Forex News
ING’s Francesco Pesole expects the ECB to leave rates unchanged but deliver a hawkish hold, with Middle East tensions and rising European gas prices keeping hawks in control. He argues policymakers aim to preserve market pricing of around 45bp of tightening by year-end, likely via a familiar post-meeting media leak, which should support front-end Euro rates even as ING’s near-term EUR/USD bias remains tilted lower toward 1.1380.
Hawkish ECB hold may limit Euro downside
"The ECB is widely expected to leave rates unchanged today, but a surprise hike cannot be fully ruled out."
"Our baseline is a hawkish hold. The re-escalation in the Middle East and European gas prices rising faster than oil prices should keep hawkish voices dominant in the governing council, in our view."
"The aim today could be – once again – to preserve market pricing (45bp by year-end) to limit the risk of inflation expectations de-anchoring."
"Achieving that may well require some indication that a September hike remains in play – more likely through a familiar post-meeting media leak than directly in the press conference."
"A central bank meeting would normally be a prime catalyst for EUR/USD to break out of its tight trading range, but we do not expect that to happen today. Our near-term bias remains tilted to the downside, as we believe FX markets are dangerously complacent about developments in the Gulf. Unless the newsflow becomes more constructive, we look for EUR/USD to slip towards 1.1380 in the coming days."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/GBP appreciates for the sixth consecutive day to test last week's highs at 0.8645.
- The Euro remains firm as traders brace for the ECB's monetary policy decision.
- The Pound, on the contrary, is struggling amid PM Burnham's spending plans.
The Euro (EUR) appreciates for the sixth consecutive day against the British Pound on Thursday, with bulls testing last week’s highs at the 0.8645 area. The Sterling remains offered across the board as investors wonder how the new cabinet will fund its spending pledges. At the same time, the Euro maintains its firm tone, awaiting the European Central Bank’s (ECB) monetary Policy decision.
The pair has rallied nearly 0.9% over the last few days and is on track for its strongest weekly performance since May, mainly due to the Pound's weakness. The soft UK Inflation figures released on Wednesday have dampened expectations that the Bank of England will hike interest rates anytime soon, while on the political front, Prime Minister Andrew Burnham's spending plans are starting to raise concerns about fiscal stability.
ECB keeps September hike in view
The Euro, on the other hand, maintains a bid tone, heading into the outcome of the ECB's monetary policy meeting. Analysts at Commerzbank expect the ECB to stay its hand for now while keeping the door open to further tightening later in the year. They argue that “it is likely still too early for an interest rate hike today, but we stick to our view that the next move - to 2.50% - will occur in September.”
By then, they say, “the ECB will have the new forecasts available, based on which another interest rate hike could follow, provided it continues to be deemed necessary.” From a currency perspective, however, Commerzbank experts remain cautious that “the euro is unlikely to benefit much from the ECB meeting, barring any hawkish surprises from Lagarde.”
Economic Indicator
ECB Rate On Deposit Facility
One of the European Central Bank's three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.
Read more.Next release: Thu Jul 23, 2026 12:15
Frequency: Irregular
Consensus: 2.25%
Previous: 2.25%
Source: European Central Bank
Economic Indicator
ECB Press Conference
Following the European Central Bank’s (ECB) economic policy decision, the ECB President gives a press conference regarding monetary policy. The president’s comments may influence the volatility of the Euro (EUR) and determine a short-term positive or negative trend. If the president adopts a hawkish tone it is considered bullish for the EUR, whereas if the tone is dovish the result is usually bearish for the Euro.
Read more.Next release: Thu Jul 23, 2026 12:45
Frequency: Irregular
Consensus: -
Previous: -
Source: European Central Bank
Deutsche Bank strategists highlight a mixed performance across global equities over the last 24 hours. United States (US) stocks were softer, with the S&P 500 slightly lower, while Asian indices such as KOSPI, Hang Seng and Nikkei advanced and European equities saw gains led by STOXX 600. US equity futures weakened further after Alphabet and Tesla earnings, with S&P 500 futures edging down.
Global indices diverge on earnings
"As all that was happening, equities have put in a much more mixed performance over the last 24 hours. In the US the tone has been more negative, with the S&P 500 down -0.14%. But in other regions things have been much more positive, and overnight we’ve seen the KOSPI (+3.98%), the Hang Seng (+1.34%) and the Nikkei (+0.52%) all advance. "
"The main exception has been in mainland China, where the CSI 300 (-0.20%) and the Shanghai Comp (-0.19%) are both lower. But the European indices put in a solid performance as well yesterday, with the STOXX 600 up +0.58%."
