Forex News
- The US ISM Services PMI is expected to improve marginally in August.
- The US services sector should remain well into expansionary territory.
- Bets of further Fed tightening appear to have regained traction in the last few days.
On Thursday, we’ll get the latest read on the US service sector when the Institute for Supply Management (ISM) publishes its August gauge. Consensus points to a marginal improvement to 54.3 from July’s 54.1. If confirmed, the reading would reinforce the sector’s resilience and offer a modest boost to confidence in the broader economy.
Back in July, the details from that release were mixed: hiring momentum weakened, with the ISM Employment Index dropping to 47.4 (from 51.2). On the flip side, New Orders gathered decent steam, increasing to 57.2, which hinted that demand may be picking up pace. In tandem with the steady growth, the Prices Paid Index rose to 70.3, echoing the strengthening momentum of inflation pressures.
What to expect from the ISM Services PMI report?
Inflation in the US is still running hotter than the Federal Reserve’s (Fed) 2% target, and that keeps policymakers uneasy, especially amid the still unresolved crisis in the Middle East and with the full effects of US tariffs yet to filter through the economy.
The inflationary pressure in the US appears to have lost some traction in July, following the small decline in the Consumer Price Index (CPI), while Personal Consumption Expenditures (PCE) readings remained unchanged from a month before. However, Fed officials and Chair Kevin Warsh have been cautious in their latest comments, keeping the issue of (still elevated) inflation on the table and the main source of the recent pick-up in speculation surrounding rate hikes in the second half of the year.
Against that backdrop, an ISM Services PMI that lands in line with expectations probably won’t move the US Dollar (USD) much. It would simply confirm the picture of an economy that’s still resilient but still wrestling with sticky price pressures. A softer-than-expected print, though, could shake confidence and see investors probably trimming their USD holdings on fears that growth is losing momentum.
When will the ISM Services Purchasing Managers Index report be released, and how could it affect EUR/USD?
The Institute for Supply Management (ISM) will publish the Services Purchasing Managers Index (PMI) on Thursday at 14:00 GMT.
Pablo Piovano, Senior Analyst at FXStreet, explains that the near-term outlook for EUR/USD has deteriorated since the recent break below its critical 200-day SMA in the 1.1630 region.
Against that, Piovano argues that there is a provisional support at the 100-day SMA near 1.1570, while a deeper retracement could lead to a test of the minor support at 1.1511 (August 13), ahead of the interim 55-day SMA around 1.1490.
On the flip side, “if the pair manages to reclaim the 200-day SMA, it could then attempt a move toward the August peak at 1.1711 (August 21)", Piovano adds.
“Momentum indicators also suggest that further pullbacks should remain on the cards, as the Relative Strength Index (RSI) has retreated to the 52 region, while the Average Directional Index (ADX) near 37 suggests that the current trend is quite firm”, he concludes.
Economic Indicator
ISM Services Employment Index
The ISM Non-Manufacturing PMI released by the Institute for Supply Management (ISM) shows business conditions in the US non-manufacturing sector, taking into account expectations for future production, new orders, inventories, employment and deliveries. It is a significant indicator of the overall economic condition in the US. The ISM Services Employment Index represents business sentiment regarding labor market conditions and is considered a strong Non-Farm Payrolls leading indicator. A result above 50 is positive (or bullish) for the USD.
Read more.Next release: Thu Sep 03, 2026 14:00
Frequency: Monthly
Consensus: -
Previous: 47.4
Source: Institute for Supply Management
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
- The Indian Rupee jumps to a fresh two-month high against the US Dollar, with USD/INR sliding to near 94.28.
- Robust foreign inflows through RBI’s special forex scheme have strengthened the Indian currency.
- The US Dollar declines after soft US ADP Employment Change data.
The Indian Rupee (INR) opens strongly against the US Dollar (USD) on Thursday, extending the rally to near 94.28. The Indian currency gains significantly as a juggernaut mobilisation of foreign exchange in India through the Reserve Bank of India’s (RBI) Foreign Currency Non-Resident (FCNR) (B) deposits window has increased FX reserves.
According to a Reuters report, India attracted a much larger-than-expected $136.38 billion through special foreign-currency mobilisation schemes, the RBI said on Wednesday, empowering the Indian central bank to contain more pressure.
