Forex News

• The Indian Rupee falls further against the US Dollar.
• An increase in hawkish Fed bets due to a hot US PPI report becomes a new concern for the Indian currency.
• Investors await the CPI data from both the US and India.

The Indian Rupee (INR) extends its downward spiral against the US Dollar (USD) for the fourth trading day on Friday, with the USD/INR pair rising to near 95.80. A weak performance was anticipated for the Indian currency against the US Dollar as the latter attracted significant gains overnight after the release of the stronger-than-projected United States (US) Producer Price Index (PPI) data for August, which lifted Federal Reserve (Fed) interest rate hike expectations.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades firmly near Thursday’s high at around 99.20.

Strong US PPI data boosts hawkish Fed bets

The US PPI report on Thursday showed that headline producer inflation arrived higher at 5.4% Year-on-Year (YoY) vs. 5.3% estimates and the July reading of 4.8%. The core PPI - which excludes volatile food and energy items – also grew at a faster pace, arriving at 4.6% YoY, as expected, compared to the previous reading of 4.3%.

Hot US PPI figures lifted Fed interest rate hike expectations. According to the CME FedWatch tool, the odds of the Fed raising interest rates at the policy meeting next week have increased to 72.4% from 61.2% seen before the data release.

Theoretically, a fresh increase in hawkish Fed expectations boosts US Treasury Yields, which ultimately diminish the appeal of riskier assets. As of writing, 10-year US Treasury Yields hit record highs at 4.98%, the highest level seen since November 2023.

Meanwhile, the Reserve Bank of India (RBI) ​likely intervened in the foreign exchange ‌market on Friday to limit the INR's fall as a run-up in oil prices and U.S. ​bond yields pressured the currency, Reuters reported.

US inflation risks seen skewed higher as core eases modestly

After the US PPI data, investors are awaiting the Consumer Price Index (CPI) report for August, which will be published at 12:30 GMT.

According to economists at TD Securities, US price pressures likely moderated only slightly in August. They “project that core CPI rose 2.3% on a y/y basis, down 10 bps vs July, while headline inflation likely stayed unchanged at 3.4% y/y.” However, they caution that “we see the risks to our forecasts as skewed to the upside given that we're assuming a number of large price declines in tariff-exposed goods categories,” suggesting the outturn could surprise higher if those assumed declines fail to materialize.

India’s CPI data to be key trigger for INR

On the domestic front, India’s retail CPI data for August scheduled for Monday could be the key trigger for the Indian Rupee.

Economists at Societe Generale expect India’s inflation backdrop to turn less comfortable in the near term, projecting that "India's CPI inflation [will] rise to around 4.8% yoy in August 2026, up from 4.4% in July, marking the highest reading under the newly launched CPI series." They note that, if realized, "this would represent the third consecutive month of inflation above the RBI's 4.0% target, further reinforcing the view that inflationary pressures are no longer confined to a few volatile categories but are gradually becoming more broad-based."

Regarding the drivers, Societe Generale highlights that "food inflation is likely to have exceeded 6.0% yoy in August and should remain the single largest contributor to headline CPI," with available price trends pointing to "continued pressure from categories such as sugar, cereals, milk, eggs, edible oils and selected vegetables." A "second source of upward pressure is likely to come from fuel inflation," as "elevated global energy prices, coupled with the lagged effects of earlier domestic fuel price adjustments, suggest that the fuel basket should continue to exert upward pressure on headline inflation." The bank also points out that "with input price pressures remaining elevated and little evidence of relief from global commodity markets, the risk of broader pass-through into consumer prices appears to be rising," while survey-based measures "point toward firmer fuel inflation in August relative to July."

Taken together, Societe Generale argues that "the August CPI print is likely to signal that India's inflation dynamics are becoming less benign. Food inflation remains elevated, fuel inflation continues to firm, and early signs of broader cost pass-through are beginning to emerge." In their view, "a print around 4.8% yoy would not only mark a new high under the revised CPI series but would also reinforce concerns that inflationary pressures are gradually broadening beyond a narrow set of categories."

RBI targets maintaining enough forex liquidity

In latest comments, RBI Governor Sanjay Malhotra said that the target of the central bank is to maintain "appropriate liquidity". Malhotra added that the central bank have "enough tools to manage liquidity, other than VRRR, such as open market operations or FX swaps".

