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The Japanese Yen (JPY) continues to navigate complex market dynamics, consolidating near the 159.25 level against the US Dollar (USD) following a sharp upward push. While technical momentum keeps short-term upside risks alive for the currency pair, the fundamental backdrop has been reshaped by rare, coordinated foreign exchange intervention between Japanese authorities and the United States. As valuation gaps narrow from extreme lows, market participants are weighing technical range boundaries against the structural impact of joint official action.

Institutional Analysis: UOB vs. DBS Group Research

To compare how leading institutions view the outlook for the Yen, we highlight the core takeaways from UOB and DBS Group Research:

• Near-Term Technical Picture: UOB expects USD/JPY to consolidate in an intraday range of 158.95 to 159.60, with deeply overbought conditions limiting immediate upside beyond 159.60.
• Multi-Week Trading Band: UOB maintains an upside-tilted bias over a 1–3 week horizon within a broader 157.00 to 160.20 range, noting that medium-term strength remains intact as long as spot holds above its 21-day EMA.
• Official Sector Action: DBS Group Research highlights the significance of Japan's second FX market intervention of the year, emphasizing that rare joint participation by the US adds massive credibility and reduces volatility risks in the US Treasury market.
• Regional Currency Impact: DBS Group Research notes that limiting JPY weakness helps alleviate unwanted selling pressure on other undervalued Asian currencies, specifically the South Korean Won (KRW) and Chinese Renminbi (RMB).

Technical overbought conditions anchor USD/JPY in elevated range

According to Quek Ser Leang and Lee Sue Ann at UOB, Monday’s sharp USD rally has transitioned into a quiet consolidation phase near 159.25. While short-term technical indicators reflect strong underlying momentum, deeply overbought conditions make a decisive breakout above major resistance unlikely in the immediate term. Over a wider multi-week period, the pair is expected to remain contained within higher boundaries, anchored by key moving average support.

"While the bias for USD is tilted to the upside, any advance is likely part of a higher range of 157.00/160.20."

Coordinated US-Japan intervention narrows Yen undervaluation and stabilizes regional FX

Taking a broader policy perspective, Chang Wei Liang at DBS Group Research stresses that the Yen's historical undervaluation has begun to narrow following joint FX intervention by US and Japanese authorities. The involvement of the US Treasury — a rare occurrence last witnessed 15 years ago in 2011 — greatly enhances the credibility of official actions while mitigating the need for massive unilateral Treasury sales by Japan. Furthermore, by stemming excessive Yen weakness, policymakers are effectively insulating broader Asian FX markets from spillover depreciation.

• "Co-ordinated FX intervention between the US and Japan is rare, with the last joint intervention occurring 15 years ago to weaken an excessively over-valued JPY in the aftermath of the 2011 Tohoku earthquake... Indeed, both the KRW and RMB are quite undervalued according to our DEER model, and so interventions to limit JPY weakness also help alleviate unwanted selling pressure on regional currencies."

Banks expect elevated range-trading backed by strong intervention credibility

Based on the assessments from both institutions, the banks project an environment where USD/JPY remains technically supported at high levels but subject to firm official capping. UOB anticipates that short-term price action will remain bound between 157.00 and 160.20, with overbought momentum limiting aggressive gains past 159.60. Concurrently, DBS Group Research maintains that the unprecedented backdrop of joint US-Japan intervention provides a credible structural floor for the Yen, helping to stabilize both the domestic currency and broader regional Asian FX over the coming weeks.

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

• EUR/USD hovers below 1.1550 after pulling back from last week's highs at 1.1580.
• Hot German inflation has failed to lift the Euro, weighed by concerns about growing tensions in the Middle East.
• US Dollar rallies remain limited with investors awaiting the release of US CPI figures.

The Euro (EUR) nurses marginal gains against the US Dollar (USD) on Wednesday, with the EUR/USD pair flattening just below the 1.1550 level during the European trading session. FX volatility remains at unusually low levels as investors await the release of US Consumer Price Index (CPI) data to place directional bets on the USD.

