Forex News
- Gold accelerates its recovery with bulls attempting to break a triangle pattern at the $4,125 area.
- Soft US data and cooling hopes of Fed rate hikes are hurting the US Dollar on Wednesday
- XAU/USD bulls are targeting the key resistance area around $4,220.
Gold (XAU/USD) has accelerated its recovery on Wednesday, favoured by a softer US Dollar as lower Oil prices and downbeat US macroeconomic data cooled market expectations of Federal Reserve (Fed) rate hikes on Tuesday. This has enticed Gold buyers to push the precious metal above the top of a triangle pattern, at the $4,125 area, in a move that is still to be confirmed.
Bullion is drawing support from lower US Treasury yields, following softer-than-expected US Job Openings and Factory Orders figures released on Tuesday. Meanwhile, the decline in Oil prices, with the US benchmark West Texas Intermediate (WTI) trading $10 below last week's highs, has eased concerns about the inflationary impact of energy prices. In this context, investors have cut back bets of a Fed rate hike in September to 58% from 67% on Tuesday, according to data by the CME’s Fed Watch Tool.
Technical Analysis: Gold needs to break $4,220 to confirm a deeper correction
XAU/USD trades at $4,161, holding a constructive near-term bias after reaching one-week highs above the top of a descending triangle. Momentum indicators in 4-hour charts endorse the positive view, with the Relative Strength Index (14) around 55 hinting at a building bullish while the Moving Average Convergence Divergence (MACD) slightly above zero strengthens the case for a moderate upside bias.
Bulls, however, will have to clear the horizontal barrier around $4,220 (June 22 highs) to confirm a bullish reversal and set sail for the mid-June highs, at $4,380.
A bearish reaction, on the other hand, is likely to find support at the $4,000 psychological level, although the key support area lies at the $3,945 area, the bottom of the mentioned triangle. A confirmation below here negates the bullish view and brings the late October 2025 lows, at $3,886, into play.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Commerzbank’s Tatha Ghose explains that the Hungarian Forint (HUF) has recently given back gains as external shocks and an ongoing Magyar Nemzeti Bank (MNB) easing cycle erode support. With the currency back above 360 versus Euro (EUR), markets await Monetary Policy Committee (MPC) minutes for signs of a more conditional stance on rate cuts that could limit further Forint downside and reinforce foreign exchange stability.
Forint relies on conditional MNB easing
"That trend has become less convincing over the past month, however, with the forint surrendering a meaningful share of its earlier gains to return to its erstwhile 360-plus range versus the euro."
"The second factor is monetary policy. MNB had just kicked off a monetary easing cycle and, following its July meeting, indicated that it sees room for additional rate cuts during the summer before reassessing the outlook in September – this guidance sounds like a relatively unconditional commitment to further easing even though the balance of inflation risks has just swung. That has inevitably reduced some of the forint’s interest rate support."
"A more conditional tone would help reassure markets that MNB may soon ditch the rate cutting cycle, which would limit further downside pressure on the forint. In the end, MNB’s long-standing emphasis has also been about maintaining foreign exchange stability."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Silver prices (XAG/USD) rose on Wednesday, according to FXStreet data. Silver trades at $61.52 per troy ounce, up 2.87% from the $59.81 it cost on Tuesday.
Silver prices have decreased by 13.45% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 61.52 |
1 Gram | 1.98 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 67.64 on Wednesday, down from 68.18 on Tuesday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
- NZD/USD trades around 0.5860 on Wednesday, down 0.54% on the day.
- The New Zealand Dollar weakens after the unemployment rate rises more than expected in the second quarter.
- Markets scale back expectations of further monetary tightening by New Zealand's central bank.
NZD/USD declines to around 0.5860 on Wednesday at the time of writing, down 0.54% on the day, following the release of weaker-than-expected New Zealand employment data. The New Zealand Dollar (USD) comes under selling pressure as investors reassess the outlook for monetary policy.
Data released by Statistics New Zealand showed that New Zealand's Unemployment Rate rose to 5.6% in the second quarter, up from 5.3% in the previous quarter and above the market consensus of 5.4%. The reading marks the highest level since 2015, highlighting the continued deterioration in the labor market.
At the same time, New Zealand's Employment Change increased by 0.5% in the second quarter, up from 0.2% previously and above market expectations of 0.2%. The participation rate also rose to 70.7% from 70.4% in the previous quarter, pointing to an increase in labor supply despite softer labor market conditions.
