Forex News
Societe Generale strategists note the Japanese Yen (JPY) remains the main G10 laggard despite higher domestic yields and Bank of Japan (BoJ) tightening. With the 10-year JGB potentially rising toward 3.50% as further 75bp of BoJ hikes are expected, FX markets still show limited enthusiasm for the Yen, while USD/JPY trades above the 200-day moving average and near the 159 level.
Higher JGB yields not supporting JPY
"A quiet session overnight cemented the position of the JPY as the main laggard in G10 ten days into August, a vastly different trajectory compared to this time in 2024, when following unilateral dollar sales by Japan’s MoF, the currency was head and shoulders above the rest of G10 and scoring a 3% gain vs the dollar."
"With another 75bp of tightening potentially to come by the BoJ by this time next year according to SG economists, we’re looking realistically at a 10y yield of around 3.50%, above the Bund."
"The prospect of a positive premium for 10y Japanese over German yields is not sufficient however not to convince the FX markets of the attractiveness of the Yen."
"EUR/JPY trades within 2.3% of all-time highs after clawing back 2.4% from the coordinated intervention low two weeks ago."
"USD/JPY recovered above the 200dma and is back above 159 handle on dip buying."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/GBP consolidates near two-week lows below 0.8550.
- The stalled US-Iran peace plan and higher Oil prices are adding pressure on the Euro
- Confirmation below the 0.8550 support area would bring 0.8530 and 0.8510 targets into focus.
The Euro (EUR) extends losses for the second consecutive day against the British Pound (GBP) on Tuesday, weighed by a cautious market mood as hopes of a swift end to Iran’s war wane and Oil prices climb. The EUR USD pair remains capped below 0.8550 after hitting two-week lows at 0.8536 on Monday.
In the absence of key macroeconomic releases in the UK or the Eurozone, geopolitical tensions are the main market driver on Tuesday. In that sense, Strategists at Rabobank caution that, although the Eurozone's economy seems to have weathered the higher energy prices and supply disruptions from the closure of the Strait of Hormuz, the breakdown of the US-Iran peace agreement "clearly implies downside risks to growth and upside inflation concerns,” posing a heavy weight on the Euro.
Technical Analysis: Bears remain in control while below 0.8550
EUR/GBP broke the ascending channel in late July, and confirmed a bearish reversal this week after slipping below a previous support at the 0.8550 area, which is now holding bulls. Momentum indicators endorse the bearish view, with the 4-hour Relative Strength Index (14) hovering in the mid-30s and the Moving Average Convergence Divergence (MACD) at slightly negative levels.
Initial support emerges at 0.8530 (July 24 low) and below here, a previous resistance area, around 0.8510. On the topside, the mentioned 0.8550 area should be broken to bring price action back to the previous ranges and shift the focus back to Monday's highs, at 0.8566 and the August 5 and 6 highs, near 0.8580.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.04% | 0.02% | -0.01% | -0.00% | 0.19% | 0.10% | |
| EUR | -0.09% | -0.04% | -0.07% | -0.08% | -0.05% | 0.11% | 0.01% | |
| GBP | -0.04% | 0.04% | -0.04% | -0.05% | -0.02% | 0.15% | 0.05% | |
| JPY | -0.02% | 0.07% | 0.04% | -0.01% | 0.00% | 0.18% | 0.09% | |
| CAD | 0.00% | 0.08% | 0.05% | 0.01% | 0.03% | 0.19% | 0.09% | |
| AUD | 0.00% | 0.05% | 0.02% | -0.01% | -0.03% | 0.16% | 0.07% | |
| NZD | -0.19% | -0.11% | -0.15% | -0.18% | -0.19% | -0.16% | -0.09% | |
| CHF | -0.10% | -0.01% | -0.05% | -0.09% | -0.09% | -0.07% | 0.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
TD Securities’ Prashant Newnaha and Alex Loo note that the Reserve Bank of Australia left the cash rate at 4.35% in a unanimous decision, with the Statement and updated forecasts sounding less hawkish than expected. However, Governor Bullock emphasized that another hike remains possible if upside inflation risks materialize, leaving the Australian Dollar sensitive to incoming data and RBA communications.