Growing concerns about the fate of the US-Iran peace process are weighing on the Euro on Wednesday, as reports of attacks on vessels attempting to cross the Straits of Hormuz and Bab el-Mandeb on Tuesday have cast further doubt about the resumption of free sea traffic in the Gulf region.

In the Eurozone, the German Harmonised Index of Consumer Prices (HICP) confirmed preliminary figures pointing to an acceleration to a 2.8% year-over-year rate in July, from 2.4% in June, as energy inflation jumped to 7.3%, from 2.7% in the previous month. The positive impact on the Euro, however, has been short-lived.

US Dollar rallies, on the other hand, remain subdued, with investors awaiting the release of July's CPI figures for a better assessment of the Federal Reserve's (Fed) interest rate plans. The Market consensus anticipates a moderate slowdown in July’s consumer prices, with the yearly CPI growth easing to a 3.4% rate from 3.5% in June, with core inflation slowing down to a 2.5% year-on-year reading from the 2.6% rate posted in the previous month.

Technical Analysis: EUR/USD wavers in range lacking a clear bias

EUR/USD trades at 1.1535, holding in a neutral range between nearby structural levels. The 4-hour Relative Strength Index (14), around 48, suggests balanced momentum, while the Moving Average Convergence Divergence (MACD) remains slightly negative, altogether highlighting a lack of clear trend.

Bullish attempts were capped at 1.1580 last week, below the Mid-June highs at the 1.1620 area and the May 29 high, at 1.1685. On the downside, the 1.1500 area held bears last week ahead of a previous resistance area around 1.1480. A confirmation below these levels brings the late-July lows, at the 1.1355 area, back into focus.

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

• GBP/JPY trades between the 50-day and 100-day SMAs, keeping the near-term bias neutral.
• The RSI near 49 points to neutral momentum, while the MACD remains slightly bearish.
• A daily close above the 50-day SMA would improve the technical outlook.

GBP/JPY holds firm on Wednesday, trading within Monday’s range as the Japanese Yen (JPY) stays on the back foot, having given up nearly half of the gains triggered by the joint US-Japan intervention. At the time of writing, the cross trades around 215.12, virtually unchanged on the day.

However, intervention risk remains, as both Japan and the US have signalled that they could step into the currency market again if needed. Strategists at BNY Mellon characterise the Yen as remaining "an intervention/rates trade," with "higher oil prices and US Treasury yields" still acting as clear headwinds for Japan’s energy‑importing economy.

They caution that "intervention risk may deter fresh JPY shorts," but add that "persistent fiscal concerns leave little fundamental case for sustained yen appreciation" in the current environment.

Technical analysis

The intervention-driven sell-off pushed GBP/JPY below the 50-day, 100-day and 200-day Simple Moving Averages (SMAs) and briefly below the 210.00 psychological mark. Buyers stepped in around that level and lifted the cross back above the 200-day and 100-day SMAs.

On the daily chart, GBP/JPY holds just above the 100-day SMA near 214.50, while the 50-day SMA around 215.50 caps immediate gains. This leaves the near-term bias neutral as the pair trades between these key averages.

Momentum signals are mixed, with the Relative Strength Index (RSI) hovering near a neutral 49 and the Moving Average Convergence Divergence (MACD) indicator still slightly negative, suggesting that directional conviction is lacking despite a moderately strong Average Directional Index (ADX) reading around 28.

On the downside, a break below the 100-day SMA would expose the 200-day SMA near 212. A decisive move below this level could signal a deeper correction. On the upside, a daily close above the 50-day SMA could open the door to a continuation of the bullish move.

TD Securities strategists expect United Kingdom (UK) June Gross Domestic Product (GDP) data to show a reversal of May’s strength in professional services, offsetting solid retail sales and leaving the Index of Services flat, with modest industrial weakness keeping monthly GDP at 0.0% m/m. Despite muted June, they see Q2 GDP at a firm 0.4% q/q but warn this apparent strength may be artificial, implying flat GDP in the second half of 2026.

