Forex News

Scotiabank’s FX team notes EUR/USD is drifting toward 1.15 after a Fed‑driven rally, with euro area CPI broadly in line with expectations and French data briefly lifting the Euro. Rate expectations are stabilizing, with about 42 bps of tightening priced by December. Their fair‑value estimate sits in the mid‑1.15s, with a near‑term 1.1450–1.1550 range.

Euro consolidates Fed‑driven gains

"The EUR is soft, down 0.2% vs. the USD with a drift toward 1.15 and a slight fade of this week’s rally. The preliminary euro area’s CPI release for July has offered little in terms of movement for spot, with headline coming in as expected at 2.9% y/y and core printing 2.5% y/y (vs. 2.4% exp.)."

"The French CPI data, released earlier, offered a modest lift to the EUR as the figures came in well above expectations. However the impact was short-lived as broader themes took hold. Comments from the ECB have been limited and the speaking calendar is empty over the next week or so."

"Rate expectations are showing signs of stabilization following their recent pullback and the market is currently pricing about 22bpts of tightening for September with a cumulative 42bpts of tightening by December. 2Y spreads (Germany-US) remain well supported and our narrow FV estimate is in the mid-1.15s."

"Bullish – the RSI remains bullish in the upper 50s and has seen an impressive reversal from the oversold (sub-30) bullish levels reached in late June. The 50 day MA (1.1482) has been broken and the daily chart offers little in terms of resistance ahead of 1.16. We look to a near-term range bound between support at 1.1450 and resistance at 1.1550. "

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

• GBP/JPY falls as suspected Japanese intervention rattles foreign exchange markets.
• The wide BoE-BoJ interest-rate gap supports the cross’s broader outlook despite the pullback.
• GBP/JPY slips below its 21-day, 50-day and 100-day SMAs, pointing to renewed downside pressure.

GBP/JPY extends its slide on Friday as suspected intervention by Japanese authorities rattles the FX market and lifts the Yen across the board, pushing the cross further away from the multi-year high of 219.16 touched earlier this month. At the time of writing, GBP/JPY trades around 213.75, hovering near June lows.

Reuters reported, citing a market source, that Japan likely conducted a large-scale US Dollar-selling, Japanese Yen-buying intervention worth as much as $58.97 billion during Thursday's American trading hours. The move triggered a drop of more than 500 pips in GBP/JPY.

Separately, Reuters, citing a source familiar with the matter, reported that the US Treasury informed a number of banks it may intervene in the Yen market on Friday and advised them to "stand ready for future action."

The latest leg lower has weakened GBP/JPY’s near-term bullish structure. However, the broader outlook remains tilted to the upside, underpinned by the wide interest-rate differential between the Bank of England (BoE) and the Bank of Japan (BoJ).

The BoJ left its policy rate unchanged at 1.0% on Friday in an 8-1 vote. The central bank reiterated that it would continue raising borrowing costs if economic activity and inflation evolve in line with its forecasts.

Meanwhile, the BoE kept the Bank Rate unchanged at 3.75% on Thursday in a 6-3 vote, with three policymakers backing an immediate rate hike to 4.0%. The central bank stands ready to adjust its policy stance if higher energy prices lead to second-round effects.

Technical analysis

The daily chart points to a bearish shift, with GBP/JPY now trading below the 21-day, 50-day and 100-day Simple Moving Averages (SMAs).

The Relative Strength Index (RSI) hovers in the mid-30s and Moving Average Convergence Divergence (MACD) is negative and declining, which together suggest renewed downside pressure while the cross remains capped by these overhead trend filters.

On the topside, initial resistance emerges at the 100-day SMA near 214.48, followed by the 50-day SMA around 215.65, with the 21-day SMA higher up at 217.42 before a more pronounced barrier at the horizontal pivot near 219.50.

On the downside, immediate support is seen at the prior floor around 212.50, with a deeper cushion at 210.50, and a daily close below these levels would further extend the current corrective phase.

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

• USD/JPY falls sharply toward 159.00 following Japanese Yen-buying intervention and volatile post-BoJ trading.
• The BoJ leaves its policy rate unchanged at 1.00%, but one policymaker votes for an increase to 1.25%.
• Progress toward Hamas disarmament improves risk sentiment, although Iranian attacks and Trump’s latest comments maintain geopolitical uncertainty.

USD/JPY trades sharply lower near the 159.50 area on Friday as the Japanese Yen (JPY) strengthens following intervention by Japanese authorities and a relatively hawkish Bank of Japan (BoJ) policy announcement.

Japan reportedly entered the foreign-exchange market to purchase Yen and sell US Dollars after USD/JPY in recent weeks climbed to multi-decade highs. The intervention triggered an abrupt decline in the pair, although price action remains extremely volatile as investors assess whether officials will continue defending the currency.