Hawkish hold with upside inflation risks
"The RBA kept the cash rate on hold at 4.35% as expected in a unanimous decision. The Statement read less hawkishly than anticipated and the revised forecasts imply a less hawkish stance too. However, the Press Conference took on a hawkish tone with the Governor stressing a number of times that another hike is a possibility, a risk to our call for a prolonged RBA hold."
"However, the Statement and the forecasts published today suggest a rate hike is not the Bank's central forecast, implying the bar for a follow-up RBA hike this year has been lifted."
"As stated above, the RBA's forecasts don't speak to another hike and the Bank does not appear to have the appetite to hike preemptively either."
"Clearly the RBA is not out of the woods. The Bank's trimmed mean CPI forecasts for Q3 and Q4 imply 0.8% q/q prints for both quarters. While the Statement and the forecasts don't signal alarm, the Governor was at pains to state where the risks lie for inflation, and they are to the upside."
"Indeed, if the RBA's 4.35% cash rate did not get the job done on inflation previously and the Minutes of the June meeting noted estimates of the real neutral rate have risen over preceding years (in addition to observations detailed above), then the RBA may not have the wiggle room it needs to get inflation back to target in a reasonable time frame."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Dow Jones futures struggle as US-Iran friction raises oil supply concerns, boosting inflation fears.
- Iran ruled out negotiating with President Trump, stating talks will remain frozen until his term ends in 2029.
- Investors await key inflation data and earnings reports from Cardinal Health, CoreWeave, and Super Micro Computer.
Dow Jones futures decline by 0.11% to trade around 54,000 during European hours on Tuesday. Meanwhile, S&P 500 futures are steady around 7,770 and Nasdaq 100 futures gain 0.12%, trading near 29,770.
US stock futures are mixed as traders adopt a cautious stance amid escalating geopolitical tensions. Rising concerns over potential oil supply disruptions have fueled inflation fears, leading to growing speculation that the Federal Reserve (Fed) may feel compelled to raise interest rates sooner than expected, even against the backdrop of a cooling labor market. According to the CME FedWatch Tool, the market-implied odds of a 25-basis-point rate hike in September have climbed to nearly 52%, up from 44.4% just a day prior.
Iran has explicitly ruled out any future negotiations with US President Donald Trump. Citing Iranian news outlets and a post on X by Majid Shakeri, an adviser to Parliament Speaker Mohammad Bagher Ghalibaf, reports indicate that Tehran intends to wait until the current US presidential term ends on January 20, 2029, before considering a return to the bargaining table. "Trump will not reach an agreement with us. We will accompany him until his term ends," Shakeri stated.
Chipmakers retreat as energy and health care cushion US equity pullback
Jim Reid’s team at Deutsche Bank notes that the broader US equity complex softened, with the NASDAQ (-0.32%) and Russell 2000 (-0.56%) also losing ground. They highlight that “energy (+4.63%) and health care (+1.68%) sectors helped limit the S&P 500’s decline,” even as the tech space came under renewed pressure. Leading the losses were chipmakers, with Deutsche Bank pointing out that “the Philly semi index dropping -2.94% after its +9.25% rebound last week” marked a sharp reversal for the sector.
Looking ahead, investors are closely monitoring upcoming inflation data scheduled for release this week to better gauge the Federal Reserve's next policy move. Meanwhile, on the corporate front, market participants are keeping an eye on earnings reports due today from key companies, including Cardinal Health, CoreWeave, and Super Micro Computer.
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- The US Dollar Index gains further to near 99.90 amid rising Oil prices.
- Traders have trimmed hawkish Fed bets due to weakness in the US labor market.
- Investors shift their focus to the US CPI data, which will be released on Wednesday.
The US Dollar (USD) extends its Monday recovery move on Tuesday, as rising Oil prices due to prolonged fears of energy supply disruption keep global inflation expectations de-anchored.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly higher to near 99.90.
Meanwhile, fears of a near-term Federal Reserve (Fed) interest rate hike have eased as the latest United States (US) Nonfarm Payrolls (NFP) data for July revealed a reduction in the overall labor force and a downward revision in labor additions figures of previous months.
