Forex News
- USD/JPY edges higher during the Asian session on Thursday, though the upside seems capped.
- Fed rate hike bets and US-Iran tensions lend support to the USD ahead of the US inflation data.
- A more hawkish BoJ repricing might continue to underpin the JPY and cap gains for spot prices.
The USD/JPY pair edges higher during the Asian session on Thursday and trades just above mid-153.00s amid bears turn cautious ahead of US inflation figures. Spot prices, however, remain close to a seven-month low, touched earlier this week, as an aggressive repricing for a more hawkish Bank of Japan (BoJ) continues to underpin the Japanese Yen (JPY).
In fact, traders now seem to have fully priced in a 25-basis-point (bps) interest rate hike by the BoJ at its upcoming September 17–18 policy meeting and are assigning a high probability of a follow-up move in December. Expectations gained traction after BoJ's prominent hawkish members – Hajime Takata and Naoki Tamura – recently pushed for faster and more nimble rate hikes to counter rising inflation. Adding to this, a combination of revised economic growth and strong wage gains bolstered the central bank’s normalization path, supporting the JPY and capping the USD/JPY pair.
The US Dollar (USD), on the other hand, recovers slightly from a nearly three-week low, touched on Wednesday, as bears turn cautious ahead of the release of the US Producer Price Index (PPI), due later today. This will be followed by the US Consumer Price Index (CPI) on Friday, which will be looked at for more cues about the Federal Reserve's (Fed) future policy path. In the meantime, bets that the US central bank will raise borrowing costs later this month, amid inflation risks due to higher energy prices, along with escalating US-Iran tensions, support the USD and the USD/JPY pair.
In the latest developments surrounding the Middle East crisis, Iran said it has attacked 10 ships near the Strait of Hormuz after the US announced it had sunk five Iranian oil tankers in the Gulf of Oman and near Kharg Island. Iran also fired missiles at US forces stationed at the Al-Azraq base in Jordan. Meanwhile, US President Donald Trump claimed the war on Iran would end immediately after the US midterm elections in November. This keeps a lid on the geopolitical risk premium in play and might hold back USD bulls from placing aggressive bets, which, in turn, could cap the USD/JPY pair.
USD/JPY daily chart
Technical Analysis
The USD/JPY pair remains under clear bearish pressure as it holds well below the 155.30-155.20 horizontal support breakpoint. On the downside, acceptance below 153.00 would be seen as a fresh trigger for bearish traders and pave the way for deeper losses as spot prices search for a more durable floor.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
The People’s Bank of China (PBOC) sets the USD/CNY central rate for the trading session ahead on Thursday at 6.7766 compared to the previous day's fix of 6.7769 and 6.7074 Reuters estimate.
PBOC FAQs
The primary monetary policy objectives of the People's Bank of China (PBoC) are to safeguard price stability, including exchange rate stability, and promote economic growth. China’s central bank also aims to implement financial reforms, such as opening and developing the financial market.
The PBoC is owned by the state of the People's Republic of China (PRC), so it is not considered an autonomous institution. The Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, has a key influence on the PBoC’s management and direction, not the governor. However, Mr. Pan Gongsheng currently holds both of these posts.
Unlike the Western economies, the PBoC uses a broader set of monetary policy instruments to achieve its objectives. The primary tools include a seven-day Reverse Repo Rate (RRR), Medium-term Lending Facility (MLF), foreign exchange interventions and Reserve Requirement Ratio (RRR). However, The Loan Prime Rate (LPR) is China’s benchmark interest rate. Changes to the LPR directly influence the rates that need to be paid in the market for loans and mortgages and the interest paid on savings. By changing the LPR, China’s central bank can also influence the exchange rates of the Chinese Renminbi.
Yes, China has 19 private banks – a small fraction of the financial system. The largest private banks are digital lenders WeBank and MYbank, which are backed by tech giants Tencent and Ant Group, per The Straits Times. In 2014, China allowed domestic lenders fully capitalized by private funds to operate in the state-dominated financial sector.
- Oil supply risks could drive prices amid rising US-Iran tensions.
- US President Trump expects the conflict and high gasoline prices to persist past November.
- Houthi strikes on Saudi energy facilities have temporarily suspended regional operations.
West Texas Intermediate (WTI) oil price depreciates after three days of gains, trading around $93.90 during Asian hours on Thursday. However, oil prices may soon regain ground as an intensifying conflict between the United States and Iran raises serious concerns over potential disruptions to energy supplies from the Middle East. Signaling that a resolution is far off.
Iran stated that it is ready for a more intense conflict, vowing to resist the US naval blockade and warning that it will step up attacks if American forces continue their strikes on Iranian territory.