In the last several months, the RBI was seen intervening in spot and Non-Deliverable Forward (NDF) markets to support the Indian currency against excessive one-sided volatile moves amid geopolitical uncertainty.
In addition to a significant inflow of foreign funds through the RBI’s special foreign exchange window, weakness in the US Dollar has also pressured USD/INR.
Soft US private labor data hurts US Dollar
The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, fell sharply on Wednesday and has extended its decline on Thursday to near 99.28 so far in the Asian session.
The Greenback came under pressure after the US ADP reported that the private sector created 38K fresh jobs in August, fewer than 47K estimate and the prior release of 46K. This has set a weak stage for the Nonfarm Payrolls (NFP) data for August, which will be published on Friday.
Investors will closely track the US NFP data as it is expected to influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
On Wednesday, New York Fed Bank President John Williams expressed confidence that the labor market is “stable and solid", and inflation expectations are “contained”.
India growth surprise narrows room for RBI to stay dovish
Analysts at Societe Generale highlight that India’s “reported 2Q26 real GDP growth of 7.8%, 80bp above the RBI’s forecast,” suggests aggregate demand is absorbing “tighter financial and adverse external conditions more comfortably than previously assumed.” They stress that the upside surprise was “reasonably broad-based,” noting that real GVA “expanded 8.2%, services grew 10.0%, manufacturing 9.2% and gross fixed capital formation 11.9%, while private consumption rose 7.1%.”
Societe Generale adds that this “supercharged growth comes on the back of a massive upward revision to the 1Q26 real GDP and real GVA growth by 0.80 percentage points each,” which in their view “reduces the downside growth cost of additional monetary tightening and suggests that the economy is operating with less spare capacity than embedded in the RBI’s current FY27 growth projection of 6.7%.”
At the same time, the bank cautions that the principal downside risks to this assessment would be “a sharp reversal in food and energy prices, a material weakening in domestic activity, or evidence that the exceptional GDP print overstates underlying demand momentum (which we believe is likely the case).”
Technical Analysis: USD/INR sees more downside to near 94.15
In the daily chart, USD/INR trades at 94.48, keeping a bearish near-term bias as spot holds below the 20-period exponential moving average (EMA) at 95.32.
The bearish structure is reinforced by price trading under this key trend reference, while the Relative Strength Index (14) at 27.96 slips into oversold territory, hinting that while selling pressure dominates, the downside could start to lose momentum if sub-95 levels persist.
On the topside, initial resistance is provided by the 20-day EMA at 95.32, and a daily close back above this barrier would be needed to ease immediate downside pressure and signal room for a corrective bounce. Looking down, the pair is expected to find support near the June 25 low at 94.16.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Chris Turner at ING notes that a near 1% drop in USD/JPY within minutes, followed by another slide, sparked talk of renewed Japanese intervention after the Bank of Japan’s earlier $96 billion sales. Authorities appear satisfied with price action, but Turner says a likely Fed hike in mid-September should keep USD/JPY supported unless the Bank of Japan turns much more hawkish.
Authorities watch sharp Yen moves
"The near 1% fall in USD/JPY over a couple of minutes yesterday afternoon, and another slide overnight, sparked talk of another round of intervention."
"This follows the $96bn sold by the Bank of Japan in late July/early August. Traders seemed to doubt that this was an intervention, given the lack of dislocation in the FX electronic matching systems at the time."
"US and Japanese authorities must be satisfied by yesterday’s price action and keen to encourage a sense of urgency for those long USD/JPY and EUR/JPY above 160 and 186, respectively."
"That said, a Fed hike in mid-September looks likely to keep USD/JPY relatively bid this month and any sustainable turn lower in USD/JPY now probably requires a much more hawkish Bank of Japan and some new initiatives to encourage domestic investment in Japan."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver price faces resistance near $66.25 in the countdown to the US NFP data.
- The Fed is expected to raise interest rates in the policy meeting this month.
- Higher oil prices could pressurize the Silver price.
Silver price (XAG/USD) struggles to extend Wednesday’s strong recovery move above $66.25 during the European trading session on Thursday. The white metal could remain sideways as investors await the United States (US) Nonfarm Payrolls (NFP) data for August, which will be released on Friday.