USD/INR Technical Analysis: Returns comfortably above 20-day EMA

In the daily chart, USD/INR trades at 95.80, holding a constructive bullish bias as it remains above the 20-day exponential moving average (EMA) at 95.22. The pair has rebounded firmly from late-August lows and now trades comfortably over its short-term trend proxy, while the Relative Strength Index (14) near 60 suggests positive but not yet overbought momentum supporting further upside attempts.

On the downside, initial support is located at the 20-day EMA at 95.22, where buyers are likely to re-emerge on dips to defend the nascent uptrend. Looking up, the pair could extend its advance toward the all-time high near 97.10.

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

• The Canadian Dollar comes under pressure due to a sharp correction in Oil prices.
• Iran and Gulf states to discuss buy-in for a temporary deal to manage shipping through Hormuz.
• Investors keenly await the CPI data from both the US and Canada.

The Canadian Dollar (CAD) underperforms its major currency peers on Friday. The North American currency faces selling pressure as Oil prices have retreated sharply after posting a fresh four-month high.

As of writing, the USD/CAD pair trades 0.1% higher to near 1.3846, extending its winning streak for the third trading day. The WTI Oil price is down almost 4% to near $96.50 after facing selling pressure above $100.

A sharp correction in Oil prices weighs on currencies from economies such as Canada, which is a net energy exporter.

The corrective move in Oil prices seems more like profit-booking, as the global energy supply mechanism remains disrupted in a tit-for-tat war between the United States (US) and Iran.

Meanwhile, Iran and Gulf states are set to hold a meeting on Monday aimed at securing buy-in for a temporary deal to manage shipping through the Strait of Hormuz, the Financial Times reported.

On the domestic front, investors await the Consumer Price Index (CPI) data for August, which will be released on Monday.

During the day, the major trigger for the USD/CAD pair will be the US CPI data for August, which will be published at 12:30 GMT.

The US CPI report is expected to show that headline inflation remained steady at 3.4% Year-on-Year (YoY), with core figures dropping to 2.4% from the previous reading of 2.5%.

Analysts at MUFG/BTMU argue that the upcoming US inflation data will be pivotal for near-term Fed expectations and the US Dollar (USD). They note that “if the reading is in line with the forecast or stronger the US rate market will continue to expect the Fed to hike rates supporting the USD.” By contrast, they warn that “a softer reading could trigger a bigger sell-off by encouraging the US rate market to scale back Fed rate hike expectations while other major central banks are expected to continue tightening policy.”

USD/CAD Technical Analysis

USD/CAD trades at 1.3845, retaining a mildly bearish bias on the daily chart as it holds just under the 20-day Exponential Moving Average (EMA) at 1.3856 and below the 50% Fibonacci retracement at 1.3900 of the latest upswing between May and July. The Relative Strength Index (14) at 46 sits slightly below the neutral midline, hinting at subdued upside momentum while keeping the focus on sellers as long as price remains capped by the nearby EMA and Fibonacci resistances.

On the topside, immediate resistance is aligned at the 20-day EMA around 1.3856, followed by the 50% Fibonacci retracement at 1.3900. A sustained break above these barriers would open the way toward the 38.2% level at 1.3982 and then the 23.6% Fibonacci retracement at 1.4084. On the downside, initial support emerges at the 61.8% Fibonacci retracement near 1.3818, with further floors seen at the 78.6% level at 1.3701 and the 100% retracement around 1.3553 if selling pressure resumes.

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

Danske Research Team explains that Sweden’s July Gross Domestic Product (GDP) indicator was weak, but underlying domestic activity appears stronger, with solid services and consumption data. Despite this, a weak Swedish Krona, high Oil prices and the rate spread versus the European Central Bank (ECB) mean they still expect clear guidance for a hike this year, likely in November, while recent market moves show EUR/SEK drifting higher on the latest shocks.

Weak GDP but hike still expected

"In Sweden, the July GDP indicator was weak at 2.5% y/y and -0.8% m/m, although June was revised higher, while production looked somewhat better at 3.6% y/y driven by stronger services."

"The domestic economy still appears stronger than the GDP print suggests, with solid services activity, high retail sales and weekly consumption data pointing to growth, while manufacturing and construction remain volatile."

"The figure was closer to the Riksbank's June forecast, which may worry the doves on the Riksbank's board, but with a weak SEK, high oil prices and rate spread versus the ECB, it should not materially affect the September rate decision."

