Forex News
- Asian stock markets capitalize on lower oil prices.
- Iran and Oman return to the table to discuss safe navigation through Hormuz.
- Investors keenly await Fed Chair Warsh’s remarks at the Jackson Hole Symposium.
Asian stock markets reflect broader strength on Wednesday, as oil prices have fallen further on renewed hopes of the Strait of Hormuz, a vital passage for almost 20% of global energy supply, reopening.
At press time, Nikkei 225 is up 0.7% to near 66,300, Shanghai rises 0.7% slightly above 3,900, Hang Seng also posts similar gains, and KOSPI surges over 2% to near 6,880.
In the Asian session, the WTI Oil price is down a little over 1% to near $80, extending its losing streak for the third trading day.
Oil prices have been pressured after reports that Iran and Oman have agreed to restart discussions surrounding safe navigation through the passage. On Tuesday, Iranian Foreign Minister Abbas Araghchi and his Omani counterpart Badr Albusaidi discussed an “interim framework” aimed at resuming shipping through the Strait of Hormuz, Bloomberg reported.
Given that Asian economies rely heavily on oil imports to meet their energy needs, lower oil prices bode well for their economic outlook.
Meanwhile, financial markets keenly await remarks from Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Symposium, which will begin early Thursday.
Jackson Hole looms as key test of Fed communication and inflation resolve
According to TD Securities, “Friday's Jackson Hole Symposium looms large,” with the event set to be “this week's main macro event in markets.” The bank expects investors to look for “an improved version of Fed Chair Warsh through his prepared remarks,” alongside “some sort of firmer and more explicit commitment toward the inflation mandate.”
TD Securities cautions, however, that “while Chair Warsh will seek to improve his communication with markets at Jackson Hole, forward guidance will still be lacking,” and his appearance may “only rehash prior remarks that will likely focus on the big picture and regime change.” Against that backdrop, the bank reiterates that “we expect the Fed to remain on hold over our forecast horizon.” With inflation “high for the rest of the year” and the labor market having “stabilized, allowing the FOMC to shift focus to its inflation mandate,” TD Securities argues that “if the Fed were to move this year, we believe that move is more likely to be a hike than a cut.”
Asian stocks FAQs
Asia contributes around 70% of global economic growth and hosts several key stock market indices. Among the region’s developed economies, the Japanese Nikkei – which represents 225 companies on the Tokyo stock exchange – and the South Korean Kospi stand out. China has three important indices: the Hong Kong Hang Seng, the Shanghai Composite and the Shenzhen Composite. As a big emerging economy, Indian equities are also catching the attention of investors, who increasingly invest in companies in the Sensex and Nifty indices.
Asia’s main economies are different, and each has specific sectors to pay attention to. Technology companies dominate in indices in Japan, South Korea, and increasingly, China. Financial services are leading stock markets such as Hong Kong or Singapore, considered key hubs for the sector. Manufacturing is also big in China and Japan, with a strong focus on automobile production or electronics. The growing middle class in countries like China and India is also giving more and more prominence to companies focused on retail and e-commerce.
Many different factors drive Asian stock market indices, but the main factor behind their performance is the aggregate results of the component companies revealed in their quarterly and annual earnings reports. The economic fundamentals of each country, as well as their central bank decisions or their government’s fiscal policies, are also important factors. More broadly, political stability, technological progress or the rule of law can also impact equity markets. The performance of US equity indices is also a factor as, more often than not, Asian markets take the lead from Wall Street stocks overnight. Finally, the broader risk sentiment in markets also plays a role as equities are considered a risky investment compared to other investment options such as fixed-income securities.
Investing in equities is risky by itself, but investing in Asian stocks comes along with region-specific risks to be taken into account. Asian countries have a wide range of political systems, from full democracies to dictatorships, so their political stability, transparency, rule of law or corporate governance requirements may diverge considerably. Geopolitical events such as trade disputes or territorial conflicts can lead to volatility in stock markets, as can natural disasters. Moreover, currency fluctuations can also have an impact on the valuation of Asian stock markets. This is particularly true in export-oriented economies, which tend to suffer from a stronger currency and benefit from a weaker one as their products become cheaper abroad.
