Forex News

• USD/JPY declines to near 159.65 as the Japanese Yen outperforms its peers.
• Financial markets hope for US-Japan intervening jointly again.
• Investors await key US ISM Manufacturing PMI and the JOLTS Job Openings data.

The US Dollar (USD) is down 0.3% to near 159.65 against the Japanese Yen (JPY) during the European trading session on Monday. The USD/JPY pair declines as the Japanese currency outperforms its peers on hopes of support from the United States (US)-Japan joint intervention.

Yen intervention in focus

Analysts at Scotiabank flag that the recent “defensive price action is notable, and somewhat worrisome for policymakers at the BoJ, as well as officials at the MoF,” particularly as media reports highlight “the aggregate $96.4bn intervention effort to support the yen from July 30 to August 26.”

US Treasury Secretary Scott Bessent stated that Washington would intervene with Japan to shore up the Asia-Pacific currency, if needed. These comments came after the US and Japan jointly intervened in late July, as USD/JPY jumped to a multi-decade high near 164.00.

Meanwhile, the US Dollar trades lower, with investors shifting their focus to a slew of US economic data, starting with ISM Manufacturing PMI for August and the JOLTS Job Openings data for July releasing on Tuesday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.16% lower to near 99.50.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 159.66. The pair holds a mildly bullish near-term bias as spot remains above the 20-day exponential moving average (EMA) at 159.55, suggesting ongoing demand on dips.

The Relative Strength Index (RSI) at 49.39 sits just below the 50 mark, hinting at consolidative conditions rather than overextended momentum, but still compatible with a gradual topside bias while price holds over the short-term EMA.

On the downside, the August 19 low at 158.05 is the key support level. Looking up, the major hurdle is the Friday high at 160.20, followed by the July 31 high at 160.88.

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

• EUR/USD bounced up from 1.1575 lows but is struggling to extend gains beyond 1.1600.
• Rising Fed tightening hopes and risk aversion amid the resumption of hostilities in Iran are capping the Euro's upside attempts.
• German preliminary HICP is expected to show that price pressures accelerated in August.

The Euro (EUR) posts marginal gains against the US Dollar (USD) on Monday, but it remains close to Friday’s lows at 1.1578, as bulls fail to find significant acceptance above 1.1600. A combination of rising bets of Federal Reserve (Fed) interest rate hikes and cautiousness amid the resumption of hostilities in Iran is weighing on Euro rallies ahead of the release of preliminary German Harmonized Index of Consumer Prices (HICP) data for August.

The common currency dropped sharply on Friday, following an unexpectedly hawkish rhetoric by the Fed Chairman Kevin Warsh at the Jackson Hole summit. Warsh said that the central bank should focus on prices right now and added that they have “work to do” to bring inflation to the bank’s 2% target. Bets for a September hike rose to 61% after the speech from 36% the day before, according to the CME’s FedWatch Tool.

Tensions in Iran dampen risk appetite

Apart from that, the US military attacked Iran for the first time since late July on Sunday, with strikes on the island of Larak, where the Islamic Revolutionary Guard Corps (IRGC) were allegedly preparing missiles to place sea mines in the Strait of Hormuz. Tehran responded by targeting US airbases in Jordan and the United Arab Emirates in a tit-for-tat reaction that complicates the resolution of the conflict even further. The market's risk-averse reaction is posing additional pressure on the Euro.

Against this background, traders await Germany’s preliminary HICP figures from August, which are expected to show that yearly inflation accelerated to 3.1% from 2.8% in July. Landers data published early on the day has shown mixed figures,

Strategists at Danske Bank highlight that the calendar remains packed with market-moving releases, pointing to “another crucial event for the US market with the labour market report for August, which is released on Friday.” They add that, alongside the US jobs data, “we have inflation data from the Eurozone,” underscoring that the twin focus on US labour conditions and Eurozone price dynamics will be central to shaping near-term policy expectations and market sentiment.

TD Securities’ macro team, including Andrew Kelvin and Jayati Bharadwaj, expects the Bank of Canada (BoC) to adopt a dovish tone and provide limited guidance as trade tensions with the US rise. They see the BoC as sidelined, leaving the Canadian Dollar (CAD) exposed as a funding currency, but still doubt USD/CAD can hold above 1.40 and keep a 1.39 year-end forecast.