"We still expect clear guidance for a hike this year, and we believe the hike will take place in November."

"The combination of a rising oil price and a hawkish ECB was clearly negative for the SEK, with EUR/SEK rising from 11.16 towards 11.26."

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

MUFG’s Lee Hardman highlights that the stronger United States (US) Producer Price Index (PPI) data has reinforced expectations for a Federal Reserve (Fed) rate hike, with around 18 bps now priced for next week’s FOMC meeting. He notes that today’s US Consumer Price Index (CPI), especially core CPI at a forecast 0.2% M/M, will be crucial for US rate expectations, the Dollar and US Treasuries.

CPI print key for Fed path

The sell-off in global bond markets was also reinforced by the release of the stronger than expected US PPI report for August which has added more weight to the case for the Fed to begin hiking rates next week."

"There are now 18bps of hikes priced into the US rate market ahead of next week’s FOMC meeting up from 13bps at the end of last week highlighting that market participants are now leaning more heavily in favour of a hike."

"The PPI report revealed that the components that feed into the PCE deflator were firmer than expected. According to Bloomberg, they are likely to add close to 0.1ppt to the August print. Healthcare costs rose by 0.3%M/M and airfares by 3.2%M/M."

The stronger PPI report makes it even more important that the release of today’s US CPI report comes in softer than expected if the Fed is to keep rates on hold for longer while the energy price shock is getting worse. The dollar index initially strengthened after the US PPI report was released but has quickly given back those gains."

"The key focus today will be on the core CPI reading. The consensus forecast is for a reading of 0.2%M/M. If the reading is in line with the forecast or stronger the US rate market will continue to expect the Fed to hike rates supporting the USD. Whereas a softer reading could trigger a bigger sell-off by encouraging the US rate market to scale back Fed rate hike expectations while other major central banks are expected to continue tightening policy.

"If the Fed stays on hold for longer it could fuel fears that it is falling behind the curve weighing more heavily on the US dollar and long-term US Treasuries."

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

• GBP/USD struggles to capitalize on the upbeat UK GDP-led modest intraday uptick.
• Rising Fed rate hike bets and geopolitical risks support the USD, capping spot prices.
• The technical setup warrants some caution for bulls ahead of the key US CPI report.

The GBP/USD pair struggles to capitalize on its modest intraday gains and trades near the 1.3500 psychological mark during the first half of the European session on Friday. Spot prices, however, hold above the weekly low as traders await the release of the latest US consumer inflation figures before placing fresh directional bets.

The British Pound (GBP) gets a minor lift following the release of the better-than-expected monthly UK GDP report, showing that the economy expanded at a pace of 0.4% in July, compared to consensus estimates for a flat reading. The immediate market reaction, however, turns out to be short-lived as rising bets for an imminent rate hike by the US Federal Reserve (Fed), bolstered by the US Producer Price Index (PPI) on Thursday, act as a tailwind for the US Dollar (USD). Furthermore, persistent geopolitical uncertainties underpin the safe-haven buck and contribute to capping the currency pair.

From a technical perspective, the GBP/USD pair currently holds just beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart, at 1.3518, which keeps the near-term tone mildly bearish despite spot prices hovering close to recent highs. The 38.2% Fibonacci retracement of the latest swing, at 1.3522, reinforces this nearby resistance zone, while the Relative Strength Index (RSI) around 42 and a slightly negative Moving Average Convergence Divergence (MACD) histogram hint that the upside momentum is starting to fade rather than accelerating.

Meanwhile, immediate resistance is clustered between the 200-period SMA at 1.3518 and the 38.2% Fibo. retracement at 1.3522, with the 23.6% retracement higher up at 1.3580 acting as the next barrier if buyers regain control. On the downside, initial support is seen at the 50.0% retracement near 1.3475, followed by the 61.8% Fibo. at 1.3428, while deeper pullbacks could expose the 78.6% level at 1.3361 and the prior swing floor around 1.3276.

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

GBP/USD 4-hour chart

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann flag a sudden AUD/USD selloff to 0.7156, with intraday momentum pointing to further losses toward 0.7140, though 0.7120 is seen as strong support for now. Over the next one to three weeks, the bank now expects the pair could decline toward 0.7120 unless it rebounds above 0.7210.

