Forex News

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann reports that USD/CNH has bounced sharply to 6.7153, with intraday gains likely capped near 6.7200. The bank’s earlier negative stance has softened as downward momentum fades, and over the next one to three weeks, it now expects the pair to edge higher within a 6.7040–6.7290 range.

From downside bias to gentle rebound

"24-HOUR VIEW: We indicated yesterday that USD “could trade between 6.7030 and 6.7100.” USD then dipped to 6.7043 before rising sharply to 6.7153. While the sharp rise has scope to extend, any advance is expected to face strong resistance at 6.7200. Support is at 6.7085."

"1-3 WEEKS VIEW: We have been holding a negative USD stance since the start of the month. In our most recent narrative from Monday (07 Sep, spot at 6.7070), we noted that “downward momentum has increased further, and if USD breaks and holds below 6.7000, it could decline further to 6.6900.” Yesterday, USD rose sharply to 6.7153. Although our ‘strong resistance’ level at 6.7160 has not been breached yet, downward momentum has largely faded. The increasing upward momentum suggests USD could edge higher, but currently, any advance should stay within a 6.7040/6.7290 range."

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

• XAG/USD holds below neckline despite bouncing from two-day lows.
• Bearish RSI signals sellers retain short-term technical control.
• Break below $62.55 exposes $61.01 and $60.00 next.

Silver price registers gains of over 1%, yet it is trading below the ‘head and shoulders’ neckline, an indication that the overall trend in the short-term may be tilted to the downside. The XAG/USD trades at $64.24, after bouncing off daily lows of $62.94.

XAG/USD Price Forecast: Technical Outlook

The white metal is poised to trade sideways if it struggles to clear the neckline at around $64.10-$64.15, with bearish momentum continuing to build. Although Silver is positive in the day, momentum is tilted to the downside, as indicated by the Relative Strength Index (RSI) below the 50 neutral level, despite aiming higher.

If XAG/USD rises past $65.00, it could open the door for a recovery to the 100-day Simple Moving Average (SMA) of $66.94. On further strength, the $67.00 could be cleared, and bulls could test the $70.00 figure up next. Above waits the 200-day SMA at $73.05.

On the flip side, Silver’s first support is the $64.00 mark. If bearish momentum builds, sellers can test the 50-day SMA at $62.55 before targeting the July 22 high-turned-support at $61.01. A breach of the latter will expose $60.00.

XAG/USD Price Chart – Daily

The US Dollar Index (DXY) closes the week near the 99.00 zone, little changed on the day and holding the ground it clawed back after a brief wobble on Thursday's US inflation release. The Greenback enters a defining week in a familiar spot, firmer in tone, but still unable to turn a hawkish rates story into a decisive breakout.

Wednesday's Federal Reserve (Fed) decision anchors everything, and markets now lean toward a quarter-point hike that would lift the target range to 4.00% from 3.75%, following an August Consumer Price Index (CPI) report in which core prices ran hotter than forecast. With the move largely priced in, attention shifts to updated economic projections and Chair Kevin Warsh's press conference for signals on whether this is a one-off insurance hike or the start of something longer.

Canada opens proceedings with August inflation on Monday, alongside a batch of Chinese activity data. Tuesday brings the United Kingdom (UK) labor market report and Germany's ZEW sentiment survey. Wednesday is the pivot: UK CPI and a rebound-tipped US Retail Sales print land before the Fed decision, projections and press conference. The Bank of England (BoE) follows on Thursday, and the Bank of Japan (BoJ) closes the week on Friday.

The European Central Bank (ECB) is well-represented on the speaking circuit, with President Christine Lagarde due several times and colleagues Schnabel, Cipollone, Elderson and Lane also scheduled, though the Eurozone's own data is limited to final inflation confirmations, industrial production and the ZEW survey. Japan adds trade figures and national CPI, New Zealand reports second-quarter Gross Domestic Product (GDP), and the Reserve Bank of Australia's (RBA) Governor, Michele Bullock, speaks on Thursday. Overhanging it all is the unresolved situation around Iran and the Strait of Hormuz, which continues to set the tone for energy prices.