"US equity futures have continued to lose ground overnight following Alphabet and Tesla’s earnings after the US close. Alphabet delivered a solid earnings and revenue beat, reporting 82% yoy growth in cloud revenue in Q2 ($24.8bn vs $22.5bn est.). "
"But its shares fell by over -3% in after-hours trading as the company increased its 2026 capex plan to a range of $195-205bn (vs. $186bn est.)."
"And Tesla fell by over -4% after-hours after the company reported its first negative quarter of free cash flows in over two years, as solid auto sales were outweighed by a 47% yoy surge in operating costs. So futures on the S&P 500 are down another -0.13% this morning."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- US Dollar Index declines to around 101.00 in Thursday’s early European session.
- The DXY keeps a bullish vibe above the 100-day SMA on the daily chart.
- The first upside barrier emerges at 101.45; the initial support level to watch is 100.60.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 101.00 in the early European trading hours on Thursday. The DXY weakens amid improved risk sentiment. However, the potential downside might be limited due to a flare-up in tensions between the United States (US) and Iran.
US President Donald Trump said that the US will “destroy one bridge or power plant” every time Iran targets a ship transiting the Strait of Hormuz. Meanwhile, Iran stated that it will hit infrastructure and energy facilities across the region.
Money markets are now pricing in a 33.7% probability of a rate hike from the US Federal Reserve (Fed) this month, as well as a 76.8% chance of at least a quarter-point hike in September, according to the CME FedWatch tool.
Technical Analysis:
In the daily chart, the near-term tone of Dollar Index Spot remains mildly bullish as price holds above the 100-day simple moving average (SMA) and operates near the upper half of the Bollinger envelope. However, the Relative Strength Index (RSI) at 54.36 sits in neutral-to-positive territory, hinting at steady rather than aggressive upside momentum.
On the topside, a daily close above the upper band at 101.45 would expose the June 24 high of 101.80. Any follow-through buying above this level could pave the way to the 102.00 psychologocal level.
On the downside, initial support is seen at the lower Bollinger band around 100.60. The key contention level is located at the 100.00 round mark, ahead of the more meaningful trend floor at the 100-day SMA near 99.65.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed seen on extended hold even as hiking bar falls
According to TD Securities, the policy outlook remains one of patience, with the bank expecting "the Fed to remain on an extended hold." Strategists acknowledge that "the bar for the Fed to hike is lower," but argue that the FOMC will "likely need to see more evidence of continued strength in inflation and the labor market before embarking on a hiking path." TD Securities also cautions that in an environment where the Fed is forced to tighten "due to supply-side inflation concerns, other global central banks, including the ECB, are likely hiking as well," reinforcing a more synchronised global policy backdrop.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- GBP/USD edges higher to near 1.3387 amid a slight weakness in the US Dollar.
- UK headline inflation cooled down to 2.6% YoY in June.
- Investors await the UK Retail Sales and the flash private sector PMI data.
The British Pound (GBP) trades marginally higher to near 1.3387 against the US Dollar (USD) during the European trading session on Thursday. The GBP/USD pair edges higher as the US Dollar drops despite surging oil prices in the wake of escalating Middle East energy supply risks.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.15% lower to near 101.00.
On the domestic front, investors await the Federal Reserve’s (Fed) monetary policy announcement next week, in which it is expected to leave interest rates unchanged.
Meanwhile, the British Pound demonstrates a broader mixed performance while fears of Bank of England (BoE) interest rate hikes have eased. Traders doubt the BoE will tighten monetary conditions in the near term as the United Kingdom (UK) headline Consumer Price Index (CPI) growth has cooled down to 2.6% Year-on-Year (YoY) in June from the previous reading of 2.8%.
BoE seen on extended hold before gradual easing to neutral in 2027
Economists at Societe Generale reiterate that their “baseline forecast remains that the BoE will keep Bank Rate on hold at 3.75% throughout 2026,” reflecting a view that policymakers will need prolonged time to consolidate the disinflation trend. They add that “by early 2027, we expect the MPC to gain confidence that inflation will return sustainably to the 2% target over the medium term, allowing for cumulative rate cuts of 75bp in 2027,” which would “bring Bank Rate to our estimate of its neutral level of 3%.”
Going forward, investors will focus on the UK Retail Sales for June and the preliminary S&P Global PMI data for July, which will be released on Friday.
GBP/USD technical analysis
GBP/USD trades slightly higher at around 1.3387 at press time. The pair corrects to near the 20-day exponential moving average (EMA), which is at 1.3385, after correcting from the downward-sloping border of the Descending Triangle pattern at 1.3540, suggesting that the near-term outlook has become uncertain.
The Relative Strength Index (14) at 50.73 sits near neutral, hinting that recent buying pressure is stabilizing rather than driving a decisive breakout, leaving the near-term bias slightly constructive but still capped by overhead trend resistance.