Strategists at ING say the latest US labor market data has delivered “clearly dovish and dollar-negative” signals, reinforcing their conviction that the Fed is done hiking. They highlight that, as James Knightley notes, “the -20k payroll print was not the only concern,” with “more than 100k of downward revisions” leaving “average payroll growth at just 20k over the past three months, with health and social care still doing most of the heavy lifting.”
Against that backdrop, ING argues that “our dovish Fed call is strengthening, and so is our bearish bias on the Dollar.” They point out that “despite Friday’s repricing, 11bp are still priced in for September, 28bp for December and 40bp for April,” and conclude that “there remains ample room for dovish repricing to harm the Dollar if we are right about the Fed.”
The CME FedWatch tool shows that the odds of the Fed leaving interest rates unchanged in the September meeting are 48.3%, up from 30.4% seen a month ago.
Going forward, investors will focus on the US Consumer Price Index (CPI) data for July, which will be released on Wednesday.
US Dollar Index Technical Analysis
In the daily chart, the Dollar Index DXY trades at 99.87, keeping a bearish near-term tone as it holds beneath the 20-day exponential moving average (EMA) at 100.32. The index has retreated from earlier highs, and the EMA now acts as immediate overhead supply, while the Relative Strength Index (RSI) around 41 shows subdued momentum, hinting at a lack of strong buying interest on current dips.
On the topside, the first hurdle is the 20-day EMA at 100.32, and a sustained break above this level would be needed to ease downside pressure and open the way for a more constructive recovery. On the downside, the US Dollar index could slide towards 99.00 and the May 29 low at 98.75 if it fails to hold Friday's low at 99.40.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Commerzbank’s Tatha Ghose describes recent Forint weakness as a high-beta correction that only partly erases post-election outperformance. He expects EUR/HUF to recover toward 350–355 if global risk sentiment improves, but warns that accelerating core inflation and narrowing real interest rates as MNB cuts will later weigh on HUF, limiting the durability of any interim recovery.
High-beta correction then structural headwinds
"The forint has corrected weaker recently through the global market risk-off. This reflects its high-beta status within the eastern European peer group."
"This near-term correction should not be over-interpreted as the forint has only given up a fraction of its outperformance since the April election, which had brought regime change. The regime-change story itself has not disappointed; Tisza’s ratings remain strong, and Peter Magyar is moving ahead with reforms on multiple fronts."
"If the global risk backdrop were to ease, the forint would recover a part of its losses, with EUR/HUF moving back to the 350-355 range. Later, however, the familiar constraints and a falling real interest rate will weigh down on the exchange rate."
"July CPI data showed underlying core inflation measures accelerating."
"Hungary’s real interest rate is likely to narrow as MNB cuts rates and as underlying inflation momentum stays elevated."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Gold attracts heavy selling following an intraday move up to over a two-month high on Tuesday.
- Higher oil prices keep Fed hike bets on the table, driving flows away from the non-yielding bullion.
- Traders look to the latest US inflation figures and geopolitical developments for further cues.
Gold (XAU/USD) extends its intraday retracement slide from the highest level since June 5 and drops to a fresh daily low, near the $4,350 area during the first half of the European session on Tuesday. Despite Friday's disappointing US Nonfarm Payrolls (NFP) report, traders are still pricing in the possibility that the US Federal Reserve (Fed) will raise borrowing costs by the year-end amid inflation risks stemming from volatile oil prices. This tends to undermine the non-yielding bullion and prompts traders to take some profits off the table, especially after a strong rally over the past week or so.
Meanwhile, Iran ruled out any future negotiations with US President Donald Trump and said that it will wait until his term ends on January 20, 2029, to resume talks, dampening hopes for the reopening of the Strait of Hormuz. Furthermore, traffic through the Bab el-Mandeb Strait remains choked due to the Iran-backed Houthis' blockade against Saudi Arabia. This led to the overnight sharp rise in crude oil prices and fueled inflation fears, underpinning prospects for a more hawkish Fed.
