Forex News

Wells Fargo Economics has raised its global Gross Domestic Product (GDP) forecast to 2.7% for 2026 and trimmed global Consumer Price Index (CPI) to 4.3%, reflecting a slightly lower Oil price path. They expect final hikes from the European Central Bank (ECB), Reserve Bank of Australia (RBA) and Bank of Japan (BoJ), a possible short cycle from the Bank of England (BoE), while the Bank of Canada (BoC) likely holds and emerging market central banks pursue mixed easing and tightening.

Mixed policy moves across major banks

"We have raised our global GDP growth forecast to 2.7% this year, and have trimmed our global CPI inflation forecast by two-tenths to 4.3% to reflect a modestly lower average oil price path."

"We expect final hikes from the European Central Bank, the Reserve Bank of Australia and the Bank of Japan, and potentially the start of a short hiking cycle from the Bank of England, where the Ofgem price cap has delayed some of the pass-through of the recent spike in energy prices."

"Others, like the Bank of Canada, however, are more likely to hold rates steady as they determine whether commodity-driven price increases begin to feed more meaningfully into underlying inflation."

"Among emerging market economies, policy is more divergent. We expect further easing from the People’s Bank of China as domestic demand remains soft, Brazil’s central bank to continue cutting as inflation moderates, tightening from the Reserve Bank of India and Banxico to remain on hold."

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

Federal Reserve (Fed) Bank of Cleveland President Beth Hammack said in a LinkedIn post on Friday that inflation pressure remains broad-based, with businesses calling for policy action and consumers expressing a growing sense of despair as they struggle to cover their expenses. Hammack noted that companies are facing higher energy and insurance costs, supply-chain disruptions, and pressure related to the expansion of artificial intelligence data centers.

Key takeaways:

Businesses believe action is needed to curb inflation, while consumers who cannot make ends meet are increasingly despairing.

Business leaders point to energy costs and supply-chain disruptions as contributing factors.

Companies are also facing pressure from insurance costs and the buildup of AI data centers.

Growth figures remain solid, while consumer spending is stable.

Economic data are considered alongside conversations with business and community leaders across the Fourth Federal Reserve District.

Inflation is not coming from a single source and appears to be broad-based.

Persistently high inflation is the bigger concern.

Scotiabank’s Shaun Osborne and Eric Theoret report EUR/USD trading slightly lower in quiet conditions as markets look ahead to next week’s ECB meeting, with policymakers in a blackout period and implied volatility subdued. They and consensus expect no policy change. Short-term, the Euro retains a mild uptrend, but a break of mid-1.14 support has dulled bullish momentum and could see a test of 1.1395/1.1405 support.

Pre-ECB consolidation and key supports

"EUR/USD is modestly lower in quiet trade. Market attention is perhaps turning to next week’s ECB policy decision (policymakers are now in their “quiet period” ahead of the meeting) but low implied vol reflects little concern that the outcome will produce any significant surprises."

"We—and the market—expect a hold."

"Eurozone CPI was finalized at –0.1% m/m in June and up 2.8% in the year. The Eurozone reported a EUR25.1bn Current Account surplus for May. "

"Neutral/bullish—The EUR maintains a mild, short-term uptrend against the USD, but gains stalled this week in the upper 1.14s. Losses through minor support in the mid 1.14 area in late week trading have blunted near-term bullishness and may see spot edge back to test support at 1.1395/05 in the next day or so."

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

• Gold struggles near $4,000, heading for a second consecutive weekly loss.
• Renewed disruption in the Strait of Hormuz lifts Oil prices and revives inflation concerns.
• Technically, XAU/USD retains a bearish bias below the Bollinger middle band, with sellers eyeing a break below the lower band.

Gold (XAU/USD) holds firm on Friday but lacks bullish momentum as rising Oil prices revive inflation concerns and reinforce expectations that the Federal Reserve (Fed) could raise interest rates later this year.

At the time of writing, XAU/USD trades around $3,992 after hitting an intraday low of $3,959, its lowest level since July 1.

Meanwhile, the US Dollar (USD) stages a comeback after falling earlier this week following softer-than-expected US inflation data. The recovery in the Greenback limits Gold’s upside and keeps the precious metal on track for a second consecutive weekly loss.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 100.76 after hitting a more than three-week low of 100.35 on Wednesday.

The United States (US) carried out strikes against Iran for a sixth consecutive night, while Tehran responded with missile and drone attacks on US military facilities across the Middle East.

Iran’s Revolutionary Guard Corps said no Oil or gas exports would pass through the Strait of Hormuz as long as US attacks persist, according to the Tasnim news agency.