US jobs rebound seen keeping Fed on hold despite hawkish risks
According to TD Securities, August Nonfarm Payrolls are expected to “rebound to 95k after July posted a decline of 23k,” with the firm cautioning that “risks to our payrolls forecasts appear hawkish, and we would not rule out an outsized positive surprise.” The unemployment rate is projected to have “gone sideways at 4.1% with balanced risks,” suggesting only limited change in headline labour market conditions.
Investors will pay close attention to the US NFP report as it is expected to influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
Analysts at TD say that “a modestly hawkish employment report will reaffirm the Fed's attention on inflation, but it will be by itself unlikely to push the Committee towards hikes,” as they “continue to expect that inflation data can print modestly, allowing the Fed to keep rates on hold for now.”
According to the CME FedWatch tool, traders see a two-in-three chance that the Fed will increase interest rates in the September policy meeting.
Elsewhere, higher oil prices due to restricted energy shipments through the Strait of Hormuz, a vital passage to almost one-fifth of global energy supply, could fizzle out the recovery move in the Silver price.
Higher oil prices prompt global inflation expectations, a scenario that increases fears of interest rate hikes from central banks. Such a case bodes poorly for non-yielding assets, like Silver.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $66.00. The pair holds above the 20-day Exponential Moving Average (EMA) at $65.51, keeping the near-term bias constructive as price extends its recovery from the mid-$50s area.
The Relative Strength Index (14) at 53.04 sits in neutral territory but leans higher, which suggests buyers still have the upper hand without the market being overstretched.
On the downside, immediate support is seen at the 20-day EMA at $65.51, where a deeper pullback would be expected to attract fresh demand. Looking up, the August high near $71 is expected to remain a key barrier.
(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.
- Dow Jones futures rise as crude oil prices and bond yields pulled back, relieving recent pressure on equities.
- ADP reports show US private employers added 38,000 jobs in August, missing the expected 47,000 consensus estimate.
- Markets continue pricing a two-thirds rate hike probability as traders await upcoming claims and Friday payrolls data.
Dow Jones futures gain by 0.18% to trade near 53,220 during European hours on Thursday. Meanwhile, S&P 500 futures advance by 0.16% to trade near 7,690, while Nasdaq 100 futures inch higher by 0.03% to trade around 29,200.
US stock futures advance as pressure on equities began to ease following a pause in the recent surge of oil prices and bond yields. Sentiment was further shaped by fresh economic data revealing a notable cooling in the labor market. According to ADP figures, US private-sector employment added just 38,000 jobs in August, falling short of the 47,000 positions economists had anticipated.
Despite the softer labor data, financial markets continue to price in roughly a two-thirds probability of a Federal Reserve (Fed) interest rate hike later this month. This lingering uncertainty has traders closely monitoring upcoming economic catalysts, particularly initial jobless claims and Friday’s comprehensive nonfarm payrolls report, to gain a clearer signal on the central bank's next policy move.
Futures market momentum follows a solid performance during the previous session, where Wall Street successfully snapped a three-day losing streak. On Wednesday, the Dow Jones Industrial Average rose 0.56%, the S&P 500 gained 0.46%, and the Nasdaq Composite climbed 0.45%, with market gains largely driven by strong performances in the materials, communication services, and health care sectors.
US equities find support as Mag 7 rebound led by Nvidia and Meta
According to strategists at Deutsche Bank, “US equities finally stabilised yesterday,” with the S&P 500 “(+0.46%) recovering after 3 consecutive declines.” They highlight that the move was “lifted by a decent rally for the Mag 7 (+0.76%), which in turn were lifted by Nvidia (+3.21%) and Meta (+2.47%),” underscoring the continued leadership of mega-cap technology in supporting the broader index.
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
BNY’s Geoff Yu notes that the July FOMC-driven Dollar hedging impulse has largely run its course, with early signs of USD buying returning against EUR, MXN and CAD. Trade-weighted Dollar holdings are historically light, suggesting scope for stabilization, but a sustained recovery still depends on stronger U.S. asset demand and renewed real-rate leadership.