Selloff shifts focus to lower supports

"24-HOUR VIEW: AUD traded between 0.7210 and 0.7238 two days ago and closed largely unchanged at 0.7217 (+0.01%). When it was at 0.7220 in the early Asian session yesterday, we highlighted that “momentum indicators are mostly flat,” and we expected AUD “to trade in a range between 0.7200 and 0.7235.” The subsequent price action did not unfold as expected. Instead of trading in a range, AUD staged a sudden and sharp selloff that reached a low of 0.7156. The rapid increase in momentum suggests further AUD downside toward 0.7140. Given the oversold conditions, AUD is unlikely to reach the major support at 0.7120. To keep the momentum going, AUD must hold below 0.7190, with minor resistance at 0.7175."

"1-3 WEEKS VIEW: We have held the same view since last Friday (04 Sep, spot at 0.7205), when we indicated that AUD “could edge higher, but any advance is likely to stay within a 0.7160/0.7240 range.” After edging higher for several days and reaching a high of 0.7238 two days ago, AUD plunged and closed 0.83% lower at 0.7157 yesterday. The rapid increase in downward momentum indicates that AUD could decline toward 0.7120. However, if AUD were to break above 0.7210 (‘strong resistance’ level), it would mean that it is likely to continue to trade in a range."

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

• The US Consumer Price Index is expected to rise by 3.4% YoY in August, matching July’s increase.
• Annual core CPI inflation is expected to edge lower to 2.4% from 2.5%.
• Inflation report could significantly influence the market pricing of next week’s Fed decision and the USD performance.

The US Bureau of Labor Statistics (BLS) will publish the August Consumer Price Index (CPI) data on Friday. The report is expected to show a small decline in annual core inflation. Any divergence from analysts’ estimates could influence the Federal Reserve’s (Fed) policy outlook and impact the US Dollar’s valuation.

The monthly CPI is forecast to rise by 0.4%, following the 0.1% increase recorded in July, while the annual reading is seen holding steady at 3.4%. Core CPI figures, which exclude volatile food and energy prices, are expected to post an increase of 0.2% and 2.4%, on a monthly and yearly basis, respectively. 

Following a nearly 22% surge in July, Crude Oil prices held steady in August, ending the month virtually unchanged as the US and Iran keep failing to reach a solution to restore naval activity in the Strait of Hormuz, while avoiding further escalation in military action.

US core CPI data seen contained as goods weakness offsets firm services

According to economists at TD Securities, the upcoming US CPI report should show that “underlying inflation stayed under control in August,” with “the core expected to rise 0.19% m/m.” They expect “the services segment [to] be the main driver of inflation, while core goods prices likely acted as a drag, posting a modest m/m drop.” On an annual basis, TD Securities projects that “core CPI rose 2.3% on a y/y basis, down 10 bps vs July, while headline inflation likely stayed unchanged at 3.4% y/y.” The bank cautions that “risks to our forecasts [are] skewed to the upside” given their assumption of “a number of large price declines in tariff-exposed goods categories.” 

How could the US Consumer Price Index report affect EUR/USD?

While speaking at the Reuters NEXT Newsmaker event in Washington last week, Federal Reserve (Fed) Governor Christopher Waller outlined a conditional reaction function. He explained that a steady policy rate is preferred if August inflation shows continued progress, yet even a modest upside surprise could trigger a “small adjustment” higher. While Waller reiterated that inflation remains “significantly elevated” and that it may not take much acceleration to justify a hike, he acknowledged an “encouraging” disinflation and a solid growth and labor backdrop.

Although the CME Group FedWatch Tool’s probability of a 25 basis points (bps) increase in the interest rate at the upcoming policy meeting declined slightly below 50% following his comments, the upbeat employment data for August, published one day later, reaffirmed healthy labor market conditions and caused markets to reassess the odds of a tightening step. Currently, there is about a 70% chance of a Fed rate hike next week.

A weaker-than-expected increase in the monthly core CPI, below the 0.2% forecast, could cause market participants to scale back bets on a rate increase and trigger an immediate USD selloff, opening the door for a leg higher in EUR/USD heading into the weekend. Conversely, a reading of 0.3% or higher could boost the USD and put EUR/USD under bearish pressure. 