The longer the disruption to traffic through the Strait lasts, the greater the upside risks to energy prices and inflation, factors that tend to weigh on Gold.

This keeps the hawkish Fed narrative alive, even as softer US inflation data released this week prompted traders to scale back bets on a near-term interest rate hike.

According to the CME FedWatch Tool, markets currently price in around a 73% chance that the Fed will raise interest rates by December.

Recent hawkish remarks from Fed officials have also kept the possibility of tighter monetary policy on the table. Dallas Fed President Lorie Logan said on Thursday that “modestly higher interest rates would better balance the outlook and risks,” adding that inflation does not appear to be heading sustainably back to the 2% target on its own.

On the data front, the preliminary University of Michigan Consumer Sentiment Index rose to 54.4 in July from 49.5 in June, beating the market forecast of 51. One-year Consumer Inflation Expectations from the University of Michigan eased to 4.2% from 4.6%, while the five-year measure held unchanged at 3.3%.

Technical analysis: XAU/USD bears retain control below Bollinger mid-band

In the daily chart, XAU/USD remains under pressure, trading below the Bollinger Bands 20-day Simple Moving Average (SMA) at $4,072. The Relative Strength Index (RSI) at 39.12 is still below the 50 line, while the Average Directional Index (ADX) near 39.77 suggests the prevailing downtrend retains notable strength.

On the upside, initial resistance sits at the Bollinger middle band at $4,072, followed by the confluence of the upper band at $4,199 and the horizontal barrier at $4,200. Beyond that, the next major hurdle emerges at $4,400.

On the downside, immediate support is seen at the lower Bollinger band near $3,945, before the more pronounced horizontal floor at $3,800, where sellers could look to extend the current bearish phase if the latter gives way.

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

TD Securities’ Robert Both expects Canadian headline CPI to ease to 2.9% year-on-year in June, with a 0.2% monthly decline driven by sharply lower Energy prices. Core measures such as CPI-trim and CPI-median are forecast to hold near 2.0%, while Shelter disinflation offsets stronger Food and Travel Services. The profile broadly tracks Bank of Canada projections.

Energy drag and stable core inflation

"We look for headline CPI to slide back to 2.9% y/y in June as prices fall by 0.2% on the large drag from gasoline and other energy products. WTI oil prices fell by nearly 40% from their Q2 highs before bottoming below $70 USD in early July, but gasoline prices have seen a much smaller decline with refineries expanding their margins over the last month. Gasoline and other energy products should shave ~0.4pp from the headline print (m/m) while contributing ~1.0pp to inflation on a year-ago basis (vs 1.5pp in May)."

"Looking past the more volatile energy component should paint a more benign picture for underlying price pressures with core measures forecast to hold steady from May. Shelter prices will remain a source of disinflation with a modest deceleration across both rents, mortgage interest costs, and utilities, even with some stabilization of market based rents over May and June. However, the food component will provide another source of strength on higher producer prices, along with the tailwind from a softer loonie."

"The drag from energy products will more than offset a larger contribution from travel-related components in June, but we do not expect much impact on the Bank's preferred measures of core inflation. We forecast CPI-trim/median to hold at 2.0%/2.1% for a third consecutive month, while the ex. food/energy measure firms by 0.1pp to 1.7% y/y. That would also leave CPI-trim/ median (roughly) stable at 2.4% on a 3m annualized basis, while indicators of CPI breadth are unlikely to move lower with headline CPI."

"A 2.9% print for June would leave headline CPI tracking in line with BoC projections (3.0% in Q2), and the recent pullback in oil prices should give the Bank more scope to look through an upside surprise on core measures or an increase to inflation breadth. Conversely, further deceleration across core measures would leave CPI-trim/median sitting in the lower half of the target range, which might lead to questions around the BoC's policy stance if stronger GDP growth does not materialize over the rest of 2026."

"One wildcard will be the impact on travel-related components from the FIFA World Cup, with 13 games played across Toronto and Vancouver. Previous large-scale events like the 2010 Olympics and 2024 Era Tours saw a sharp increase for traveler accommodation costs, while others like the 2019 NBA Finals or 2025 World Series did not leave much of an impact. Industry sources have reported higher average daily rates on game days in Toronto and Vancouver, but June also tends to see a seasonal headwind to travel services coming off larger NSA increases in May; travel services inflation already accelerated by 7.5pp in May, and we look for another strong performance in June to build on this before unwinding some of the recent strength next month."