- WTI prolongs its weekly downtrend for the third straight day amid easing geopolitical tensions.
- The technical setup seems tilted in favor of bearish traders and backs the case for further losses.
- Any meaningful recovery attempt might now be sold into and is more likely to remain capped.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – remains under some selling pressure for the third straight day and drops to a nearly two-week low during the Asian session on Wednesday. The black liquid currently trades just below the $80.00 psychological mark and could extend its retracement slide from the monthly peak, touched last Friday, amid positive developments surrounding the Middle East crisis.
In fact, Iran said that it had restarted talks with neighbor Oman to manage commercial shipping traffic through the key Strait of Hormuz. Adding to this, the US offered Iran sanctions relief and an end to the naval blockade in exchange for reopening the strategic waterway and halting attacks carried out by its regional proxies. This revived hopes for a diplomatic resolution to end the US-Iran war and prompts traders to price out the geopolitical risk premium, which, in turn, is seen weighing on crude oil prices.
From a technical perspective, the overnight breakdown below the 100-period Exponential Moving Average (EMA) on the 4-hour chart was seen as a key trigger for bearish traders. Moreover, the commodity now trades below the 50% Fibonacci retracement level of the recent recovery from the monthly swing low, reinforcing the negative outlook and backing the case for deeper losses. Meanwhile, momentum indicators remain heavy and hint that any bounce would still need to overcome nearby resistance to shift the tone.
The Moving Average Convergence Divergence (MACD) stays below zero with the latest reading at -0.65, while the Relative Strength Index (RSI) at 23.15 shows oversold territory. On the downside, initial support emerges at the 61.8% retracement at $78.61, ahead of deeper Fibonacci backing at $76.27 and the structural floor around the prior swing low near $73.30. A sustained break below the latter would likely extend the current bearish phase toward those lower levels despite the increasingly oversold conditions.
On the topside, immediate resistance appears at the 50.0% retracement at $80.26, followed by the 38.2% level at $81.90 and the 100-period EMA at $82.44. This forms a dense supply band ahead of the higher 23.6% retracement at $83.93 and the recent cycle high zone near $87.22.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI 4-hour chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- Indonesia’s Current account deficit hit USD 12.5B in Q2, straining Indonesia's external balance.
- Incoming BI leadership prioritizes foreign exchange flow management and proactive interest rate policies.
- Strong US inflation data and Jackson Hole speech support the Dollar, capping Rupiah gains.
USD/IDR remains stronger for the second successive day, trading around 17,760 during the Asian hours on Tuesday. The pair continues to hold its ground while the Indonesian Rupiah (IDR) faces ongoing pressure from a cautious market sentiment and persistent external headwinds.
Adding to these concerns, Indonesia’s current account deficit expanded to a record USD 12.5 billion in the second quarter of 2026. This widening gap raises red flags that high oil prices, robust domestic demand for imports, and weaker export figures will keep the nation's external balances under strain for the foreseeable future.
On the policy front, Bank Indonesia (BI) Governor candidate Destry Damayanti outlined a forward-looking economic vision aimed at balancing macroeconomic stability with accelerated domestic growth. Identifying foreign exchange flow management as a top priority, Damayanti highlighted that Indonesia’s solid internal fundamentals serve as a strong cushion against global turbulence. Moving forward, the central bank plans to fine-tune its policy mix through a pre-emptive interest rate strategy while simultaneously advancing digital payment initiatives to fuel economic expansion.
Meanwhile, the US Dollar has found renewed support ahead of the upcoming US Personal Consumption Expenditures (PCE) release, the Federal Reserve’s key inflation metric, giving the USD/IDR pair an extra upward push. Market participants are closely watching Fed Chair Kevin Warsh’s speech at the annual Jackson Hole symposium on Friday for clearer signals regarding a potential interest rate adjustment in September.
Despite this momentum, further gains for the Greenback may be limited as safe-haven demand softens. Market tension eased after reports surfaced that Iran and Oman discussed establishing a temporary joint maritime corridor in the Strait of Hormuz. With technical talks ongoing to finalize a permanent framework, the proposed corridor aims to improve strait administration, traffic management, maritime security, and real-time information sharing across the region.
