Forex News

• Gold struggles to capitalize on Asian session gains to the highest level since June 5.
• Inflation fears stemming from volatile oil prices keep Fed rate-hike bets on the table.
• Geopolitical risks further benefit the USD, which contributes to the intraday pullback.

Gold (XAU/USD) retreats over $100 from its highest level since June 5, touched earlier this Thursday, and maintains its bearish tone around the $4,375-$4,370 region through the first half of the European session. The initial market reaction to signs of moderating US inflation fades quickly as investors remain worried that higher energy prices will rekindle inflationary pressures. This underpins prospects for at least one interest rate hike by the US Federal Reserve (Fed) in 2026, which is seen as supporting the US Dollar (USD) and driving flows away from the non-yielding bullion.

The US Bureau of Labor Statistics reported on Wednesday that the headline US Consumer Price Index (CPI) eased in line with market expectations, from 3.5% to 3.4% YoY in July. Adding to this, the core gauge, which excludes volatile food and energy prices, rose 0.2% and 2.5% on a monthly and yearly basis, respectively, matching consensus estimates. This comes on top of last Friday's weak US Nonfarm Payrolls (NFP) report and gives the Fed more room to hold interest rates steady in September, which offered some support to gold.

Investors, however, remain worried about inflation risks stemming from volatile oil prices due to the US-Iran standoff. In fact, President Donald Trump again claimed that the US has "total control" over the Strait of Hormuz, while Iran has pledged to keep the vital waterway closed until all its demands are met. Moreover, Iran-backed Houthis in Yemen escalated attacks on vessels in the Red Sea and Bab el-Mandeb Strait, targeting Saudi ships. This has led to increased war-risk premiums, which continue to lend some support to crude oil prices.

This continues to fuel inflation fears and backs the case for some Fed tightening. According to the CME Group's FedWatch Tool, traders are still pricing in a nearly 80% chance that the US central bank will raise borrowing costs in 2026. This, in turn, helps the USD Index (DXY) build on the previous day's bounce from the post-CPI swing low and climbs to a two-week high, exerting additional pressure on the Gold. Moreover, acceptance below the $4,400 mark backs the case for an intraday corrective pullback from an over two-month high. meaningful corrective decline in the Gold price.

Traders now look forward to Thursday's US economic docket, featuring the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims. This, along with speeches from influential FOMC members, will drive USD demand and provide some impetus to the precious metal. Apart from this, further developments surrounding the Middle East crisis might continue to infuse volatility across global financial markets and contribute to producing short-term trading opportunities around the Gold price.

XAU/USD daily chart

Technical Analysis

The previous day's close above the 100-day Simple Moving Average (SMA) and a subsequent move beyond the 50% retracement level of the April-June downfall favor XAU/USD bulls. Adding to this, the Moving Average Convergence Divergence (MACD) indicator remains elevated, reinforcing constructive momentum. Meanwhile, the Relative Strength Index (RSI) at 67.44 hovers near overbought territory, hinting that upside pressure persists but may be nearing a stretched condition.

Hence, strength beyond the daily swing high might confront initial resistance near the 200-day SMA at $4,502. This is closely followed by the 61.8% retracement at $4,525.18, above which the Gold price could climb to the next barriers at $4,683 and $4,885. On the downside, weakness below the 100-day SMA could drag the Gold to the 38.2% Fibo. at $4,302 and the 23.6% level at $4,164.38, before a more significant structural floor emerges near $3,941.47.

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

OCBC’s Sim Moh Siong and Christopher Wong highlight that the Swiss Franc (CHF) has weakened toward their year-end EUR/CHF target of 0.94, making it a preferred funding currency for carry trades. With domestic inflation subdued and near-term imported inflation risks limited, they expect the Swiss National Bank (SNB) to keep rates at zero for the rest of the year, pointing to continued CHF softness amid mixed growth signals.

SNB policy underpins CHF weakness

"The CHF has weakened in recent months, moving closer to our year-end EUR/CHF target of 0.94. A dovish SNB, coupled with potential intervention risks in the JPY, has strengthened the case for CHF as a preferred funding currency for carry trades. As a result, the CHF is the worst-performing G10 currency against the USD so far in 3Q26."

"Near-term inflation risks remain limited. While the recent depreciation of the CHF may eventually lift imported inflation, the impact is unlikely to be felt for at least another two quarters. Domestic inflation remains subdued and below the midpoint of the SNB's 0-2% price stability range."