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

Thu Lan Nguyen at Commerzbank notes that weaker United States (US inflation data briefly supported Gold, but the price has slipped back below USD 4,000 per troy ounce. With markets still pricing at least one Federal Reserve rate hike and energy-price risks from the Middle East conflict, she sees limited near-term upside, though a more dovish Fed stance could later re-ignite the Gold rally.

Limited upside unless Fed shifts

"Weaker US inflation data — both consumer and producer prices surprised with slower growth in June — have dampened expectations for US interest rate hikes. While the market had previously priced in nearly two rate hikes by year-end, only a single 25-basis-point rate hike is now fully priced in. However, this provided only a brief boost to the gold price. Yesterday, it slipped back below the USD 4,000 per troy ounce mark, where it is currently trading."

"In the short term, further upside potential is likely to remain limited. With the ongoing escalation of the Middle East conflict and the resulting risk of another sharp spike in energy prices, expectations of interest rate hikes are likely to persist for some time."

"A correction, regardless of developments in the US-Iran conflict, is likely to occur only if the market's assessment of the Federal Reserve were to fundamentally change."

"But the picture could also shift again: Warsh, for example, is already suggesting that AI would boost productivity and therefore likely have an inflation-dampening effect. New York Fed President John Williams also recently made similar comments, referring to a long-term downward trend in inflation."

"If this view gains traction within the FOMC, it could mean that interest rate hikes are not considered necessary to combat current inflation."

"The price of gold would then likely benefit not only in the short term from the market pricing out interest rate hikes, but also from the fact that the market perceives increased inflation risks in the long term due to a significantly more dovish stance by the Federal Reserve."

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

• EUR/GBP rises for a second consecutive day as short-covering follows the midweek sell-off.
• The cross still heads for a fourth straight weekly loss after breaking below the 0.8600 support.
• Technically, sellers retain control while EUR/GBP trades below its major moving averages.

EUR/GBP edges higher on Friday, extending gains for a second consecutive day as traders cover short positions following the midweek sell-off. At the time of writing, the cross trades around 0.8501 but is still on track for a fourth straight weekly loss.

From a technical perspective, EUR/GBP faces persistent downside pressure after breaking below the multi-month support at 0.8600 on July 1, pushing the cross to a one-year low.

On the daily chart, EUR/GBP trades around 0.8504 and holds below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs), which are clustered between 0.8617 and 0.8688.

The Relative Strength Index (RSI) trends below 33, just above the oversold threshold of 30, while the Average Directional Index (ADX) at 31 points to a strengthening downtrend.

On the upside, initial resistance appears at 0.8550, followed by the 0.8600 horizontal barrier. Beyond that, the 50-day SMA at 0.8617 and the 100-day SMA at 0.8645 could limit recovery attempts, with the 200-day SMA at 0.8688 acting as a stronger barrier.

On the downside, the next notable support sits at 0.8450. A sustained break below this level could open the door to an extension of the current bearish move.

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

Scotiabank’s Shaun Osborne and Eric Theoret highlight the Canadian Dollar (CAD) as a modest outperformer, with firmer Oil offsetting weak equities and narrowing front-end spreads driving gains. Position adjustment after heavy CAD short-building is adding tailwinds. Technically, they see USD/CAD retaining a negative tone, targeting 1.3981 as 38.2% retracement support, with any mild USD rebounds viewed as selling opportunities below the low/mid-1.41 area.

CAD supported as USD/CAD trends lower

"The CAD is a modest gainer versus the USD on the day, keeping funds pressed down on the low 1.40 area. For a change, firmer crude oil appears to trump weaker stocks as the intraday influence on the CAD. But the overarching drive behind the firmer CAD this week is the narrowing in front-end spreads—which remains an important driver into the end of the week."

"Positioning is perhaps adding to CAD tailwinds as the aggressive build-up of CAD shorts in recent weeks gives way to position adjustment and stop-loss CAD buying."

"Bearish—Spot retains a negative technical undertone. USD losses through retracement support (23.6%) of the May/June rally at 1.4083 and bearish-leaning oscillators retain our focus on USD/CAD easing to 38.2% retracement support at 1.3981. Mild USD rebounds remain a fade ahead of the low/mid-1.41 area."

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

American consumer confidence regained momentum in early July, as households grew more optimistic about current conditions and the broader economic outlook, according to preliminary data from the University of Michigan.

The closely watched Consumer Sentiment Index is expected to improve to 54.4 from 49.5 in the previous month, surpassing economists’ expectations and signalling a better backdrop for public confidence.

Furthermore, the Current Conditions index climbed to 54.9 from 47.7, while the Expectations gauge rose to 54.0 from 50.7, highlighting some change of view regarding the months ahead.