The outlook, in turn, remains supportive of elevated US Treasury bond yields, which is seen lending support to the USD and exerting pressure on the non-yielding yellow metal. Traders now look forward to the release of the US Consumer Price Index (CPI) and the Producer Price Index (PPI) on Wednesday and Thursday, respectively, for more cues about the Fed's future policy path. The crucial data will play a key role in influencing the near-term USD price dynamics and providing some meaningful impetus to the Gold price.
Apart from this, further developments surrounding the Middle East crisis might continue to infuse volatility across global financial markets and contribute to producing trading opportunities around the XAU/USD pair.
XAU/USD daily chart
Technical Analysis
An intraday breakout through the 100-day Simple Moving Average (SMA) and the 50.0% Fibonacci retracement of the April-June suggested that buyers retain control. Momentum indicators also backed the constructive structure. Moreover, the Relative Strength Index (RSI) is hovering just below overbought territory at 68.89, and the Moving Average Convergence Divergence (MACD) histogram is expanding in positive territory. This, in turn, suggests persistent upside pressure while the Gold price remains capped beneath the 200-day SMA at $4,498.
That said, a deeper pullback would expose the 38.2% retracement at $4,297 and then the 23.6% level at $4,162, ahead of the structural floor near $3,945. On the top side, the $4,400 mark, followed by the daily swing high, near $4,435 could act as immediate hurdles ahead of the 61.8% Fibo. retracement at $4,514.92. A break above would open the way toward the 78.6% retracement at $4,669 and the cycle high around $4,866.98.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
- NZD/USD weakens as higher energy prices and Treasury yields stoked fears of early Fed rate hikes.
- Iran ruled out negotiations with President Donald Trump, choosing to wait until his term ends in 2029.
- Rising oil prices and surging Q2 inflation data sparked caution ahead of the RBNZ's September policy meeting.
NZD/USD extends its losses for the second successive day, trading around 0.5880 during the European hours on Tuesday. The pair depreciates as the US Dollar (USD) gains on increased safe-haven demand amid heightened geopolitical tensions.
Iran ruled out any future negotiations with United States (US) President Donald Trump, according to Iranian outlets and a X post by an adviser to Parliament Speaker Mohammad Bagher Ghalibaf. Headlines note that Tehran will wait until the US President’s term ends on January 20, 2029, to resume talks. "Trump will not reach an agreement with us. We will accompany him until his term ends," Majid Shakeri, adviser to Ghalibaf, said
This geopolitical tension has driven a sharp rally in crude oil, which in turn has pushed US Treasury yields higher. Concerns are growing that the Federal Reserve (Fed) may feel compelled to raise rates sooner rather than later, even against the backdrop of a cooling labor market. Investors are now closely watching upcoming inflation data this week to gauge the Fed's next move, with the CME FedWatch Tool showing that market-implied odds of a 25-basis-point Fed rate hike in September have climbed nearly 52%, up from 44.4% just a day prior.
Higher oil and rate hike bets weigh on global sovereign bonds
Analysts at Deutsche Bank highlight that the combination of rising energy prices and renewed policy tightening concerns left fixed income markets under pressure, noting that “that backdrop of higher oil prices and rate hike speculation meant it was a tricky session for sovereign bonds around the world.”
Cleveland Fed President Beth Hammack emphasized that the central bank will likely need to execute multiple rate hikes to get broad-based inflation under control. Speaking with Yahoo Finance, Hammack, who notably dissented at the July meeting in favor of an immediate hike, argued that current policy remains insufficiently restrictive. She highlighted the upcoming Consumer Price Index report as a pivotal test that will dictate the Fed's trajectory moving forward.
Rising oil prices have sparked fresh debate on how the Reserve Bank of New Zealand (RBNZ) might approach its September policy meeting. Markets are exercising caution ahead of New Zealand’s third-quarter inflation expectation figures, particularly after the Q2 data showed an unexpected acceleration.
New Zealand Prime Minister Christopher Luxon has called an urgent, in-person caucus meeting for Wednesday morning to confront growing speculation surrounding his leadership. Following a turbulent week marked by reports of MPs receiving calls about a potential leadership challenge, Luxon is acting decisively to suppress internal dissent before it metastasizes into a campaign-defining issue for the National Party.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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