Strategists at Brown Brothers Harriman (BBH) emphasize that Friday’s US August CPI release is “the main market driver that will decide the Fed’s September 16 rate decision.” They argue that “a hot CPI print would all but seal a September hike and underpin a firmer USD,” whereas “a cooler reading would strengthen the case for a hold and leave USD vulnerable to a dovish Fed repricing.” However, BBH cautions that “even if a September Fed hike becomes a done deal, we doubt USD will make new cyclical highs,” noting that tightening by other major central banks is limiting policy divergence. 

At the same time, DBS Group Research notes that, despite recent volatility, “there are no signs that price pressures are broadening out.” The bank argues that the upcoming US CPI release will be pivotal for near-term Fed expectations, suggesting that “CPI and core CPI of 0.4% MoM sa and 0.3% MoM respectively may well be the minimum that would nudge market participants to increase the odds of imminent tightening.” By contrast, DBS believes that “a 0.2% print in both figures would probably see the odds of imminent tightening fall closer to zero.”  

Eren Sengezer, European Session Lead Analyst, shares a brief technical outlook for EUR/USD:

“EUR/USD clings to a bullish stance in the short-term technical outlook, with the Relative Strength Index (RSI) indicator on the daily chart holding above 50 and the pair trading well above the 100-day and 50-day Simple Moving Averages (SMA). The 200-day SMA, currently located at 1.1635, aligns as a pivot level. Once the pair confirms that level as support, technical buyers could remain interested. In this scenario, 1.1700 (upper arm of the Bollinger Band, static level) could be seen as an interim resistance level ahead of 1.1800 (static level).”

“On the downside, a relatively wide support region seems to have formed at 1.1560-1.1520, where the 100-day SMA, lower arm of the Bollinger Band and the 50-day SMA are located. If the pair retreats below this region, 1.1460 (static level) could be seen as the next support level before 1.1350 (static level).”

Francesco Pesole at ING argues that despite stronger United Kingdom (UK) Gross Domestic Product (GDP) data and resilient Sterling, the move in Gilts is largely externally driven and not about domestic fiscal fears. ING maintains its view that the Bank of England will not hike further, warning of a potential dovish repricing and targeting higher EUR/GBP and lower GBP/USD into the fourth quarter.

BoE seen resisting further tightening

"Gilts took another blow yesterday, underperforming European peers. The 10-year is now eyeing 5.5%, and the 30-year is very close to 6.0%. Sterling held up well yesterday, confirming this was a purely externally driven move in gilts (which simply have higher beta to US Treasuries) and not caused by heightened fiscal concerns. "

"Chancellor John Healey’s pledge to budget discipline is working in that sense. But it equally highlights how limited the room for any pro-growth government measure is."

"That, among other things, sits at odds with markets’ mammoth bets on monetary tightening: 48bp by year-end, 110bp by July. Our baseline is still that the Bank of England won’t hike at all, leaving sterling in front of a potential cliff-edge dovish repricing."

"UK GDP surprised to the upside this morning, rising 0.4% MoM after June's strong 0.3% gain. Around half the increase came from IT, continuing a familiar trend."

"GBP is a tad stronger on the back of that, but these monthly growth prints have not had much impact on BoE decisions."

"We continue to see upside room for EUR/GBP and downside for GBP/USD, with 4Q targets of 0.87 and 1.33."

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

• EUR/JPY recovery from 10-month lows below 177.90 has been capped at 179.75.
• The Yen remains supported on hopes of a hawkish hike by the BoJ next week.
• The Euro bounced up on Thursday as the ECB hiked rates and hinted at further tightening.

The Euro (EUR) retreated below 179.00 against the Japanese Yen (JPY) on Friday, as the mild recovery seen after Thursday's European Central Bank (ECB) meeting failed to find follow-through above 179.50. The risk-averse sentiment amid the entangled Middle East crisis and investors’ bets that the Bank of Japan (BoJ) will hike interest rates next week are keeping EUR/JPY rallies limited.

Analysts at DBS Group Research argue that “it is almost a done deal that the Bank of Japan will hike rates at the upcoming meeting on Sep 17-18,” pointing to a clear shift in the policy backdrop. In their view, “the most likely outcome is for the BoJ to deliver a hawkish 25bps hike while signalling a flexible pace of rate hikes at future meetings.”

Japanese data released earlier on Friday revealed that factory prices remain at high levels, strengthening the case for immediate BoJ monetary tightening. Producer Price Index (PPI) figures showed a 7.6% year-over-year growth in August, down from the 7.7% reading posted in July but above market expectations of a deeper slowdown, to 7.4%.