Dollar risk reversals flag lingering softness in sentiment
Strategists at Scotiabank highlight that underlying Dollar sentiment remains subdued, pointing to options markets for confirmation. They note that “Dollar sentiment remains soft, as reflected in risk reversal pricing for the Bloomberg dollar index which has gravitated away from a premium for dollar calls over the past month,” underscoring a shift in positioning that leaves the currency vulnerable to renewed pressure in the absence of clearer policy signals.
Technical Analysis:
In the daily chart, USD/IDR trades at 17,761.75, extending its retreat beneath both the short-term and medium-term Exponential Moving Averages (EMAs) and keeping the near-term bias bearish. The nine-day and the 50-day EMAs sit overhead as immediate caps, suggesting rallies are likely to be sold while the pair remains below these trend markers. The 14-day Relative Strength Index (RSI) at 39 leans toward bearish momentum without yet reaching oversold territory, hinting that downside pressure could persist if price fails to reclaim the nearby EMAs.
On the topside, initial resistance is seen at the nine-day EMA at 17,817.06, followed by a more significant barrier at the 50-day EMA near 17,873.50, where a break would be needed to ease the current bearish tone and open the way for a broader recovery. With no clear moving-average supports below the market, the pair lacks a defined technical floor, leaving scope for further slippage until fresh demand emerges or momentum turns more decisively higher.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- US Dollar Index rebounds to around 99.00 in Wednesday’s early European session.
- The US Treasury could use its General Account to help fund purchases of government bonds.
- Traders await the US July PCE data on Wednesday ahead of the Jackson Hole symposium.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 99.00 in the early European trading hours on Wednesday. The DXY recovers some lost ground but remains at risk as traders digest renewed US efforts to ease pressure on longer-dated Treasury yields.
Last week, US Treasury Secretary Scott Bessent said that the US Department of the Treasury will double its bond buyback operations to at least $4 billion per operation, up from the current $2 billion maximum, in an effort to stabilize surging long-term borrowing costs. This action has sparked concerns as national debt surpasses $40 trillion.
CNBC reported on Monday that the department could use part of its cash balance to buy back longer-dated bonds to help steady long-term yields, although traders see a confluence of factors that could keep the USD under pressure through the rest of the year.
US President Donald Trump's administration unveiled an expansion of secondary sanctions it can impose on entities and countries that maintain business ties with Iran around the world, per Reuters. Heightened Middle East sanctions could boost safe-haven flows, supporting the US Dollar against its rivals.
Traders have lowered their bets on an imminent interest rate hike by the Federal Reserve (Fed). Markets are now pricing in nearly a 38.4% probability of a 25 basis points (bps) rise in September, down from 67% earlier this month, according to the CME FedWatch tool.
The release of the US July Personal Consumption Expenditures (PCE) Price Index data will be the highlight later on Wednesday. On Friday, the attention will shift to the speech from Fed Chairman Kevin Warsh in Jackson Hole, Wyoming, which could offer some hints about the outlook for US interest rates. Any hawkish remarks from Fed policymakers could lift the DXY in the near term.
Dollar seen vulnerable without clear jackson hole policy signals
Strategists at Scotiabank caution that the Dollar’s recent stabilization could prove fragile in the absence of firmer guidance from US officials. They argue that “investors will want clear signals from US policymakers on the promised fiscal consolidation plan from Bessent and on the Fed’s reaction function from Warsh at Jackson Hole or the dollar is liable to come under renewed pressure,” underscoring how closely markets are watching upcoming policy communications for direction.
Technical Analysis: US Dollar Index keeps a bearish vibe in the near term
In the daily chart, US Dollar Index Spot extends a bearish bias as price holds beneath the 100-day simple moving average (SMA) and the Bollinger band midline. The index is only slightly above the lower Bollinger band, while the Relative Strength Index (RSI) at 34.60 hovers just above oversold territory, suggesting downside pressure is still dominant but nearing stretched conditions.
On the topside, initial resistance emerges at the Bollinger band middle line around 99.55, followed by the 100-day SMA at 99.70, with a stronger cap at the upper Bollinger band near 100.40. On the downside, immediate support is defined by the lower Bollinger band at 98.65, and a clear break below this area would open the door for a deeper slide in the near term.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Gold prices fell in India on Wednesday, according to data compiled by FXStreet.