"Against this backdrop, we expect the SNB to keep policy rates at zero for the rest of the year, reinforcing the outlook for continued CHF softness. Growth signals also remain mixed. Strength in the pharmaceutical sector contrasts with softer industrial activity and weaker consumer-facing earnings, offering little justification for a more hawkish policy stance."

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

Francesco Pesole at ING sees some downside risks for the Norwegian Krone from Norges Bank’s meeting, as benign CPI‑ATE prints could tilt communication slightly less hawkish. He still expects rates to stay at 4.25% today and another hike later this year, but is less convinced about multiple moves. Despite limited upside for front‑end NOK rates, ING keeps a bullish NOK stance with a 10.75 EUR/NOK year‑end target.

Norges Bank tone versus NOK fundamentals

"This morning’s Norges Bank meeting carries some downside risks for NOK. In this article, we discuss why we think policymakers will keep rates at 4.25% (in line with expectations), but still expect them to hike rates again later this year."

"However, we cannot ignore the two benign 2.7% CPI-ATE prints in June and July and how they might tilt the balance to a slightly less hawkish tone. We see little upside room for front-end NOK rates anyway at this stage."

"Markets are pricing in 27bp of tightening by year-end, broadly in line with our base case, but we have become less convinced about another hike and even less convinced about the prospect of more than one."

"That is not a major concern for our bullish NOK views, however. Fundamentals and an attractive carry regardless of another hike, and we remain bullish on the krone with a 10.75 target versus EUR at the end of December."

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

• USD/JPY hovers near 160.00, pressured by wide interest rate gaps and high import costs.
• Escalating US-Iran conflict and potential oil blockades lend safe-haven support to the US Dollar.
• Soft July US CPI data reduced market expectations for a September Federal Reserve rate hike.

USD/JPY inches lower after registering minor losses in the previous day, trading around 159.40 during the European hours on Thursday. The currency pair hovers near the crucial 160.00 level, keeping traders on high alert for possible intervention from Japanese authorities. Despite intervention caution, the Japanese Yen (JPY) remains under fundamental pressure due to wide interest rate differentials, fiscal worries, and rising import costs.

Analysts at Commerzbank highlight that the recent move in USD/JPY has effectively unwound much of the post-intervention strength in the Japanese currency, noting that "the yen has now given back a significant part of the gains following the coordinated US-Japan intervention earlier this month." This reversal leaves markets reassessing the durability of the earlier support for the Yen as investors focus on the evolving Bank of Japan rate outlook and the potential for renewed policy action.

Meanwhile, the US Dollar (USD) gains support from escalating US-Iran tensions. Stalled diplomacy and aggressive US moves, such as threats of broader sanctions and a potential naval blockade on Iranian oil exports, have heightened geopolitical risks, reinforced by President Donald Trump's claim of "total control" over the strategic waterway.

However, the Greenback’s upside could be capped by shifting Federal Reserve (Fed) rate expectations following softer inflation metrics. July’s headline CPI dropped slightly to 3.4% year-over-year, while core CPI cooled to 2.5%, matching market forecasts. This cooling inflation has reinforced market expectations for a more accommodative Fed stance, with the CME FedWatch tool showing the probability of a September rate hike falling to roughly 36% from 48% a day earlier.

Commerzbank’s Tatha Ghose reports Russia’s June merchandise trade surplus rose to USD 12.5bn, up over 50% year-on-year, as higher Oil prices and improved Urals pricing supported exports. IMF trade data confirm a jump in exports and surplus by April, but he cautions the improvement is not trend-altering and may fade as export prices ease. With USD/RUB only weakly tied to fundamentals, he expects continued Ruble depreciation over the coming year.

Oil-driven trade gains lack durability

"Russia’s June merchandise trade data show that the rise in the oil price and better Urals price realisation since March began to have a positive effect on the trade balance since around April. According to the latest official data, the merchandise trade surplus reached USD 12.5bn in June (up by 52.3%y/y)."

"We still choose to showcase the IMF’s Direction of Trade Statistics for trends in Russian trade (as opposed to local Russian statistics, whose reliability became questionable – partly because of stated official policy – since the Ukraine war began). The IMF data are delayed, which means that the latest available data are for April rather than June. Still, one can observe the effect already by April."