The larger-than-expected increase in unemployment weakens the case for further monetary tightening by the Reserve Bank of New Zealand (RBNZ), weighing on the New Zealand Dollar. Traders now see greater scope for the central bank to maintain a cautious stance as the economy slows.
Markets are now turning their attention to upcoming US macroeconomic releases, including the ADP Employment Change report and the Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI), ahead of Friday's official US employment report.
NZD/USD technical analysis
In the one-hour chart, NZD/USD trades at 0.5863 with a mildly bearish intraday bias, holding just above nearby horizontal support while capped by overhead moving average. The pair sits below the 100-hour simple moving average (SMA) at 0.5872 and beneath the downward resistance trend line coming in around 0.5896, keeping rebounds in check. The 200-hour SMA at 0.5829 remains comfortably below price, hinting that the broader downtrend is not aggressive, though the Relative Strength Index (RSI) near 38 suggests lingering downside pressure rather than a clean bullish setup.
On the downside, initial support appears at the recent horizontal floor around 0.5860, followed by a secondary shelf at 0.5849; a sustained break beneath these levels could expose the 200-hour SMA support near 0.5829. On the topside, buyers would need to reclaim the 100-hour SMA at 0.5872 first, with a subsequent push toward the descending trend-line resistance around 0.5896 to signal that bears are losing near-term control.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Nordea’s Chief Analyst Jan Størup Nielsen notes that Nationalbanken did not intervene in July to support Denmark’s fixed exchange rate policy, after a small purchase of kroner in June. He argues the recent weakening of the Danish krone against the Euro reflects shifts in domestic corporate demand and expects the EUR/DKK interest rate differential to stay unchanged for an extended period.
Danish krone weakness without fresh intervention
"Over the past month, there has been no need to purchase kroner in support of Denmark's fixed exchange rate policy."
"The July figures were awaited with particular interest, as Nationalbanken in June purchased DKK 0.7 billion to curb a further weakening of the Danish krone against the euro."
"The absence of intervention in July supports our view that the weakening of the Danish krone against the euro is due to changes in the underlying demand for Danish kroner among domestic non-financial corporates."
"Given this circumstance, and given that Nationalbanken, in our assessment, will, going forward, seek to create a more symmetric fluctuation band in EUR/DKK around the central parity, the current interest rate differential between Denmark and the euro area of -0.4 percentage points will in all likelihood remain unchanged for an extended period."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD attracts buyers for the second straight day, though it lacks bullish conviction.
- Traders opt to wait for fresh developments surrounding the ongoing Middle East crisis.
- The technical setup favors bulls and supports prospects for a further appreciating move.
The GBP/USD pair gains follow-through positive traction for the second straight day and sticks to modest intraday gains through the first half of the European session on Wednesday. Spot prices, however, lack bullish conviction and currently trade just above mid-1.3400s, up less than 0.10% for the day.
The latest optimism over a diplomatic resolution to end the five-month-old war in the Middle East and the reopening of the Strait of Hormuz dragged crude oil prices to a four-week low, easing inflation fears. Traders were quick to react and trimmed their bets for an imminent Fed rate hike. This, in turn, undermines the safe-haven US Dollar (USD), which is seen acting as a tailwind for the GBP/USD pair.
Investors, however, seem hesitant to place aggressive directional bets and opt to wait for further developments surrounding the US-Iran conflict. Furthermore, the closely watched US Nonfarm Payrolls (NFP) report on Friday would be looked for more cues about the Fed's policy path. The outlook, in turn, will play a key role in influencing the near-term USD price dynamics and providing fresh impetus to the GBP/USD pair.
From a technical perspective, spot prices keep the near-term tone constructive while above the 200-hour Simple Moving Average (SMA). Moreover, momentum indicators are mildly supportive, with the Relative Strength Index (RSI) near 55 and the Moving Average Convergence Divergence (MACD) marginally positive near the zero line. This suggests steady bullish pressure as long as the GBP/USD pair remains above the underlying average.
Hence, any corrective pullback is more likely to attract fresh buyers near the 1.3400 mark, which should limit the downside near the 200-period SMA pivotal support around 1.3379. A convincing break below, however, would weaken the bullish bias and open the way to deeper losses. On the top side, bulls may look to the weekly top, around the 1.3500 psychological mark, as a reference point for potential resistance should the GBP/USD pair extend its advance.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
GBP/USD 1-hour chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- EUR/CAD remains stronger as German and Eurozone PMI data support the Euro.
- The Eurozone Composite PMI rose to 52.0 in July, signaling a rebound into economic expansion.