Canadian Dollar vulnerable as funding

"BoC will take center stage in the midst of rising trade tensions w/ the US; we look for a dovish tone from the Committee & limited guidance to keep options open."

"BoC meeting likely to take focus after markets look to the Bank to give updates in their thinking after US tariffs."

"Sidelined BoC leaves CAD vulnerable as a funding currency, w/ NOK/ MXN better supported by carry & cleaner macro backdrops."

"Even so, we struggle to see sustained USD/CAD trading above 1.40 in a bearish USD environment & maintain our 1.39 YE forecast."

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

• The New Zealand Dollar trades without a clear direction on Monday after receiving some support from slightly better-than-expected Chinese data.
• Chinese activity indicators remain in contraction territory, limiting the support for the New Zealand currency.
• Investors turn their attention to the RBNZ decision on Wednesday, while the US central bank’s hawkish stance supports the US Dollar.

NZD/USD trades around 0.5910 on Monday, virtually unchanged on the day at the time of writing. The New Zealand Dollar (NZD) retains some support from improving Chinese activity data, but the move remains limited as investors prepare for the Reserve Bank of New Zealand (RBNZ) decision on Wednesday.

China’s National Bureau of Statistics (NBS) reported that the Manufacturing Purchasing Managers Index (PMI) rose to 49.8 in August from 49.2 in July, beating expectations of 49.7. Despite the stronger-than-expected improvement, the indicator remains below the 50 threshold separating expansion from contraction in manufacturing activity. The Non-Manufacturing PMI remained unchanged at 49, also in contraction territory.

The Chinese data nevertheless provides moderate support to the New Zealand Dollar due to the close trade ties between New Zealand and China. An improvement in Chinese activity tends to strengthen the outlook for New Zealand exports, although current PMI levels suggest that economic momentum in China remains fragile.

On the domestic front, investors are now focusing on the upcoming RBNZ decision. The NZIER Monetary Policy Shadow Board suggests that the central bank should raise its Official Cash Rate (OCR) by 25 basis points in September. Traders will also monitor guidance on the future path of interest rates, as the prospect of another tightening move by year-end could support the NZD.

This prospect is partly offset by the recent deterioration in New Zealand business confidence. The ANZ Business Confidence Index fell to 53.7 in August from 56.1 previously, while the Activity Outlook declined to 48.2 from 49.3, pointing to some moderation in the domestic economic outlook.

On the US side, the US Dollar (USD) benefits from the hawkish tone adopted by Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole symposium. Warsh stressed that the recent better-than-expected inflation data are not sufficient to demonstrate a lasting improvement in underlying price pressures and indicated that the central bank still has work to do if inflation does not move sufficiently toward its target.

According to the CME FedWatch Tool, markets now see around a 62% chance of a Fed rate hike in September, a sharp increase following Warsh’s comments. This repricing of the US monetary policy outlook provides support to the Greenback and helps keep NZD/USD around 0.5910 despite the more encouraging Chinese data.

Attention is likely to gradually shift toward the RBNZ decision on Wednesday before the key US employment data due on Friday. The Nonfarm Payrolls (NFP) report and the Unemployment Rate could alter expectations surrounding the Fed’s next decision and, consequently, determine the next directional impulse for the US Dollar against the Kiwi.

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5911, retaining a mildly bearish near-term tone as it holds beneath the 100-period simple moving average (SMA) at 0.5946 and the 200-period SMA at 0.5949. The pair is attempting to stabilize just above nearby horizontal demand at 0.5900, while the Relative Strength Index (RSI) at 35.9 hovers near oversold territory, hinting that selling pressure could be losing some momentum without yet signaling a clear reversal.

On the topside, initial resistance appears at 0.5930, followed by the clustered 100-period and 200-period SMAs at 0.5946 and 0.5949, with a stronger cap further up at 0.5967. On the downside, immediate support is located at 0.5900, ahead of a more significant floor at 0.5860, where a break would likely open the way for a deeper decline in the pair.

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

BNY’s Geoff Yu highlights that recent U.S. inflation data left the macro narrative intact, but Fed Chair Kevin Warsh’s Jackson Hole speech pushed markets to reprice September hike odds and lifted the Dollar. The focus now shifts to U.S. JOLTS, ISM surveys and especially nonfarm payrolls, which will test whether the hawkish repricing and benign U.S. growth story can be sustained.