Dollar hedges unwind after FOMC
"Our flows are showing the first signs of dollar stabilization after a difficult August. After spending much of Q2 and Q3 significantly overheld as part of the “U.S. exceptionalism” trade, the dovish interpretation of the July FOMC meeting prompted a flurry of dollar hedging."
"One day doesn’t signal a trend, but the past three weeks indicate there was no appetite to add aggressively to dollar hedges. The Fed’s signal that it’s willing to continue rate hikes removes the main driver for dollar sales in early August."
"Overall USD holdings remain elevated, but without any re-opening of a policy gap between the U.S. and peers, we don’t see any additional constraints on dollar performance. Tariffs notwithstanding, stronger performance against the currencies of key U.S. trading partners also represents incremental tightening through pass-through."
"We expect dollar holdings to stabilize around current levels now that Fed expectations have adjusted. There are idiosyncratic reasons for markets to avoid adding to MXN, CAD and EUR aggressively, while CNY’s impact is diminishing."
"Shifting the dollar toward a case of holdings recovery requires strong asset interest and leadership in real rates. Qualitatively, this requires the Fed to shift toward restrictive policy – a stance that all but precludes asset performance, especially in equities."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Here is what you need to know on Thursday, September 3:
The Japanese Yen (JPY) continues to gather strength against its major rivals in the European session on Thursday, building on Wednesday's impressive rally. In the second half of the day, the US economic calendar will feature weekly Initial Jobless Claims data and the Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI) report for August.
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 | -0.17% | 0.25% | -1.99% | -0.67% | -0.28% | 1.02% | 0.12% | |
| EUR | 0.17% | 0.43% | -1.80% | -0.52% | -0.12% | 1.14% | 0.30% | |
| GBP | -0.25% | -0.43% | -2.31% | -0.94% | -0.54% | 0.71% | -0.21% | |
| JPY | 1.99% | 1.80% | 2.31% | 1.24% | 1.71% | 2.93% | 2.02% | |
| CAD | 0.67% | 0.52% | 0.94% | -1.24% | 0.40% | 1.68% | 0.74% | |
| AUD | 0.28% | 0.12% | 0.54% | -1.71% | -0.40% | 1.26% | 0.34% | |
| NZD | -1.02% | -1.14% | -0.71% | -2.93% | -1.68% | -1.26% | -0.91% | |
| CHF | -0.12% | -0.30% | 0.21% | -2.02% | -0.74% | -0.34% | 0.91% |
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).
USD/JPY declined sharply during the American trading hours on Wednesday and lost about 1% in a less than 30 minutes. Although this action in markets resembled a possible currency intervention, there was no official confirmation from either the Japanese or the US side. The pair remains under persistent bearish pressure and trades at its lowest level in a month below 157.00 in the European morning on Thursday, losing more than 1% on the day. Reflecting the broad JPY strength, EUR/JPY is down 1% on the day near 182.00, while GBP/JPY also loses slightly more than 1% at around 212.00.
Yen resilience tests USD/JPY longs as Japan data backs BoJ tightening case
Analysts at ING argue that both US and Japanese officials are likely content with the latest moves in the currency market, noting that "US and Japanese authorities must be satisfied by yesterday’s price action and keen to encourage a sense of urgency for those long USD/JPY and EUR/JPY above 160 and 186, respectively." Even so, ING cautions that policy dynamics still favour the Dollar in the near term, with "a Fed hike in mid-September" seen as likely to "keep USD/JPY relatively bid this month," and that "any sustainable turn lower in USD/JPY now probably requires a much more hawkish Bank of Japan and some new initiatives to encourage domestic investment in Japan."
Adding to the case for tighter policy, Deutsche Bank highlights that "Japan's services sector expanded at its fastest pace in five months in August, adding to evidence of resilient domestic activity and potentially strengthening the case for further Bank of Japan (BoJ) policy tightening." Together, the stronger data backdrop and official tolerance for recent price action underscore the growing pressure on Yen bears, particularly those positioned in extended USD/JPY and EUR/JPY longs.
Meanwhile, US President Donald Trump said on Wednesday that the renewed campaign against Iran “won’t continue for too long," adding that he is prepared to launch another attack on Iran. During remarks at the White House, he said that Iran was trying to build a rocket that drops sea mines and was trying to rebuild radar and missile systems. The barrel of West Texas Intermediate (WTI) holds steady at around $88.50 after closing virtually unchanged on Wednesday.