In the Eurozone, the ECB raised its benchmark Rate on the Deposit Facility by 25 basis points to 2.5%, as widely expected on Thursday, and President Christine Lagarde left the door open for further rate hikes, as, in her opinion, inflation will remain above the 2% target until "well into 2027." The Euro appreciated against its main peers following Lagarde's press conference.

Technical Analysis: A likely dead cat bounce for the Euro

EUR/JPY trades at 179.05, with the rebound from 177.86 lows looking corrective, as the daily Relative Strength Index (14) picks up from heavily overbought levels, following a nearly 4% drop in the last two weeks. The Moving Average Convergence Divergence (MACD) in the same timeframe is well within negative territory, altogether hinting at persistent downside pressure.

Initial support is at the mentioned September 8 low, at 177.86. Further down, there is no clear support until the 127.2% Fibonacci extension of the September selloff, near 175.60. On the topside, any rebound faces immediate resistance at the July 31 high, at 179.55, which held bulls on Thursday. Above here, the next target is the September 4 high, at 182.00.

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

• Gold attracts some dip-buyers near $4,300, though the upside potential seems limited.
• The US PPI report lifted Fed hike bets and underpins the USD, capping the commodity.
• Geopolitical risks further benefit the safe-haven USD ahead of the crucial US CPI report.

Gold (XAU/USD) clings to modest recovery gains around $4,450 through the first half of the European session, albeit it lacks bullish conviction as traders await the release of US consumer inflation figures. Meanwhile, the US Producer Price Index (PPI) report, released on Thursday, lifted Federal Reserve (Fed) rate-hike bets. This continues to act as a tailwind for the US Dollar (USD) and caps the upside for the non-yielding bullion.

US CPI seen as key swing factor for next week’s Fed decision

Commerzbank’s Michael Pfister stresses that markets “have little time to catch their breath,” with today’s US CPI release “potentially tipping the scale for next week’s Fed meeting.” He argues that the inflation print will be pivotal not only for the immediate policy decision but also for the Dollar, given that investors are already pricing roughly 80 basis points of additional Fed tightening by mid-2027 on the back of higher Oil prices and expectations for a 0.4% monthly rise in headline CPI, even as core inflation remains more moderate and uncertainty around the new Fed Chair’s reaction function lingers.

The US Bureau of Labor Statistics (BLS) reported on Thursday that the headline PPI accelerated to a 5.4% YoY rate in August, compared to the previous month's upwardly revised print of 4.8% and estimates of 5.3%. Stripping out food and energy, the core gauge matched forecasts and rose 4.6% YoY from 4.3% in July. This comes on top of inflation risks stemming from elevated energy prices and reaffirms expectations that the US central bank will raise borrowing costs next week.

In fact, crude oil prices shot to the highest level since May 21 amid further escalation of tensions between the US and Iran. The US Treasury plans to sanction a large, undisclosed bank on Monday as part of its ongoing economic pressure campaign against Iran. Moreover, Iran-backed Houthis in Yemen seized the crucial Red Sea city of Mocha, expanding control over the strategic Bab al-Mandeb Strait and adding to growing market concerns about a prolonged disruption to oil supplies.

Meanwhile, US President Donald Trump said that the Iran war will likely continue until after the November midterm elections. This keeps the geopolitical risk premium in play, which might continue to support crude oil prices and the safe-haven Greenback. Hence, a strong US CPI number would push the USD higher, warranting some caution before placing bullish bets on gold. Nevertheless, the commodity remains on track to register weekly losses and depreciate further.

XAU/USD daily chart

Technical Analysis

The precious metal trades marginally above the 50% retracement at $4,320 and the 200-day Exponential Moving Average (EMA) at $4,313, keeping price supported by key medium-term trend references. However, momentum indicators are softening, with the Moving Average Convergence Divergence (MACD) in negative territory and the Relative Strength Index (RSI) hovering just below the 50 line, hinting at a waning bullish impulse rather than an outright reversal.

On the topside, initial resistance is aligned at the 38.2% Fibonacci retracement at $4,409, followed by a stronger barrier at the 23.6% retracement of $4,519. On the downside, immediate support is seen at the 50% retracement at $4,320, reinforced by the 200-day EMA at $4,313. A break below this area would expose the 61.8% retracement at $4,231 and then the 78.6% level at $4,104, with the prior cycle low around $3,943 acting as a more distant floor.

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