The price for Gold stood at 14,209.59 Indian Rupees (INR) per gram, down compared with the INR 14,260.31 it cost on Tuesday.
The price for Gold decreased to INR 165,737.50 per tola from INR 166,329.50 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 14,209.59 |
10 Grams | 142,095.60 |
Tola | 165,737.50 |
Troy Ounce | 441,968.00 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
Japan's Economy Minister Minoru Kiuchi said on Wednesday that he expects consumer prices to gradually rise amid the Middle East situation.
Market reaction
At the time of writing, the USD/JPY pair is down 0.12% on the day at 159.01.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- GBP/USD drifts lower during the Asian session on Wednesday, though it lacks follow-through.
- Receding Fed rate hike bets and hopes for Iran diplomacy cap the USD, supporting spot prices.
- Traders also seem hesitant ahead of the key US PCE data and Fed Chair Kevin Warsh’s speech.
The GBP/USD pair trades with a negative bias below mid-1.3600s during the Asian session on Wednesday, eroding a part of the previous day's strong gains. Spot prices, however, remain within striking distance of a six-month top, set last Friday, as traders keenly await the release of the US Personal Consumption Expenditures (PCE) Price Index data for a fresh impetus.
The crucial US inflation data, along with Federal Reserve (Fed) Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday, will be scrutinized for cues about the US central bank's interest rate path. Apart from this, developments surrounding the Middle East crisis would play a key role in determining the near-term trajectory for the US Dollar (USD) and the GBP/USD pair.
Fed communication gap clouds Dollar outlook
DBS Bank’s Philip Wee argues that recent moves in US yields are exposing a critical communication gap at the Fed. He writes that Kevin Warsh “needs to explain how a Fed without forward guidance intends to anchor expectations, how much tightening the Fed is prepared to tolerate through long-term yields, and the policy boundary between the Fed and the Treasury.” In Wee’s view, the lack of clear guidance on these issues is undermining confidence in the Dollar at a time when investors are already questioning the sustainability of higher US yields.
In the meantime, tamer US inflation data and a sluggish labor market have shifted expectations toward a policy hold at the September 15–16 FOMC meeting. Adding to this, the US Treasury's buyback strategy and easing inflationary fears due to a fall in crude oil prices lead to a further decline in US bond yields, which should undermine the USD and support the GBP/USD pair.
Two senior officials indicated that the Treasury could use its near $1 trillion General Account to fund its recently announced plans to increase buybacks of longer-term bonds. On the geopolitical front, Iran said that it had restarted talks with Oman to manage commercial shipping traffic through the Strait of Hormuz, dragging crude oil prices to a nearly two-week trough.
Meanwhile, the US offered Iran sanctions relief and an end to the naval blockade in exchange for reopening the Strait and halting attacks carried out by its regional proxies. This revived hopes for a diplomatic resolution to end the US-Iran war, further denting the Greenback's reserve currency status and warranting caution before placing aggressive bearish bets on the GBP/USD pair.
GBP/USD daily chart
Technical Analysis
The GBP/USD pair holds below the 1.3660-1.3665 supply zone, which if cleared, will be seen as a fresh trigger for bullish traders and pave the way for additional gains. The near-term bias, however, stays skewed to the upside, though a failure to make it through the said barrier would hint at a deeper move corrective slide below the 1.3600, back toward the mid-1.3500ss.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- EUR/USD remains in a limited range near 1.1660 in the countdown to the US PCE Inflation data.
- Investors keenly await the outcome of the Jackson Hole Symposium.
- The ECB is expected to raise interest rates in the September policy meeting.
The Euro (EUR) continues to trade in a tight range at around 1.1660 against the US Dollar (USD) during the Asian trading session on Wednesday. The pair struggles for direction as investors have sidelined, awaiting the United States (US) Personal Consumption Expenditure Price Index (PCE) data for July, which will be published at 12:30 GMT.