The US Dollar (USD) Index continues to edge lower and fluctuates below 99.50 after closing marginally lower on Wednesday.
US Dollar narrative steadies as ING eyes ISM services and back-end yield risks
Strategists at ING note that the latest US data have done little to shift the broader policy narrative, with “ADP payrolls came in at 38k, leaving few marks.” They point out that market conviction on a September Fed hike “decreased slightly yesterday, with pricing declining from 18bp to 15bp,” adding that this modest pullback was “likely due to the oil rally stalling” rather than any meaningful reassessment of the economic outlook.
Looking ahead, ING highlights that “today, the ISM services report is in focus, and expected to flatten at 54.1,” and argues that “the bar to drive the Fed away from a September hike looks fairly high, especially for second-tier data.” At the same time, they caution that “the main risk remains that higher back-end yields can prompt more interventionism by the Treasury and a revamp of the debasement trade,” underscoring that curve dynamics and policy responses at the long end remain a key source of uncertainty for the Dollar.
EUR/USD clings to small recovery gains and trades at around 1.1600 in the European session on Thursday.
GBP/USD stabilizes near 1.3500 after posting moderate losses for two consecutive days.
Gold (XAU/USD) gathered strength in the American session on Wednesday and rose more than 1% on the day. XAU/USD preserves its bullish momentum and was last seen trading near $4,440, rising about 1.2% on the day.
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 is struggling to find acceptance above 1.1600 after bouncing from two-week lows at 1.1565.
- The downward revision of the Eurozone's Services PMI has failed to provide support to the common currency.
- ING sees the Euro depreciating further as the market overestimates ECB hawkishness.
The Euro (EUR) picks up against a somewhat softer US Dollar (USD) on Wednesday, but upside attempts are frail, after last week's 0.8% decline and Eurozone PMI data have failed to boost confidence in the Eurozone's economic outlook. The EUR/US is struggling to find acceptance above the 1.1600 area, after bouncing from two-week lows at 1.1565 on Wednesday
Eurozone final HCOB Purchasing Managers Index (PMI) figures have been revised down to a 51.7 reading from the 51.8 previously estimated, which showed a steady expansion level from July. Likewise, the Composite PMI has been revised down to 52.0 from preliminary estimations of 52.1.
Regarding Eurozone countries, German Services PMI has been revised up to 49.7 in August from previous estimations of 48.5, but still at contraction levels, below the 50 mark. In the rest of the Eurozone, France's services PMI has shown the weakest performance, downwardly revised to 48, from previous estimations of 48.4, while Italy and Spain's Services PMIs showed stronger figures with 55.2 and 57.8 respectively.
Later on the day, Eurozone’s Producer Price Index data is expected to show that factory inflation bounced up to a 1.2% growth in July, following a 0.3% contraction in June. These figures would suggest that price pressures remain high, and add pressure on the European Central Bank to hike interest rates later this month.
ING sees the Euro poised for further decline
Analysts at ING, however, warn that ECB policymakers “may be more concerned about widening European bond spreads than second-round inflation risk at this point,” which in their view “argues for a less hawkish message than what markets may be expecting.”
Against that backdrop, ING adds that it “still feels risks are condensed to the downside in EUR/USD and expects a return to the 1.150-1.155 range in the near term.”
In the US, on Wednesday the ADP Employment Change report showed a 38K increase in private jobs in July, below the 47K expected and the lowest level since January.
Beyond that, New York Federal Reserve (Fed) President John Williams affirmed that the bond yields rally is due to the solid economy, rather than to inflation fears, and suggested that he will take a "wait and see" stance at the next Fed meeting, tempering expectations of an interest rate hike.
Economic Indicator
HCOB Services PMI
The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among services providers is generally declining, which is seen as bearish for EUR.
Read more.Last release: Thu Sep 03, 2026 08:00
Frequency: Monthly
Actual: 51.6
Consensus: 51.7
Previous: 51.7
Source: S&P Global
Economic Indicator
HCOB Services PMI
The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in Germany’s services sector. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for EUR.