Inflation expectations, meanwhile, came in mixed. The one-year outlook eased to 4.2% from 4.6%, and the five-year forecast held steady at 3.3%, suggesting that consumers are seeing some loss of momentum in price pressures, in line with recent inflation data.

Market reaction

The dollar remains slightly bid amid the broader choppiness seen throughout the week. That said, the US Dollar Index (DXY) navigates the 100.80 region in the wake of the data release, adding to Thursday’s rebound.

This section below was published as a preview of the preliminary print of the University of Michigan Consumer Sentiment for July at 12:30 GMT.

• The Preliminary Michigan Consumer Sentiment Index is expected to rise to 51 in July from 49.5 in June.
• The decline in consumer prices seen earlier this week is likely to have contributed to lifting sentiment.
• A positive surprise on UoM Consumer Sentiment might provide some support to a weak US Dollar.

The University of Michigan (UoM) will release the preliminary estimate of July’s Consumer Sentiment Index on Friday. The UoM report, measuring consumers’ feelings about personal finances, business conditions, and purchasing plans, is expected to show that consumers’ confidence improved for the second consecutive month in July, although remaining at levels well below those before the start of the US-Iran war.

US consumers’ confidence is seen improving to 51 in July, from June’s 49.5 reading, as measured by the UoM Consumer Sentiment Index. These numbers would show some progress from May’s record low of 44.8, but also a considerable deterioration from the 56.6 level seen in February, just before the US and Israel attacked Iran for the first time.

Consumer spending is a key contributor to US economic activity, accounting for about 70% of the country’s Gross Domestic Product (GDP), and the Michigan Consumer Sentiment Index is considered a reliable forward-looking indicator of US economic trends. In that sense, any deviation from the market consensus tends to have a significant impact on US Dollar (USD) crosses.

What to expect from June’s UoM Consumer Sentiment Index report?

Markets will be attentive to July’s consumer sentiment data to assess the extent to which the ebbing inflationary pressures have brightened US consumers’ mood. Oil prices have retreated from the highs seen at the height of the war in the Middle East, and recent numbers revealed that consumer and producer inflation fell beyond expectations in June. It remains to be seen, however, if the macroeconomic trend has reached Main Street.

June's University of Michigan report highlighted the moderation in gas prices as a key factor in explaining the improvement in consumer sentiment, with business conditions brightening as concerns about the economic consequences of Iran’s conflict apparently start to abate. 

Inflation has receded further in the meantime. Crude prices are nearly 30% below the levels seen in April and May, helping ease price pressures.

Recent data from the US Bureau of Labor Statistics revealed that the US Consumer Price Index (CPI) contracted 0.4% MoM in June, its sharpest monthly fall in nearly six years, and that yearly inflation slowed down to 3.5%, the lowest growth rate since March.

US Producer Price Index (PPI) figures, released on Wednesday, confirmed the easing price pressures. Inflation at factory gates contracted against expectations in June, and the yearly PPI eased to 5.5% from a revised 6% in May, when the market was hoping for further acceleration to 6.2%.

On Thursday, US Retail Sales data showed a mild increase, while US Jobless Claims added to evidence that the labour market has stabilized. Putting it all together, the picture shows an improving scenario that might lead to a positive surprise on the UoM Consumer Sentiment data due later in the day.

When will the UoM Consumer Sentiment Index be released, and how could it affect the US Dollar?

The University of Michigan will release its Consumer Sentiment Index, together with the Consumer Inflation Expectations survey, on Friday at 14:00 GMT. The market consensus hints at a moderate improvement from May’s reading, yet at levels significantly below pre-war ones, and nearly 20% below the July 2025 reading.

The US Dollar has been trading lower this week, as investors pared back bets of immediate Federal Reserve interest rate hikes, although the escalation of hostilities in the Middle East is keeping the Greenback supported.

The US Dollar Index Spot (DXY) trades just above the 100.00 level at the time of writing, with momentum indicators on the 4-hour chart highlighting a neutral-to-bearish stance, and the bigger picture showing price action contained within a descending channel, in an extended correction of the May-June rally. 

The DXY found support at the base of the channel this week and looks stalled below the 100.80 area, although the key resistance area lies between 101.00 and 101.30, where the July 15 high at 101.03, the channel top, now around 101.20, and the July 13 high at 101.33 are likely to challenge bulls. A confirmation above that area would negate the bearish trend and expose the year-to-date high at 101.80.

On the downside, the confluence of trendline support with the June 18 low, in the 100.20 area, is likely to provide significant support. If that level gives way, bears might gain confidence to test mid-June lows in the 99.50 area.

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