"The up to date official data suggest that the trade balance has not improved much further since then and may, in fact, begin to fade in July as the oil export price begins to average lower. Crucially, our chart shows that the trade balance improved to a multi-year high, but did not really increase to a level beyond what Russia had enjoyed in preceding years."

"In this sense, the development is not “trend altering” although better Urals pricing did help the Russian economy. The USD/RUB “technical fix” began to drift up around the same time because the geo-political environment deteriorated, while the exchange rate has only a weak link to underlying trade fundamentals. We expect the ruble to keep depreciating over the coming year."

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

• DXY gains positive traction for the fourth straight day and seems poised to appreciate further.
• Oil-driven inflation fears fuel Fed hike bets and underpin the USD amid the US-Iran standoff.
• A move above a short-term trading range barrier is needed to reinforce the bullish outlook.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, is seen building on the previous day's sold bounce from the post-CPI swing low and prolonging its weekly uptrend for the fourth straight day. The momentum lifts the Index to a two-week high during the early part of the European session on Thursday, with bulls still awaiting a sustained move beyond the 100.00 psychological mark before positioning for further gains.

The US Consumer Price Index (CPI) report, released on Wednesday, came in line with market expectations, giving the Federal Reserve (Fed) more room to hold interest rates steady. Traders, however, remain worried about inflation risks stemming from volatile oil prices and are still pricing in a greater chance that the US central bank will raise borrowing costs at least once by the end of this year. Apart from this, the US-Iran standoff keeps the geopolitical risk premium in play and acts as a tailwind for the safe-haven US Dollar (USD).

From a technical perspective, this week's move beyond the 50-period Simple Moving Average (SMA) and the 23.6% Fibonacci retracement level of the July-August decline were seen as key triggers for DXY bulls. Adding to this, supportive momentum indicators back the case for a further near-term appreciating move. In fact, the Relative Strength Index (RSI) at 58.50 leans bullish without overbought signals, while the Moving Average Convergence Divergence (MACD) remains slightly positive, hinting that buyers retain control.

However, it will still be prudent to wait for a breakout through the top boundary of a short-term trading range held since the beginning of this month before positioning for any further gains. The DXY might then climb to the 38.2% Fibo. retracement at 100.26, en route to the 50.0% retracement at 100.51 and the denser barrier around the 61.8% level at 100.77. A sustained break above these would open the way toward the 78.6% retracement at 101.14 and the recent cycle high around 101.61.

On the downside, immediate support is seen at the 23.6% Fibo. retracement at 99.94, with the 50-period SMA at 99.83 reinforcing that floor. A deeper pullback would expose the structural low around 99.42.

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

DXY 4-hour chart

• The Oil price rises to near $82.10 as fears of a prolonged energy supply disruption remain intact.
• Both the US and Iran claim to control the Hormuz Strait.
• OPEC has revised its global oil demand forecast for 2026 to 580,000 bpd.

West Texas Intermediate (WTI), futures on NYMEX, trades 0.5% higher at around $82.10 during the European trading session on Thursday. The oil price reflects strength as fears of a prolonged energy supply disruption continue to act as a key tailwind for oil prices.

With the United States (US) and Iran both claiming to have control of the Strait of Hormuz, a critical chokepoint for one-fifth of global energy supply, the traffic through the chokepoint remains low.

According to data from Kpler, shipping traffic through the Strait of Hormuz was recorded to 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.

On Wednesday, US President Donald Trump said in a post on Truth Social that the US has "total control" over the Hormuz, describing the American naval presence as a "wall of steel".

Meanwhile, OPEC has revised its global oil demand forecast for the current year to 580,000 barrels per day (bpd) from the prior estimate of 780,000 bpd.

WTI Technical Analysis

The WTI US Oil trades at $82.10, holding a constructive near‑term bias as it trades above the 20‑day Exponential Moving Average (EMA) at $80.07. The oil price has extended the recovery above the 20-day EMA, which started after completing the 61.8% retracement of the swing from the July 2 low at $67.09 to the July 23 high at $92.25.

The Relative Strength Index (14) at 52.55 sits slightly above neutral, hinting at steady rather than aggressive bullish momentum while price approaches overhead Fibonacci levels.

On the topside, initial resistance is seen at the 38.2% Fibonacci retracement at $82.54, followed by the 23.6% retracement at $86.11, where further gains could start to face profit‑taking. On the downside, immediate support is defined by the 20‑day EMA at $80.07, with stronger structural demand clustered around the 50.0% retracement at $79.65; a break below this area would expose deeper Fibonacci supports at $76.75 and $72.64, while the $67.40 low remains a major bearish target only if the current bullish structure fails decisively.