Meanwhile, US President Donald Trump predicted that the conflict will likely persist past the November midterm elections, noting that significant relief in gasoline prices is unlikely before then and signaling limited prospects for near-term de-escalation.
Hostilities have rapidly escalated over the past week following roughly a month of relative calm, with both nations stepping up attacks. The geopolitical crisis further broadened after Iran-backed Houthi militants launched strikes on several energy facilities in Saudi Arabia, which prompted the temporary suspension of some operations in the region.
Oil bid as conflict-driven supply risks keep market tight
According to strategists at TD Securities, crude prices continue to push higher as geopolitical tensions show little sign of easing, with "crude rallies with seemingly no end to conflict in sight." They argue that "another round of escalation and an apparent preference for limited attacks and economic squeeze as opposed to deal-making leaves the energy market on a continued tightening trajectory," reinforcing the view that ongoing conflict dynamics are keeping supply risks elevated and the balance of risks for Oil skewed to the upside.
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.
A Reuters poll showed the Bank of Japan (BoJ) will hike interest rates to 1.25% at its September policy meeting and then to 1.75% in the second quarter (Q2) of 2027, earlier than previously expected, amid persistent concerns over broadening price pressures and Japanese Yen (JPY) weakness.
82% of economists said the joint US-Japan Yen-buying intervention to stem the JPY's slide to 40-year lows and remarks by Treasury Secretary Scott Bessent on BoJ policy had "significantly" or "somewhat" lowered political barriers for rate hikes.
September 1-8 survey showed all but two of 68 economists expected the BoJ to raise rates on September 18, up from 57% in a previous poll. More than one-third, 24 of 66 economists, anticipated the Japanese central bank would follow with another hike to 1.50% in either October or December, roughly double the share in August.
Beyond this year, 89% of analysts, 57 of 64, see the policy rate reaching at least 1.50% by the end of March next year, up from 65% last month. Around 62% saw the interest rate reaching at least 1.75% by the end of Q2 2027, three months earlier than predicted in August's poll.
Market reaction
At the time of writing, the USD/JPY pair is up 0.05% on the day at 153.60.
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.
- EUR/USD flatlines near 1.1635 in Thursday’s early Asian session.
- ECB is widely expected to hike interest rates at its September policy meeting on Thursday.
- The US August PPI inflation data will take center stage later on Thursday.
The EUR/USD pair holds steady around 1.1635 during the early Asian trading hours on Thursday. Traders prefer to wait on the sidelines ahead of the European Central Bank (ECB) policy meeting and the release of the US August Producer Price Index (PPI) later in the day.
The ECB is likely to raise interest rates on Thursday for the second time this year, driven by surging energy prices due to the ongoing US-Iran conflict. Traders have fully priced in a 25 basis points (bps) move to 2.5% as the latest data shows Eurozone inflation rose back above 3% in August.
"A September hike looks all but locked in," said Alessia Berardi, head of global macroeconomics at the Amundi Investment Institute. "Inflation remains elevated and should stay sticky over the next few months before easing toward the second half of next year,” Berardi added.
Traders will closely monitor the US PPI inflation data on Thursday for more clues about the US interest rate path. The headline PPI is expected to show a rise of 5.3% YoY in August, versus 4.7% prior. Meanwhile, the core PPI is projected to show an increase of 4.6% in August, compared to 4.2% in July. Any signs of hotter inflation in the US could boost the US Dollar (USD) and create a headwind for the major pair in the near term.
Euro steadies as ECB expectations firm on higher oil
Strategists at Scotiabank note that the Euro is treading water in early North American trade, with the EUR “entering Wednesday’s NA session unchanged vs. the USD following an overnight push to a fresh one week high.” They argue that “fundamentals remain supportive as ECB rate expectations firm in response to the latest rally in oil prices, reflecting the ECB’s greater sensitivity to energy price risks in the current environment.”
Looking ahead to this week’s policy decision, Scotiabank highlights that “a 25bpt rate hike is fully expected at Thursday’s meeting, and another 25bpts has been priced in for December.” The bank’s strategists “anticipate a hawkish hike tomorrow, as President Lagarde unveils the latest forecast and signals ongoing concern about upside risk,” reinforcing the market’s conviction in a continued tightening bias.
Technical Analysis: EUR/USD keeps a mildly bullish vibe in the near term
In the daily chart, EUR/USD holds a mildly bullish near-term bias as price hovers just above the Bollinger middle band, effectively the 20-day simple moving average (SMA), while also remaining comfortably over the 100-day SMA near 1.1560. This configuration suggests that dips are being supported within the recent consolidation envelope, with the Relative Strength Index (14) around 58 hinting at steady, though not extreme, upside momentum within the prevailing range.