The BoJ left its short-term interest rate unchanged at 1.00%, as widely anticipated. The decision was approved by an 8–1 majority, with board member Hajime Takata voting to raise the rate to 1.25% due to increasing upside risks to inflation from overseas demand shocks and changes in global financial conditions.

Despite maintaining rates, the Japanese central bank reiterated that it would continue raising borrowing costs if economic activity, inflation and financial conditions evolve in line with its projections. BoJ Governor Kazuo Ueda also indicated that the central bank could accelerate the pace of rate increases and would avoid falling behind the inflation curve, providing additional support to the Yen.

Geopolitical developments provide mixed signals for the US Dollar. United States (US) President Donald Trump announced an agreement intended to secure the phased disarmament of Hamas and the eventual withdrawal of Israeli forces from Gaza. The development could reduce some safe-haven demand for the Greenback, although implementation remains conditional on commitments from the parties involved.

However, tensions surrounding Iran remain elevated. Kuwait said its air defenses intercepted Iranian drones targeting military and vital installations, while Trump stated that the war was progressing well and that the United States was “hitting Iran hard.”

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.12, maintaining a bearish near-term bias as price holds well below the 20-period and 100-period Simple Moving Averages (SMAs) clustered around 162.31 and 162.62. The pair remains capped by a band of overhead horizontal resistance beginning at 159.92 and reinforced at 160.57, while the Relative Strength Index (RSI) near 25 hovers in oversold territory, hinting that downside momentum is stretched but not yet reversed.

On the topside, initial resistance appears at 159.92, with a stronger barrier at 160.57. Above these levels, the 20-period and 100-period MAs around 162.31 and 162.62, respectively, form a broader supply zone that would need to be reclaimed to ease the prevailing bearish tone. On the downside, immediate support is seen at 158.91, with a secondary floor at 158.56, and a clear break beneath this cluster would expose the pair to further declines in line with the dominant downtrend.

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

Royal Bank of Canada (RBC) economists Abbey Xu and Nathan Janzen note that Canadian Gross Domestic Product (GDP) rose 0.3% in May, with an advance estimate of 0.2% for June, indicating a solid second-quarter rebound after winter stagnation. They highlight broad-based sector gains and estimate Q2 annualized growth of 3.4%, above their 2.2% forecast, while warning that escalating trade tensions and new U.S. tariffs pose downside risks despite improving per-person and per-worker output.

Growth rebounds but trade risks loom

"The stronger-than-expected 0.3% increase in Canadian GDP in May (and early estimate of another 0.2% increase in June) added to evidence that the economy bounced back at a solid pace in the second quarter after growth stalled over the winter."

"Monthly GDP readings and advance estimates are notoriously revision-prone, but the preliminary estimate, including the June advance, points to annualized quarter-over-quarter growth of 3.4% in Q2, more than a percentage point above our 2.2% forecast."

"Looking ahead, escalating trade tensions and the latest U.S. tariff announcements pose downside risks to the outlook, particularly for targeted industries."

"Still, signs of a bounce-back in Q2 growth and stabilization in labour markets are encouraging."

"We continue to expect the economy to gradually improve on a per-person and per-worker basis this year."

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

TD Securities economists Eli Nir and Oscar Munoz highlight that Q2 United States (US) Gross Domestic Product (GDP) growth slowed to 1.5% q/q AR, but underlying private domestic final purchases accelerated to 3.9%. They stress that AI (Artificial intelligence)-related activity remains a large share of the economy, yet growth outside AI sectors was strong. They argue this broader momentum suggests policy may not be highly restrictive.

Underlying momentum extends beyond AI

"Headline Q2 GDP growth moderated to 1.5% q/q AR, but underlying activity (private domestic final purchases) accelerated to a strong 3.9%."

"The percent of GDP that comes from AI-related activity remains high, but growth outside those sectors was strong in Q2."

"AI-related activity remains a large share of the economy, but robust Q2 growth beyond the AI sector showed encouraging signs of healthier, more broad-based economic momentum."

"Robust activity is also another sign that policy may not be that restrictive."

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

Commerzbank’s Norman Liebke highlights that China’s July trade data will be key for base metals, especially Aluminium. Chinese Aluminium output in H1 exceeded the official cap, suggesting production may ease later this year. Combined with higher energy costs and low LME stocks, the bank expects Aluminium prices to trend higher over coming months.

Chinese output and stocks underpin outlook

"In addition, the data should provide indications of developments in aluminium and copper production in China."

"In the first half of the year, Chinese aluminium production, with annualized output of just under 46.4 million tons, was significantly above the government-imposed cap of 45 million tons, which is why production could be somewhat lower in the second half of the year."

"Alongside the renewed increase in energy prices and the low LME inventory levels, this supports the view that aluminium prices are likely to trend higher over the coming months."

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