Read more.Last release: Thu Sep 03, 2026 07:55
Frequency: Monthly
Actual: 49.7
Consensus: 48.5
Previous: 48.5
Source: S&P Global
Commerzbank analysts note that Brent extended its rally and closed above USD95, although gains moderated after President Trump suggested the renewed US bombing campaign against Iran could be short-lived. Despite fresh US strikes and Iranian retaliation across the Middle East, the situation remains highly fluid and there is still little evidence of a durable de-escalation.
Brent holds above 95 dollars
"Brent crude still rose 1.0% to close above USD95, but eased from an intraday high of around USD97 after President Trump said the renewed bombing campaign against Iran would likely be short-lived."
"President Trump said the renewed bombing campaign against Iran would likely be short-lived, although he also stressed that the US was prepared to strike again."
"The US carried out a second round of attacks in three days, targeting radar systems and mine-laying capabilities along Iran’s southern coast, while Iran retaliated against US bases across the Middle East."
"The situation remains highly fluid, with little evidence yet of a durable de-escalation."
"Brent crude oil prices rose 1% to USD95.63 while gold rebounded around 1.2% to USD4,382."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold attracts some follow-through buyers for the second straight day amid a weak USD.
- Wednesday’s soft US ADP report and retreating US bond yields weigh on the Greenback.
- Fed hike bets and geopolitical tensions could limit USD losses and cap the XAU/USD pair.
Gold (XAU/USD) built on its recovery from a nearly four-week low for the second straight day on Thursday, though it remains below $4,450 through the first half of the European session. The US Dollar (USD) plummets to a one-week low and is seen as a key factor supporting the commodity. Against the backdrop of sliding US bond yields and Wednesday's soft US ADP report, a sharp rally in the Japanese Yen (JPY) exerts heavy downward pressure on the buck. However, firming Federal Reserve (Fed) rate-hike expectations and inflation risks stemming from higher energy prices act as a tailwind for US bond yields. Moreover, geopolitical uncertainties could limit deeper losses for the safe-haven USD, warranting caution before placing fresh bullish bets on the precious metal or positioning for further gains.
According to CME Group's FedWatch Tool, traders are pricing in around a 62% chance that the US central bank will hike rates at its upcoming September 15-16 policy meeting. The expectations were lifted by Fed Chair Kevin Warsh's hawkish remarks last Friday. Moreover, worries that rising energy prices will rekindle inflationary pressures back the case for Fed tightening, which could limit the USD's corrective slide and cap the non-yielding bullion. In fact, crude oil prices trade near the highest level since July 24, touched on Wednesday, as tensions between the US and Iran have flared up after fresh US strikes on Iranian targets and retaliatory drone and missile attacks by Tehran across the Gulf region.
Furthermore, US President Donald Trump said on Wednesday that he is prepared to launch another attack on Iran. This, along with continued clashes over the Strait of Hormuz, keeps the geopolitical risk premium in play, which should continue to support oil prices and the USD. Hence, it will be prudent to wait for strong follow-through buying before confirming that the Gold price has bottomed out in the near term and placing fresh bullish bets. Traders might also opt to wait for the release of the crucial US Nonfarm Payrolls (NFP) report on Friday, which will be looked at for more cues about the Fed's future policy path and help in determining the next leg of a directional move for the XAU/USD pair.
XAU/USD 4-hour chart
Technical Analysis
The overnight close above the 23.6% Fibonacci retracement level of the recent corrective slide from an over three-month peak, set in August, and the subsequent move up back the case for further gains. That said, the 38.2% retracement at $4,438 is the first cap, reinforcing the idea of a corrective bounce within a broader downside phase. Furthermore, the Moving Average Convergence Divergence (MACD) indicator turns positive and the Relative Strength Index (RSI) hovers near 49, hinting at stabilizing but not yet bullish momentum.
A move beyond the 38.2% Fibonacci level, however, should pave the way for a move toward the 100-period SMA at $4,480, the 50.0% retracement at $4,487, the 61.8% level at $4,535, and, later, $4,604 and $4,692. On the downside, immediate support emerges at the 23.6% retracement at $4,378, while a deeper pullback would expose the Fibonacci-derived structural floor near $4,282.
(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.
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