On the topside, immediate resistance emerges at the Bollinger upper band around 1.1700, where prior attempts have tended to stall, and a clear break above this ceiling would open the way for a more decisive extension of the recovery. On the downside, initial support is seen at the Bollinger middle band near 1.1625, followed by the 100-day SMA around 1.1560 and the lower Bollinger band close to 1.1555, a clustered zone that should act as a key floor while the broader constructive tone persists.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
- Gold price rebounds to around $4,400 in Thursday’s early Asian session.
- Markets are currently pricing in around a 60% chance of an interest rate hike at next week’s Fed meeting.
- Traders await the US August PPI data on Thursday ahead of the CPI inflation report.
Gold price (XAU/USD) recovers to near $4,400, snapping the three-day losing streak during the early Asian session on Thursday. The precious metal gains ground amid a weaker US Dollar (USD). Traders will closely monitor the key US inflation data later this week, which could provide fresh clues on the Federal Reserve’s (Fed) next interest rate decision.
Reuters reported on Wednesday that Iran said it had attacked 10 ships near the Strait of Hormuz after the US sank five Iranian oil tankers, in the biggest wave of attacks on shipping by both sides since the start of the six-month-old war.
Renewed tensions in the Middle East and rising oil prices have raised inflation concerns and strengthened the case for the US central bank to hike rates at its policy meeting next week. Higher interest rates typically weigh on gold because the precious metal does not pay interest, making yield-bearing assets relatively more attractive.
Traders brace for the US Producer Price Index (PPI) due on Thursday and Consumer Price Index (CPI) inflation data on Friday. These reports could offer some hints on whether the Fed will hike interest rates to contain price pressures.
The market is pricing in about a 60% chance of an interest rate hike at the central bank’s policy meeting next week, according to the CME FedWatch Tool.
Gold stays data sensitive as US inflation looms large
According to TD Securities, “a stronger jobs report initially weighed on gold,” but subsequent “less hawkish Fedspeak and currency interventions then cooled the narrative,” underlining that the market now has “an elevated sensitivity to incoming data and headlines.” The bank argues that “inflation data is the next big catalyst,” warning that “an upside surprise would embolden Fed pricing and weigh on the yellow metal,” whereas “less worrisome inflation could ultimately be the first catalyst to see the next wave of discretionary positioning start to enter the market.”
Technical Analysis: Gold remains bullish above the 100-day SMA
In the daily chart, XAU/USD holds above the 100-day moving average (MA), keeping a constructive near-term bias while price consolidates between the Bollinger Bands’ lower band and the middle band resistance. The Relative Strength Index (14) at 50.65 is neutral, suggesting momentum has cooled after recent gains but not yet reversed decisively.
On the topside, initial resistance is located at the Bollinger middle band around $4,465, with a break higher exposing the upper band near $4,675 as the next hurdle. On the downside, immediate protection emerges from the 100-day MA at $4,345, ahead of stronger structural support at the Bollinger lower band around $4,255, where buyers would be expected to reappear on deeper pullbacks.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
- AUD/USD stays flat as Treasury buyback briefly lifts Dollar.
- Higher US yields offset support from fading Greenback strength.
- US PPI and RBA expectations could break Aussie stalemate.
The Australian Dollar is virtually unchanged against the US Dollar on Wednesday amid a light economic calendar, with the US Treasury's announcement of a buyback for the September 10 auction boosting the Greenback. The AUD/USD trades at 0.7219, flat.
AUD/USD stalls as higher yields and Hormuz risks offset RBA hawks
Earlier, the US Treasury released a statement in which it said it would buy up to $6 billion of outstanding securities set to mature in the 10- to 20-year tranche. This pushed the US Dollar higher, but that move faded as the North American session progressed.
US Treasury yields ended higher in the session. The 10-year hit 4.845%, up five basis points, while the 30-year used to calculate mortgage rates rose four and a half basis points, at 5.293%:
In the Middle East, hostilities continued near the Strait of Hormuz, as Tehran continues to launch several attacks on US military facilities and warships, while Washington targets Iranian Oil vessels.
Data in the US featured the ADP Employment Change 4-week average, which rose from 10K to 12K. Now eyes are set on the Producer Price Index (PPI) on Thursday, which is expected to rise from 0% to 0.4% MoM and from 4.7% to 5.3% annually. Core figures are foreseen to rise from 0.2% to 0.3% MoM, while for the twelve months to August, the number is projected to increase to 4.6%.