Inflation seen easing only gradually as core pressures remain firm
Wells Fargo is “not expecting much surprise on inflation,” noting that “the latest CPI and PPI reports point to a 0.1% gain in the PCE deflator in July, nudging the year-over-year rate down to 3.6%.” The bank expects “core PCE inflation” to “rise 0.2% on the month, leaving the annual rate at 3.3%,” underscoring a picture of gradual disinflation but inflation still running above the Fed’s target.
This week, the key event for the major currency pair will be remarks from Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Symposium, which will begin early Thursday.
On the Euro front, market participants seem confident that the European Central Bank (ECB) will raise interest rates in the September policy meeting.
Euro area resilience keeps ECB on track for one last hike
Analysts at Deutsche Bank argue that, in the absence of “clear evidence of broad-based second-round effects,” the case for pushing policy beyond the “2.50% neutral upper bound is unlikely.” Against that backdrop, and despite the recent energy-driven uptick in Euro area inflation, they “continue to expect a final 25bps ECB hike in September to a 2.50% terminal rate,” marking what they see as the end of the current tightening cycle.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1664. The pair holds above the 20-period Exponential Moving Average (EMA) at 1.1587, keeping the near-term tone bullish as price clings to the day’s open pivot at 1.1664. Momentum remains firm, with the 14-period Relative Strength Index (RSI) hovering near 68, hinting at strong buying pressure but also a market that is edging toward overbought territory.
On the downside, immediate support emerges at the day’s open and current pivot near 1.1664, while the 20-period EMA at 1.1587 forms a secondary demand zone below. Looking up, the major currency pair needs to break above the August 21 high at 1.1711 to extend the rally towards the May high near 1.1800.
Strategists at Scotiabank also see limited hurdles before 1.1800. They said in a note that remain constructive on EUR/USD, noting that the “RSI remains bullish around the overbought threshold at 70,” underscoring the strength of recent gains. They judge that “the latest rally looks to have stalled above near-term resistance around 1.17,” but highlight “the absence of any additional meaningful resistance ahead of 1.18,” suggesting the upside remains relatively unobstructed in the short term. On the downside, Scotiabank identifies “near-term support at 1.1650 and 1.1600,” and draws attention to the “200 day MA at 1.1632” as an additional technical reference point for traders.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Wed Aug 26, 2026 12:30
Frequency: Monthly
Consensus: 3.3%
Previous: 3.3%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
- Gold is seen consolidating in a range as bulls keenly await the release of the US PCE data.
- Fading Fed hike bets and sliding US bond yields weigh on the USD, supporting the bullion.
- The bullish technical setup suggests that the path of least resistance remains to the upside.
Gold (XAU/USD) extends its two-way price moves for the second straight day and trades above $4,650 during the Asian session on Wednesday. The commodity remains within striking distance of its highest level since May 14 as traders keenly await the release of the US Personal Consumption Expenditures (PCE) Price Index for some meaningful impetus. Investors this week will also scrutinize Federal Reserve (Fed) Chair Kevin Warsh's scheduled speech at the Jackson Hole Symposium for more cues about the interest rate path. The outlook, in turn, will drive the US Dollar (USD) and the non-yielding yellow metal.
In the meantime, expectations have shifted toward a policy hold at the upcoming September 15–16 FOMC meeting in the wake of cooling price pressures and a sluggish labor market. Moreover, the US Treasury's buyback strategy leads to a further decline in US bond yields. Meanwhile, two senior officials indicated that the Treasury could use its near $1 trillion General Account to fund its recently announced plans to increase buybacks of longer-term bonds. Furthermore, positive developments surrounding the Middle East crisis weigh on crude oil prices, easing inflation fears and exerting additional pressure on US bond yields. This keeps USD bulls on the defensive and acts as a tailwind for the Gold price.
Crude oil prices dropped to a nearly two-week low after Iran said that it had restarted talks with Oman to manage commercial shipping traffic through the Strait of Hormuz. The countries said they had discussed a joint temporary navigational corridor through the strategic waterway. Adding to this, the US offered Iran sanctions relief and an end to the naval blockade in exchange for reopening the Strait and halting attacks carried out by its regional proxies. This revived hopes for a diplomatic resolution to end the US-Iran war, further denting the Greenback's reserve currency status and supporting the Gold price. Bulls, however, await a move beyond $4,700 before placing fresh bets on the XAU/USD pair.