On the topside, initial resistance is located at the downward-sloping trend-line region near 1.3501, followed by the July 15 high at 1.3558. On the downside, the July 8 low at 1.3322 is the immediate support zone, with a more notable cushion at the June 24 low at 1.3140.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Last release: Wed Jul 22, 2026 06:00
Frequency: Monthly
Actual: 2.6%
Consensus: 2.7%
Previous: 2.8%
Source: Office for National Statistics
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
Lloyd Chan at MUFG underscores escalating US–Iran tensions and threats to energy infrastructure and shipping through the Strait of Hormuz and Bab el-Mandeb. He notes that Brent has rebounded above USD90 and that attacks on Saudi Oil tankers and warnings to shipping firms heighten the risk of a broader global energy shock impacting regional exports and markets.
Brent supported by rising conflict risk
"Geopolitical risks in the Middle East continue to escalate as tensions between the US and Iran intensify once again. President Trump warned that the US would target Iranian bridges and power infrastructure if Iran attacks vessels transiting the Strait of Hormuz. In response, Iran stated that it would strike power facilities across the Gulf region if its own infrastructure and energy assets come under attack."
"Tehran has also warned shipping companies against using alternative routes around Hormuz. Since the collapse of the US-Iran ceasefire memorandum signed in June, renewed hostilities have led to a sharp decline in tanker traffic through the Strait of Hormuz."
"Adding to supply concerns, the Houthis have reportedly attacked two Saudi oil tankers in the Red Sea, threatening shipping through the Bab el-Mandeb Strait—an increasingly important alternative route for regional oil exports."
"The key market risk is whether the conflict shifts from a phase of renewed escalation to one that triggers a broader global energy shock. Brent crude prices have rebounded above USD90/bbl this month."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver hit resistance at $61.00, but dips have remained limited above the $58.45 area
- Surging Oil prices have sent US Treasury yields rallying, adding pressure on precious metals.
- The immediate bias remains positive after rallying 7.5% in the previous four days.
Silver (XAG/USD) is trading practically flat, a few cents below the $60.00 level on Thursday, with upside attempts capped as US Treasury yields jump to fresh highs. The precious metal was rejected at the $61.00 area on Wednesday, but the following reversal found buyers at the middle range of the $58.00s earlier in the day.
Markets remain in a cautious mood as the war in Iran threatens to extend through the region. US and Iran have exchanged attacks for the 12th consecutive day, and reports of attacks on Saudi Arabian vessels in the Red Sea have sent Oil prices to their highest levels since early June, spurring inflationary pressures and pushing US Treasury yields higher. This is likely to keep Silver bulls in check during the next sessions.
Technical Analysis: The immediate bias remains positive
XAG/USD trades at $59.70, holding above the broken downward trendline, consolidating gains after a 7.5% rally in the last four trading days. The 4-hour Relative Strength Index (14) is hovering in bullish territory, and the Moving Average Convergence Divergence (MACD) indicator is still positive, although showing fading momentum.
On the topside, initial resistance appears at the horizontal barrier around $60.70, which capped bulls on July 9, ahead of July's top, at the $63.30 area. On the downside, the session low at $58.46 is likely to provide some support ahead of the broken trendline, now at $55.50, and the year-to-date low, at $54.72.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
United Overseas Bank’s Quek Ser Leang and Lee Sue Ann expect GBP/USD to consolidate intraday between 1.3350 and 1.3400 after a modest pullback from recent lows. However, for the coming weeks, Quek Ser Leang warns that rapidly building downside momentum means a daily close below 1.3340 could open 1.3300. The strong resistance cap has been lowered to 1.3435, while the broader multi‑month view remains range‑bound.
Pound-Dollar pressured but still range bound
"24-HOUR VIEW: GBP dropped sharply to a low of 1.3360 two days ago. Yesterday, when GBP was at 1.3375, we indicated that “the rapid increase in downward momentum suggests GBP could continue to decline.” However, we highlighted that “last week’s low, near 1.3340, is expected to provide firm support.” GBP weakened less than expected to 1.3355 before closing largely unchanged at 1.3376 (+0.01%). With momentum indicators turning flat, we expect GBP to consolidate today, most likely between 1.3350 and 1.3400."
"1-3 WEEKS VIEW: Following the sharp decline in GBP two days ago, we highlighted yesterday (22 Jul, spot at 1.3375) that “downward momentum is increasing rapidly, and if GBP closes below 1.3340, it is likely to decline further to 1.3300.” We added, “the likelihood of GBP closing below 1.3340 will remain intact as long as the ‘strong resistance’ level, now at 1.3455, is not breached.” We continue to hold the same view, but we are revising the ‘strong resistance’ level to 1.3435."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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