Fed repricing hinges on payrolls

"Last week’s U.S. inflation data did little to upset the macro narrative, with core PCE landing broadly in line, but Fed Chair Kevin Warsh’s Jackson Hole speech was the clear market mover."

"His more hawkish tone drove the market to reprice the probability of a September hike from roughly one-in-three to greater than 50/50, and nearly one and a half cumulative hikes by year end. The curve flattened, and the dollar rose."

"This week looks materially busier on the data front. In the U.S., JOLTS lands Tuesday, followed by ISM Manufacturing and Services on Tuesday and Thursday respectively, with both expected to remain in expansionary territory."

"But the main event is Friday’s nonfarm payrolls (NFP) report, where consensus looks for a rebound to 58,000 after last month’s surprisingly weak -23,000 print."

"NFP is the key release for rates, FX, and risk assets. After last month’s soft employment print, another weak number could temper the hawkish repricing that followed Jackson Hole. Conversely, a firmer print would validate Warsh’s message that the Fed’s focus should be on the inflation side of the mandate."

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

• XAU/USD consolidates losses around $4,450 after depreciating more than 4% late last week.
• Rising Fed hiking bets and geopolitical tensions are buoying the US Dollar.
• Gold prices broke below the key 200-day SMA on Friday.

Gold (XAU/USD) shows marginal gains on Monday, with price action hovering around $4.450 at the time of writing yet unable to take off from last week’s lows in the $4,400 area after depreciating more than 4% late last week. Rising bets that the Federal Reserve (Fed) will hike interest rates in September, coupled with the resumption of hostilities in Iran, are buoying the US Dollar and weighing on precious metals.

Bullion tanked on Friday as Fed Chairman Kevin Warsh conveyed an unexpectedly hawkish message at the Jackson Hole summit. Warsh urged policymakers to focus on prices, and said that the central bank has “work to do” to bring inflation to the bank’s 2% target. Investors ramped up bets of a September hike to 61% from 36% the day before, according to the CME’s FedWatch Tool.

Apart from that, the US and Iran exchanged attacks on Sunday to put an end to about one month of a tense truce. The US military attacked the Iranian island of Larak on Sunday, where the Islamic Revolutionary Guard Corps (IRGC) were allegedly preparing missiles to place sea mines in the Strait of Hormuz. Tehran responded by targeting US airbases in Jordan and the United Arab Emirates. The risk-off reaction has underpinned support to the safe-haven US Dollar.

Technical Analysis: Bears gain confidence below the 200-day SMA

XAU/USD trades at $4,450 after an impulsive reversal on Friday that pushed price action below the 200-day simple moving average (SMA) at $4,528. This is a very popular indicator for traders, and Friday's clear move below it gives fresh hope for bears.

Momentum indicators in the bearish charts show a neutral-to-negative stance, with the Relative Strength Index (RSI) at 54.36 easing into a more neutral zone and the Moving Average Convergence Divergence (MACD) indicator drifting into negative territory, which hints at waning upside momentum and scope for further consolidation or downside probes.

Immediate support is seen at Friday's floor in the $4,400 area, followed by the August 14 low near $4,310 and the August 6 low, near $4,225. Bulls, on the other hand, are likely to be challenged at the mentioned 200-day SMA, at $4,528, and the August 27 low near $4,565 ahead of last week's highs, near $4,700.;

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

• The Indian Rupee drops against the US Dollar at the start of the US data-packed week.
• Higher oil prices due to renewed US-Iran tensions have weighed on the Indian Rupee.
• Fed’s Warsh reiterates that officials are committed to countering high inflation.

The Indian Rupee (INR) opens slightly lower against the US Dollar (USD) at the start of the week. The USD/INR pair ticks up to near 95.43, as higher oil prices due to renewed tensions between the United States (US) and Iran have weighed on the Indian currency.

In the opening session, the MCX Crude Oil price contract expiring on September 21 trades 2.13% higher to near Rs. 8,160.

Lower oil prices bode well for currencies from economies such as India, which rely heavily on oil imports to meet their energy needs.

US and Iran exchange attacks near Hormuz Strait

The exchange of attacks between the US and Iran over the weekend has refreshed fears of military aggression in the Middle East. On Sunday, the US Central Command (CENTCOM) struck Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz, following weeks of relative calm, Bloomberg reported.