Q2 growth firm but questioned

"We expect June to reverse some of May’s outsized strength in professional services, offsetting solid retail sales and leaving Index of Services flat (mkt: 0.0%; prior: 0.3%)."

"Together with modest weakness in industrial production, this should keep GDP at 0.0% m/m (mkt: -0.1%; prior: 0.1%)."

"Despite the muted June, however, Q2 growth is still on track for a firm 0.4% q/q (mkt: 0.4%, BoE: 0.3%), ending the first half of the year on a note of strength."

"We do believe this strength could be artificial though, suggesting a potential flat-lining of GDP growth in the second half of 2026."

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

Commerzbank FX analyst Antje Praefcke notes that July US inflation is expected to rise only 0.1% month-on-month, with headline and core rates slipping to 3.4% and 2.5% year-on-year. She argues the Federal Reserve is unlikely to hike in September, but markets may adjust rate expectations and Dollar direction depending on the data and ongoing Middle East developments.

US inflation and conflict-driven volatility

"These are expected to reflect the temporary easing of tensions in the Middle East conflict and lower gasoline prices in early July, and are therefore likely to have risen by only 0.1% month-over-month."

"The possibility of an interest rate hike as early as September is likely off the table, as the FOMC will probably want to wait for more data showing that inflation is trending downward before ultimately deciding against a hike altogether."

"Should the inflation data come in weaker than expected, the market is likely to scale back its expectations further, which in turn would weigh on the dollar."

"In the alternative scenario - which we consider less likely - the market could see its assessment further confirmed, raise its expectations for an interest rate hike again, and thereby also provide a boost to the dollar."

"All in all, the dollar could become a bit more turbulent and volatile again by midweek."

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

According to a senior Iranian source, there are no discussions about extending the ceasefire between Iran and the US, Reuters reported.

Additional remarks

From Iran’s perspective, there is no ceasefire start date, therefore nothing to extend.

US violated the interim pact 48 hours after it was reached and withdrew from it a few days later.

One of the issues that is being discussed is US returning to MoU, defining a time frame for implementing its commitments.

Market reaction

No immediate reaction is seen in the US Dollar (USD), following remarks from Iran. At press time, the US Dollar Index (DXY) trades flat at around 99.85

• The Indian Rupee recovers against the US Dollar due to likely RBI intervention.
• India's retail inflation rises to 4.45% YoY in July, almost matching expectations of 4.5%.
• Investors keenly await the US CPI data for July.

The Indian Rupee (INR) recovers early losses against the US Dollar (USD) on Wednesday due to likely Reserve Bank of India's (RBI) intervention in the market. At press time, USD/INR trades slightly lower to near 95.33.

While dollar sales from state-run banks - most likely ‌on behalf ⁠of the ⁠RBI - kept a lid on losses, caution heading into key United States (US) inflation print and worries over higher oil prices contained the room for gains, ​traders said, Reuters reported.

The Indian currency underperformed in the opening session as surging oil prices prompt risks of higher foreign outflows, which are still intact. As of writing, the MCX Crude Oil contract expiring on August 19 trades flat at around Rs. 7,950, but is close to its weekly high of Rs. 8,075 posted on Tuesday.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

Restricted energy supply continues to boost oil prices

A prolonged oil supply disruption due to the closure of the Strait of Hormuz, a critical chokepoint to almost one-fifth of global energy supply, amid tensions between the United States (US) and Iran continues to boost oil prices.

According to data from Kpler, shipping traffic through the Strait of Hormuz, a vital passage to almost 20% of global energy supply, was recorded at just six vessels on August 10, down from a recent 10-day average of about 11. This remains a massive decline from pre-war levels of 130 to 140 ships daily, Reuters reports.

Meanwhile, mediators from Pakistan have expressed optimism regarding progress in negotiations between the US and Iran. Pakistan’s Defence Minister, Khawaja Asif told reporters that “things are shaping up again in favor of a peace arrangement or a deal, according to Bloomberg.