- Oil prices weigh on the Canadian Dollar despite minor Red Sea supply rebounds.
EUR/CAD continues its winning streak that started on July 24, trading around 1.6240 during the European hours on Wednesday. The currency cross rises as the Euro (EUR) receives support following the release of HCOB Purchasing Managers’ Index (PMI) data from Germany and the Eurozone.
The HCOB Eurozone Composite PMI rebounded into expansion territory in July, rising to 52.0 from June's neutral 50.0 mark. This signals the first increase in regional business activity since March and the sharpest rate of growth in eight months. Driving this turnaround, the Eurozone Services PMI advanced from 49.4 in June to 51.7 in July, snapping a three-month streak of decline with its fastest growth rate since February.
Germany's Composite PMI also returned to growth for the first time since March, rising to 51.3 in July from 49.5 in June. Meanwhile, Germany's Services PMI edged up to 49.8 from 48.6, remaining just below the neutral 50.0 threshold. Though still slightly contracting, this represents the mildest decline in German service sector activity since the downturn began in April.
Services PMIs highlight divergent Eurozone momentum amid Middle East tensions
Analysts at Rabobank note that the latest round of global services PMI releases underscores a widening divergence within the Eurozone. They point out that “we have the final print for global services PMIs,” with the Italian reading at “52.5” and the Spanish index at “58.3,” both of which “beat consensus expectations – the latter by a wide margin even.” Rabobank contrasts this resilience with “the preliminary estimates for France and Germany, which both came in below the 50-mark,” signalling ongoing weakness in those core economies. The bank also cautions that “the final prints will probably have deteriorated somewhat further, since the situation in the Middle East worsened throughout the survey period for July,” suggesting that geopolitical tensions may have exerted additional downward pressure on sentiment as the month progressed.
The EUR/CAD cross gains ground as the commodity-linked Canadian Dollar (CAD) struggles against falling energy markets, with oil prices trading near three-week lows. West Texas Intermediate (WTI) oil price rebounded slightly to around $75.40 per barrel at the time of writing, attempting to recover following sharp losses of nearly 13% over the previous two consecutive sessions.
Crude oil prices received a modest boost after Yemen's Houthis claimed responsibility for an attack on a Saudi vessel in the Red Sea. However, despite this temporary bump, investors are growing increasingly optimistic that a deal to reopen the Strait of Hormuz could soon be reached.
Axios reported that the United States (US), Iran, and Oman are nearing an interim agreement to reopen the Strait of Hormuz, with US officials aiming for an official announcement on Wednesday. The proposed framework establishes a 60-day temporary arrangement between Oman and Iran across the vital maritime chokepoint, which handles nearly 20% of the world's energy supply, with options for further extension.
Oil market weighs fragile Strait of Hormuz truce
Rabobank cautions that, despite the apparent progress toward a temporary arrangement to reopen the Strait of Hormuz, the outlook remains highly uncertain. The bank argues that “even if this deal isn’t immediately sunk by a drone or missile strike, there is a long and risky road ahead,” noting that negotiations are “currently clearly focused on preventing new escalation” rather than resolving the underlying disputes. In its view, the proposed 60‑day framework “does not offer permanent solutions for the key sticking points,” leaving the market exposed to renewed setbacks if tensions flare again.
DBS Group Research strategist Philip Wee notes that the US Dollar Index (DXY) Index is struggling to regain the 100 level, with European currencies better reflecting underlying Dollar weakness once Japanese Yen (JPY) volatility is excluded. Wee also flags US trade policy uncertainty and legal challenges to tariffs as additional headwinds, alongside reduced expectations for a September Federal Reserve rate hike.
DXY struggles near key threshold
"The DXY Index’s negative bias is becoming increasingly difficult to ignore, following four failed attempts to reclaim the psychological 100 threshold."
"Filtering out the JPY’s correction (-0.36%) on Tuesday, following its acute rebound driven by joint US-Japan interventions, the strength in the European currencies – EUR (+0.19%), GBP (+0.14%), and CHF (+0.14%) – better represented the greenback’s underlying weakness."
"Following last week’s underwhelming FOMC meeting, the futures markets cut the probability of a September Fed hike to 58% from 72%."
"US trade policy uncertainty remains another headwind for the USD."
"The US Court of International Trade reported that the Trump administration had refunded about $100bn or 60% of the Liberation Day tariffs collected, following the US Supreme Court’s ruling against the tariffs under the International Emergency Economic Powers Act in February."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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