In Australia, the Reserve Bank of Australia (RBA) Deputy Governor Hauser said that at the next meeting, the debate will focus on whether to raise interest rates, following the RBA's 75-basis-point rate hike to 4.35% this year.
Ahead, the Aussie economic schedule will feature Consumer Inflation Expectations for September, which, if it comes in above August’s 4.9%, could spark a hawkish repricing of the RBA.
AUD/USD Price Forecast: Technical Outlook
In the daily chart, AUD/USD trades at 0.7220, extending its advance above the cluster of underlying trend support and the simple moving average triple, last around 0.7057. Price action holding over the horizontal floor at 0.7198 keeps the near‑term bias bullish, while the Relative Strength Index (14) near 68 suggests firm but increasingly stretched upside momentum as the pair approaches higher structural barriers.
On the topside, initial resistance is seen at the upward trend-line break near 0.7354, with subsequent barriers emerging at 0.8597 and then 0.9394. On the downside, immediate support is located at 0.7198, ahead of the moving average cluster around 0.7057 and the ascending trend-line levels at 0.7017 and 0.6900, with a deeper structural base at the prior downward trend-line break near 0.6385.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.06% | -0.29% | 0.13% | -0.04% | 0.29% | 0.04% | |
| EUR | 0.11% | 0.07% | -0.18% | 0.22% | 0.08% | 0.41% | 0.16% | |
| GBP | 0.06% | -0.07% | -0.21% | 0.17% | 0.06% | 0.37% | 0.08% | |
| JPY | 0.29% | 0.18% | 0.21% | 0.40% | 0.23% | 0.55% | 0.31% | |
| CAD | -0.13% | -0.22% | -0.17% | -0.40% | -0.16% | 0.22% | -0.10% | |
| AUD | 0.04% | -0.08% | -0.06% | -0.23% | 0.16% | 0.34% | 0.05% | |
| NZD | -0.29% | -0.41% | -0.37% | -0.55% | -0.22% | -0.34% | -0.27% | |
| CHF | -0.04% | -0.16% | -0.08% | -0.31% | 0.10% | -0.05% | 0.27% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
- GBP/USD churned flat on Wednesday near 1.3550, waiting for the data that will shape next week's policy calls.
- US (United States) inflation prints on Thursday and Friday, and will set the table for a potential Fed hike on September 16.
- The Bank of England meets a day later and is widely expected to hold.
The real tension weighing on GBP/USD is a rate parity that masks a divergence. Both central banks sit at 3.75%. Federal Reserve (Fed) Chair Warsh's Jackson Hole speech two weeks back opened the door to a hike, with markets now pricing in over 60% odds that the Fed raises a quarter point on the 16th. The Bank of England's MPC (Monetary Policy Committee) voted 6–3 to hold at its July 30 meeting, with three members preferring a move to 4%. The BoE (Bank of England) faces the same energy shock that is pushing inflation toward 3.2% this year. The difference is that Fed Chair Kevin Warsh reads the inflation problem as unresolved. The BoE's split vote reads as exhaustion.
Cable's chart confirms the indecision. A rally from 1.3400 in early August ran out of gas near 1.3675 on August 21. The pair has ground lower for two weeks. The 1.3550 handle is the middle of August's range and sits as session-level support on Wednesday. Stochastic RSI is oversold but rolling over, a sign that the selling impulse has lost momentum. The 50-day and 200-day exponential moving averages cluster around 1.3550 and 1.3400, establishing two technical tiers. Resistance is 1.3650.
What moves Cable right now
Thursday's US Producer Price Index (PPI) and US Consumer Price Index (CPI) on Friday are the last two inflation reads before September 16. Core PPI is expected at 0.3% MoM and 3.3% YoY. Core CPI comes in at 0.2% MoM and 3.4% YoY expected. Both sit above the prior month. A hotter print extends Warsh's case for a hike and bids the Dollar higher. A softer print lets the market reprice rate cuts back in, and Sterling rallies with it.
The calendar also carries the usual noise: Initial Jobless Claims on Thursday at 205K expected, Existing Home Sales Thursday, and this week's UK Purchasing Managers Index (PMI) reading on Friday. The UK's own CPI print is due Friday, expected at 2.6% YoY, and it lands on the same day as the Fed (Federal Reserve) decision cascade. The BoE's own decision announcement comes September 17 at noon GMT (Greenwich Mean Time). Timing is the tell: UK inflation lands before the Bank of England decision, so a hot reading pushes the hawkish minority's case for a 4% hike at the MPC (Monetary Policy Committee) vote.
The trade setup
Resistance: 1.3650. Support: 1.3475, then 1.3400.