India's retail inflation rises in July

India’s retail Consumer Price Index (CPI) data for July grew almost in line with estimates. On an annualized basis, retail inflation accelerated to 4.45%, remaining within the RBI's tolerance band of 2%-6%, from 4.35% in June. The data was expected to arrive at 4.5%. Signs of steady inflation growth are unlikely to force RBI officials to consider raising interest rates in the near term.

In the monetary policy announcement earlier this month, the RBI left its key policy rates unchanged and delivered a data-dependent approach. Indian central bank trimmed its inflation forecast for the current financial year to 5% from 5.1% projected in June.

US CPI data awaited

The major highlight for global financial markets will be the US inflation data, which will be published at 12:30 GMT. The inflation data is expected to have a significant influence on the Federal Reserve’s (Fed) monetary policy outlook. In the July policy meeting, remarks from Fed Chairman Kevin Warsh clearly showed that officials are heavily concerned about inflationary pressures remaining well above the central bank’s 2% target for a long period.

US inflation seen firming but not reaccelerating in July

Brown Brothers Harriman’s Elias Haddad expects the upcoming US July CPI report to show inflation "firm modestly but stop short of signaling a renewed acceleration in inflation." He notes that "headline CPI is expected to rise +0.1% m/m vs. -0.4% in June and ease to 3.4% y/y vs. 3.5% in June," while "core CPI is expected to rise +0.2% m/m vs. 0.0% in June and ease to 2.5% y/y vs. 2.6% in June." Haddad argues that such a profile would underscore a gradual disinflation trend rather than a renewed pickup in price pressures.

Technical Analysis: USD/INR faces pressure near 20-day EMA

USD/INR struggles to return above the 20-day exponential moving average (EMA) at 95.52, hinting at the strength of Indian Rupee bulls.

The Relative Strength Index (14) around 46 hints at soft, range-bound momentum rather than aggressive selling pressure.

On the topside, immediate resistance is located at the 20-day EMA near 95.52, which would need to be decisively reclaimed to ease the current downside bias and open the way for a further recovery move toward 96.00. Looking down, key support zones are the August 5 low at 94.83 and the June low at 94.15.

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

• Yen hesitates below 159.00 with all eyes on US inflation figures.
• US CPI data is expected to show easing inflationary pressures, which might cool hopes of immediate Fed tightening.
• A hawkishly leaning BoJ Summary of Opinions has provided some support to the Yen.

The Japanese Yen (JPY) is one of the best performers in an unusually low-volatility market on Wednesday, picking up to levels near 159.00 against the US Dollar, after hitting support in the 159.45 area. USD/JPY dips, however, are finding buyers, with the focus on the US Consumer Price Index (CPI) report, due later on the day.

The market consensus anticipates a moderate slowdown in July’s consumer prices, with the yearly CPI growth easing to a 3.4% rate from 3.5% in June. Likewise, the core CPI is seen slowing down to a 2.5% year-on-year reading from the 2.6% rate posted in the previous month.

US CPI data set to determine the path for USD crosses

Brown Brothers Harriman’s Elias Haddad notes that the US CPI reading is set to be “a key swing factor for Fed funds rate expectations and set the tone across rates, currencies, and broader risk sentiment.” He points out that Fed funds futures “currently price in 50% odds of a 25bps hike in September” and that “a soft US CPI would strengthen the case for a dovish repricing in Fed hike expectations and further undermine USD while lifting risk assets.”

By contrast, “a hot US CPI will likely deliver a knee-jerk USD bounce via higher front-end yields.” However, he cautions that “with Fed policy already restrictive (assuming a neutral rate of 3.00%), the scope for a material hawkish repricing looks limited, which is a USD headwind.”

The Yen, on the other hand, is drawing some support from the hawkishly leaning Bank of Japan's (BoJ) Summary of Opinions released earlier this week. The bank's monetary policy committee showed increasing concern about upside risks to inflation, opening the door to a quarter-point interest rate hike in September, with one committee member suggesting a possible acceleration in the bank's monetary tightening pace.