XAU/USD daily chart
Technical Analysis
The recent breakout through the $4,500 psychological mark confluence hurdle – comprising the 200-day Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the March-June decline – was seen as a key trigger for XAU/USD bulls. The subsequent move up, however, struggles to find acceptance above the 50% retracement level, warranting some caution before positioning for any further gains.
Meanwhile, the Relative Strength Index (14) near 72 signals overbought conditions and hints that upside momentum, although strong, could be vulnerable to consolidation. The Moving Average Convergence Divergence (MACD) indicator (12, 26, 9) stays in positive territory, reinforcing the constructive tone despite stretched momentum. Nevertheless, XAU/USD bulls might still wait for a move above $4,700.
A sustained break above the said handle would open the way toward the 61.8% level at $4,856, the 78.6% retracement at $5,104, and the cycle high area around $5,421. On the downside, initial support is seen at the 200-day SMA at $4,522 and the nearby 38.2% Fibo. retracement at $4,508, with deeper pullbacks likely targeting the 23.6% retracement at $4,292 and the structural floor anchored near $3,944.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- Silver price jumps to near $69.40, capitalizing on plunging oil prices.
- Iran and Oman have agreed to resume talks surrounding safe navigation through Hormuz.
- Investors await the US PCE Inflation data for July and the Jackson Hole Symposium.
Silver price (XAG/USD) is up almost 1% to near $69.40 during the Asian trading session on Wednesday. The white metal gains as oil prices fall further on hopes that the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply, will reopen soon, following reports that Iran and Oman have resumed talks to establish a “temporary joint maritime corridor” for safe navigation.
On Tuesday, Iranian Foreign Minister Abbas Araghchi and his Omani counterpart Badr Albusaidi discussed an “interim framework” aimed at resuming shipping through the Strait of Hormuz, Bloomberg reported.
This has eased fears of a prolonged energy supply disruption, a scenario that could anchor rising global inflation expectations and diminish interest rate hike expectations for various central banks. Such a case bodes well for non-yielding assets, like Silver.
Meanwhile, investors await the United States (US) Personal Consumption Expenditure Price Index (PCE) data for July, which will be published at 12:30 GMT. The US core PCE inflation, which is closely tracked by Federal Reserve (Fed) officials, is expected to have remained steady at 3.3% Year-on-Year (YoY), with monthly figures rising at a 0.2% pace, faster than the June reading of 0.1%.
This week, the major trigger for global markets will be the outcome of the Jackson Hole Symposium, which will begin early Thursday.
Jackson Hole looms as key test of Fed communication and inflation resolve
According to TD Securities, “Friday's Jackson Hole Symposium looms large,” with the event set to be “this week's main macro event in markets.” The bank expects investors to look for “an improved version of Fed Chair Kevin Warsh through his prepared remarks,” alongside “some sort of firmer and more explicit commitment toward the inflation mandate.”
TD Securities cautions, however, that “while Chair Warsh will seek to improve his communication with markets at Jackson Hole, forward guidance will still be lacking,” and his appearance may “only rehash prior remarks that will likely focus on the big picture and regime change.” Against that backdrop, the bank reiterates that “we expect the Fed to remain on hold over our forecast horizon.” With inflation “high for the rest of the year” and the labor market having “stabilized, allowing the FOMC to shift focus to its inflation mandate,” TD Securities argues that “if the Fed were to move this year, we believe that move is more likely to be a hike than a cut.”
Silver Technical Analysis
In the daily chart, XAG/USD trades at $69.17. The pair holds firmly above the 20-day Exponential Moving Average (EMA) at $65.12, keeping the near-term bias bullish as price extends its advance away from dynamic trend support.
The Relative Strength Index (14) at 64.65 sits in positive territory but shy of overbought, suggesting steady upward momentum without signs of immediate exhaustion.
On the downside, initial support emerges at the 20-day EMA around $65.12, where buyers are likely to defend the current advance if a corrective pullback unfolds. Looking up, the June 17 high at $71.56 appears to be the key hurdle.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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