EUR/USD closes around 1.1590, softer on the day. The domestic calendar is thin, with final August inflation readings, industrial production, and the ZEW survey, so the pair stays largely a Dollar story into Wednesday's Fed decision. A hawkish hike would pressure it, but the Greenback's repeated failure to hold gains has kept a floor under the Euro.

GBP/USD trades near 1.3525, roughly flat on the day, and finally has a home calendar worth watching. Tuesday's jobs report, with the unemployment rate seen ticking up to 5.0%, precedes Wednesday's CPI, where core inflation is expected to firm to 2.7%. The Bank of England (BoE) decision on Thursday is expected to hold rates at 3.75%, though the market is looking for a sizeable minority around three members to vote for a hike. Sterling has its own catalysts, but the Fed still sets the bigger tone.

USD/JPY sits around 153.70, pressed lower as a soft Dollar met a firmer Yen. Friday's BoJ meeting is the domestic highlight, with markets leaning toward a hike to 1.25% that would take Japanese rates to their highest in decades. Thursday's national CPI feeds the debate. With the Fed and BoJ potentially tightening in the same week, the risk is skewed toward further Yen strength.

AUD/USD trades near 0.7170 and is the standout among the majors, holding firm into the weekend. The home calendar is light, with Bullock the main event on Thursday, so the Aussie leans on risk appetite, Monday's Chinese activity data and the Fed's guidance. A hawkish surprise is the clearest threat to its recent run.

West Texas Intermediate (WTI) Oil hovers near $100 after shedding more than 3% on the day, with no Oil-specific releases due. The story stays geopolitical: the standoff around Iran and the Strait of Hormuz keeps a floor under prices, and the International Energy Agency's warning of a widening supply deficit adds to the backdrop even as this week's pullback shows how quickly sentiment can turn.

Gold trades near $4,350, close to record highs after another firm session. With no catalyst of its own, the metal is keyed to the Fed: a hawkish hike and firm guidance from Warsh could finally spark a pullback, while any softness in the message would likely extend the run.

ING analysts Chris Turner and Padhraic Garvey argue the Bank of Japan is likely to hike 25bp to 1.25% and then proceed cautiously. They see government resistance to aggressive tightening and project two additional 25bp hikes in January and April, taking the policy rate to 1.75%, which they view as near‑neutral ahead of a temporary consumption tax cut.

BoJ seen hiking but staying cautious

"Formal communication from the BoJ this year has acknowledged that the real policy rate is negative and needs to be raised. Various BoJ speeches have discussed the concept of a neutral rate, which most see in the 1.1-2.5% range in nominal terms."

"We doubt the BoJ would want to shock investors and Scott Bessent by leaving the policy rate unchanged at 1.00%. A 25bp rate hike to 1.25% looks likely. The marginally bigger risk than unchanged rates is a 50bp rate hike, perhaps as part of a broader understanding with Washington designed to sustainably push USD/JPY lower, reduce the need for large-scale dollar selling intervention from the BoJ and help stabilise JGBs."

"However, the Japanese government has an aggressive pro-growth strategy and will no doubt express its views against a more aggressive tightening cycle. Maybe we are underestimating a shift here, but it is hard to see government officials backing a much faster tightening cycle of either a 50bp hike in September or back-to-back hikes in September and October. Instead, our house view is for two further 25bp rate hikes next January and April, which would take the policy rate to 1.75%."

"A near-neutral 1.75% policy rate next April seems an appropriate target before the consumption tax on food and non-alcoholic beverages is cut from 8% to 1% that month for two years. That will sharply depress headline inflation – perhaps for the next two years – and would create a difficult environment in which to deliver further tightening."

"When it comes to prices, the BoJ narrative has firmly shifted towards inflation moving onto a sustainable path. One central theme now is that higher input/producer prices are more likely to feed through into broader CPI. The most recent Tankan business survey showed output price expectations rising sharply and the BoJ is focusing heavily on the 7% year-on-year growth in corporate goods prices."

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