In response, Iran's Islamic Revolutionary Guard Corps (IRGC) launched ballistic missile strikes on two US bases in Jordan in retaliation for the US attack on Larak Island.

The restart of the war could prompt fears of a prolonged global oil supply disruption. Financial market participants might not have anticipated US military aggression, as it said earlier this month that it would pursue economic pressure on Tehran to force it to a deal.

Fed’s Warsh reiterates upside inflation risks

At the Jackson Hole Symposium on Friday, Federal Reserve (Fed) Chairman Kevin Warsh reiterated that board members are committed to bringing inflation down to the 2% target.

“This summer's inflation data better than expected, but do not tell me underlying trends have meaningfully changed," Fed Chair Warsh said and added, "Fed's predominant focus right now should be on prices."

Warsh didn’t deliver any remarks regarding the monetary policy outlook, as expected; however, traders raised Fed interest rate hike bets following his remarks.

According to the CME FedWatch tool, the odds of the Fed leaving interest rates unchanged again in the September meeting have diminished to 39.4% from almost 60% seen a week ago.

US NFP will be key event

This week, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for August, which will be released on Friday. Investors will closely track the official employment data to get fresh cues regarding the Fed’s interest rate outlook.

July’s NFP report strongly impacted the Fed’s interest rate expectations after it revealed that US employers fired 23K workers while they were anticipated to hire 80K fresh workers.

India's Q2 GDP data

India's Q2 Gross Domestic Product (GDP) data has come in stronger than expected. The GDP growth remained steady at 7.8% on an annualized basis, faster than estimates of 7.1%.

USD/INR Technical Analysis

In the daily chart, USD/INR trades at 95.43, maintaining a neutral near-term bias as spot remains close to the 20-day exponential moving average (EMA) at 95.53.

The Relative Strength Index (RSI) around 45 stays below the neutral 50 line, reinforcing a lack of bullish momentum rather than signaling oversold conditions.

On the topside, immediate resistance is located at the 20-day EMA near 95.53, which needs to be reclaimed to ease the current bearish tone and open the way for a more sustained recovery. Above the dynamic EMA, the 96.00 level could act as a key hurdle for the pair. Looking down, the August 5 low at 94.92 could be the key support level.

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

• GBP/USD edges higher to near 1.3545 as the US Dollar corrects.
• Fed Chair reiterates upside inflation risks at the Jackson Hole Symposium.
• Cable finds support after sliding slightly below the 20-day EMA.

The British Pound (GBP) is marginally higher at around 1.3545 against the US Dollar (USD) during the European trading session on Monday. The GBP/USD pair rebounds as the US Dollar corrects after a strong upside move on Friday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.15% lower to near 99.53.

The US Dollar gained significantly on Friday, following a speech from Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Symposium, where he warned of upside inflation risks.

Fed chair Warsh signals readiness to keep tightening until inflation improves

Rabobank’s Elwin de Groot highlights that Kevin Warsh struck a notably tougher tone on inflation at Jackson Hole. More importantly, he notes that, for the first time since becoming Chair, Warsh “explicitly expressed dissatisfaction with recent inflation developments and signalled that he was open to further rate hikes unless underlying inflation began to improve convincingly.” As Warsh put it, “We must be convinced that underlying inflation is moving toward our target clearly and at a sufficient pace. Otherwise, we still have work to do.”

Rabobank’s De Groot argues that this formulation underscores the Fed’s willingness to extend the tightening cycle if disinflation stalls, reinforcing upside risks around the policy path even as longer-term rate premia have eased.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3543. The pair holds a mildly bullish near-term bias as it consolidates directly on the 20-day exponential moving average (EMA) at 1.3543 after a corrective move. The pair trades inside a Rising Channel pattern, suggesting that the overall trend will remain bullish but in a limited range.

The Relative Strength Index (RSI) at 52.97 sits just above the neutral 50 mark, hinting at steady but not overstretched upside momentum as the pair respects the reclaimed trend structure.

On the downside, initial support is aligned with the 20-day EMA at 1.3543, which acts as an immediate pivot, followed by firmer demand at the former trend-line break area near 1.3420. Looking up, the pair needs to return decisively above 1.3600 to reclaim the six-month high at 1.3676.

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