader region, as the S&P Global Eurozone Manufacturing PMI edged up to 51.9 from 51.4 in June, marking the strongest overall improvement in factory operating conditions since April.

European equities gain as Brent retreat eases geopolitical nerves

Analysts at Deutsche Bank highlight that European equities outperformed as energy markets softened, noting that "European equities outperformed as Brent crude fell by -6.88% to $90.12/bbl in the absence of new material escalation between the US and Iran." They suggest that the sharp pullback in Brent helped create a more supportive backdrop for major European indices by tempering immediate geopolitical and commodity-related concerns.

Kocher flags geopolitical risks but keeps Euro policy data-dependent

FXS Speechtracker scores the speech at 5.6/10, below Kocher’s historic 6.3/10 average, pointing to a mildly softer tone versus past appearances. The emphasis on how fast geopolitical developments can alter energy prices and the inflation outlook highlights upside inflation risks, but the lack of explicit tightening language tempers the hawkish impact for the Euro.

Kocher’s pledge that the ECB Governing Council will decide in autumn based on incoming data to bring Euro area inflation back to 2% on a sustainable basis reinforces a cautious, data-dependent stance. Overall, the remarks lean slightly hawkish on inflation vigilance but fall short of a strong policy push, suggesting limited immediate support for the Euro unless data re-accelerate.

Meanwhile, the commodity-linked Canadian Dollar (CAD) faces headwind from falling crude oil prices, further supporting the EUR/CAD cross. Oil markets weakened following news that US President Donald Trump announced a pause on planned military strikes against Iran, significantly easing supply risk concerns. In a post on Truth Social, President Trump noted that Iran and its regional partners requested time to negotiate a deal focused on resolving nuclear concerns and fully reopening the Strait of Hormuz.

Nomura strategists note that Swiss Consumer Price Index (CPI) slowed to 0.4% year-on-year in July, helped by weaker car fuel prices and easing imported energy costs. They expect Swiss inflation in Q3 to average 0.5% year-on-year, below the Swiss National Bank’s (SNB) 0.7% forecast, implying a softer backdrop for the Swiss Franc (CHF).

Q3 inflation seen below SNB path

"Swiss CPI inflation slowed to 0.4% y-o-y in July (Nomura: 0.5%, consensus: 0.4%) from 0.5% y-o-y in June. Core inflation remained at 0.3% y-o-y (Nomura: 0.4%, consensus: 0.3%)."

"The CPI fell 0.1% m-o-m, below our expectation of no change. The main downside surprise to our forecast was transport, as prices declined 0.4% m-o-m vs. our expectation of a 0.6% rise."

"Domestic prices increased 0.5% y-o-y, while imported product prices were unchanged from a year earlier as imported energy cost pressures have eased after adding to inflation in recent months due to the Iran war."

"The SNB’s latest forecast is for inflation to average 0.7% y-o-y across Q3. Today’s data were below that, and while we expect inflation to accelerate through the quarter, we now forecast inflation to average 0.5% y-o-y for Q3, 0.2pp below the SNB’s forecast."

"Car fuel prices contributed to the slowdown in Swiss inflation in July. We expect inflation in Q3 to print below the SNB’s forecast."

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

• EUR/USD steadies at the 1.1525 area after pulling back from seven-week highs at 1.1556.
• Erozone HCOB Manufacturing PMI has been revised down but is still showing a moderate expansion in July.
• The Euro is drawing support from risk appetite, as hostilities halted in Iran and Trump hinted at a new round of negotiations.

The Euro (EUR) posts moderate losses against the US Dollar (USD) on Monday, trading at 1.1525 at the time of writing, but standing close to the seven-week highs, at 1.1556 hit earlier on the day. Final Eurozone Purchasing Managers Index (PMI) figures confirmed a moderate expansion of the sector's activity in July, while hopes of new peace talks between the US and Iran are providing additional support to the Euro.

Eurozone’s final HCOB Manufacturing PMI has been revised down to 51.9 in July from previous estimations of 52.0. This is still a moderate improvement from June’s 51.4 reading and its best performance since April, which suggests that the region’s factory activity is showing resilience to the energy shock and the uncertainty from Iran’s war.

Down to member Spain’s and Italy’s HCOB Manufacturing PMIs have shown moderate expansion in July, yet short of the levels anticipated by the market’s consensus. German Manufacturing PMI has shown a significant improvement, while French manufacturing activity contracted against expectations.

Before that, German Retail Sales disappointed, showing a 1.1% fall in June, more than twice the 0.5% decline forecasted by market analysts, and it could have been much worse if it were not for the 2.1% rise in petrol station sales. These figures follow a 1.2% increase in May.

Risk appetite, lower Oil prices are Euro-supportive

The Euro is drawing some support from a moderate risk-on mood and lower Oil prices, as hostilities in the Middle East were halted and US President Donald Trump affirmed that negotiations with Tehran will begin on Monday. Iran’s Foreign Ministry Spokesperson Esmail Baghaei, however, has denied any talks with the US regarding Hormuz, a vital sea corridor for global crude supplies.

Analysts at ING argue that EUR/USD “should probably be doing better,” pointing to “decent Eurozone hard data last week, lower oil prices and lots of Dollar selling from Japan” as supportive factors. Looking forward, however, they doubt that “such news will have any lasting impact on the Euro.”

The experts at ING assess that the bigger and more lasting driver of the EUR/USD trend is the Fed’s September decision, noting that this “remains unresolved,” and that US data this week will determine whether the pair ends the week “pressing 1.1615/20 resistance or trading back below 1.15.”