Cable breaks below 1.3475 on any CPI or PPI surprise higher, targeting 1.3400 and opening the door to a retest of August's 1.3350 low if the Fed raises and Cable round-trips. The invalidation is a break above 1.3650 on a softer inflation read and Fed pause repricing, which shifts the technical bias toward the 1.3675 August high and the 1.3700 handle.
GBP/USD daily chart
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.
US President Donald Trump crossed the wires on Wednesday, saying that the Iran war will end “immediately” right after the US midterm elections. He said that Iranians are “desperate to try and affect the election,” told to reporters before leaving for the Republican National Convention in Dallas.
Trump said he had a great conversation with his counterpart, Russian President Vladimir Putin, adding that a bilateral meeting could take place. Regarding Iran, he said negotiations could take place.
Key highlights:
TRUMP: GREAT CONVERSATION WITH RUSSIA'S PUTIN
TRUMP: BILATERAL MEETING COULD HAPPEN
TRUMP ON GASOLINE PRICE: IT WILL TAKE A LITTLE BIT LONGER
TRUMP ON IRAN: WAR IN IRAN WILL END IMMEDIATELY AFTER ELECTION
TRUMP ON IRAN: I'M DOING MUCH MORE THAN A NUCLEAR DEAL
TRUMP ON IRAN: NEGOTIATION COULD HAPPEN
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.04% | -0.29% | 0.15% | -0.02% | 0.24% | 0.07% | |
| EUR | 0.08% | 0.04% | -0.21% | 0.24% | 0.05% | 0.34% | 0.16% | |
| GBP | 0.04% | -0.04% | -0.25% | 0.21% | 0.03% | 0.30% | 0.13% | |
| JPY | 0.29% | 0.21% | 0.25% | 0.44% | 0.27% | 0.53% | 0.38% | |
| CAD | -0.15% | -0.24% | -0.21% | -0.44% | -0.18% | 0.11% | -0.07% | |
| AUD | 0.02% | -0.05% | -0.03% | -0.27% | 0.18% | 0.27% | 0.12% | |
| NZD | -0.24% | -0.34% | -0.30% | -0.53% | -0.11% | -0.27% | -0.19% | |
| CHF | -0.07% | -0.16% | -0.13% | -0.38% | 0.07% | -0.12% | 0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- GBP/JPY falls for the third day but avoids a fresh lower low.
- Oversold RSI warns of a rebound, though bearish bias persists.
- Break below 207.10 exposes 206.78 and 206.00 support.
GBP/JPY falls for the third straight day on Wednesday, but it fails to register a lower low, suggesting buyers are stepping in but lack the strength to push the exchange rate past the opening price, leaving the pair near this week's lows. The cross-pair trades at 208.05, down 0.22%.
GBP/JPY Price Forecast: Technical outlook
From a market structure perspective, GBP/JPY is downward-biased after reaching the lowest low of the year at 207.10 on Tuesday, which could open the door for further downside. Momentum, as measured by the Relative Strength Index (RSI), turned oversold. Yet, due to the speed of the decline, the cross remains downward-biased unless the RSI clears the 30 level.
On the downside, the first support is 208.00. A breach of the latter will expose the YTD low of 207.10. Once hurdled, the next stop is the December 16, 2025, low of 206.78, followed by 206.50 and 206.00.
For a bullish reversal, the GBP/JPY must reclaim the September 8 high of 209.08. Once done, this could form a ‘bullish engulfing’ chart pattern, indicating that buyers have overtaken sellers. In that scenario, the next stop would be 210.00, followed by the 200-day Simple Moving Average (SMA) at 213.09, which would emerge as the next ceiling level.
GBP/JPY Price Chart – Daily
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.16% | -0.20% | -1.55% | -0.20% | -0.27% | 0.70% | 0.13% | |
| EUR | 0.16% | -0.03% | -1.38% | -0.04% | -0.10% | 0.89% | 0.29% | |
| GBP | 0.20% | 0.03% | -1.44% | 0.00% | -0.06% | 0.90% | 0.34% | |
| JPY | 1.55% | 1.38% | 1.44% | 1.45% | 1.36% | 2.36% | 1.75% | |
| CAD | 0.20% | 0.04% | -0.01% | -1.45% | -0.03% | 0.92% | 0.33% | |
| AUD | 0.27% | 0.10% | 0.06% | -1.36% | 0.03% | 0.97% | 0.41% | |
| NZD | -0.70% | -0.89% | -0.90% | -2.36% | -0.92% | -0.97% | -0.61% | |
| CHF | -0.13% | -0.29% | -0.34% | -1.75% | -0.33% | -0.41% | 0.61% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
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