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

BNY’s Geoff Yu argues that the July Fed meeting marked a peak in Dollar dehedging rather than an end to U.S. exceptionalism. Cross-border investors are rebuilding USD hedges, reducing effective unhedged U.S. exposure while maintaining broadly solid underlying demand for U.S. assets. Dollar selling is concentrated against GBP, EUR and CAD, while JPY and CNY remain notable exceptions.

Fed decision shifts Dollar hedging

"The July Fed appears to have marked a dollar dehedging peak rather than an end to U.S. exceptionalism. Cross-border investors are adding USD hedges again, with net U.S. asset exposure falling sharply after the July 29 decision. Dollar selling is concentrated in GBP, EUR and CAD, while JPY and CNY remain notable exceptions."

"Our USD “net hedge” indicator moved from an excess hedge position of close to 15% to around half its trailing 12-month level by the July 29 Fed meeting. The speed of that shift highlights how strongly investors had re-engaged with the dollar."

"Our data indicate that between July 29 and August 5, net U.S. asset exposure fell from 0.47 to 0.34, a significant drop in the “U.S. exceptionalism” view. However, the long-term average for net U.S. exposure is close to flat – changes in USD hedges tend to track asset values. So overall U.S. exceptionalism remains solid."

"Stripping out month-end effects, the data show that the Fed outlook remains material for hedging levels. The Fed will therefore need to remain sensitive to such FX effects, especially if the dollar is increasingly viewed as an inflation pass-through channel."

"Express concerns around the Fed through higher USD hedge ratios, rather than outright reductions in U.S. asset exposure."

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

Here is what you need to know on Thursday, August 13:

The action in financial markets remains relatively subdued early Thursday, with major currency pairs fluctuating within their narrow weekly ranges. In the second half of the day, weekly Initial Jobless Claims and Producer Price Index (PPI) data for July will be featured in the US economic calendar.

On Wednesday, the data published by the US Bureau of Labor Statistics showed that annual inflation in the US, as measured by the change in the Consumer Price Index (CPI), declined to 3.4% in July from 3.5% in June. On a monthly basis, the CPI rose by 0.1% following the 0.4% decline recorded in the previous month. The core CPI, which excludes volatile food and energy prices, increased by 0.2% and 2.5% on a monthly and yearly basis, respectively. All of these figures came in line with analysts' estimates and failed to trigger a noticeable market reaction.

The US Dollar (USD) Index registered small losses on Wednesday before entering a consolidation phase at around 100.00 early Thursday. In the meantime, US stock index futures trade virtually unchanged on the day following the mixed action seen in Wall Street midweek.

US Dollar reaction muted as CPI cools hike odds but leaves structural worries intact

Analysts at Deutsche Bank note that, “for the most part, markets focused on the benign headline of the CPI print,” with the probability of a September Fed hike slipping as a result. They highlight that “pricing of a September Fed hike fell from 48% to 40%, the lowest it has been since the June Fed meeting shifted the market perspective on hikes.” Even so, Deutsche Bank stresses that “our US economists maintain their call for a Fed rate hike in September, though the CPI print together with last Friday’s mixed jobs report reduce the urgency for imminent action.” In their view, “the CPI report eased concerns about the next Fed move without doing much to resolve the longer-term concerns around deficits, supply, and term premium,” leaving underlying structural issues firmly in place despite the softer near-term policy risk.

The UK's Office for National Statistics reported earlier in the day that the Gross Domestic Product (GDP) expanded at an annual rate of 1.2% in the second quarter. This print followed the 0.9% increase recorded in the previous quarter and came in slightly better than the market expectation for an expansion of 1.1%. On a negative note, Industrial Production and Manufacturing Production in the UK contracted by 0.2% and 0.5%, respectively, on a monthly basis in July. GBP/USD edges slightly lower following these mixed data releases and was last seen trading at 1.3485, losing about 0.1% on the day.

Following Monday's upsurge, USD/JPY lost its bullish momentum and closed virtually on Tuesday and Wednesday. The pair extends its sideways grind early Thursday and trades in a tight channel below 159.50.

Gold regained its traction and held slightly above $4,400 at the end of the day on Wednesday. The precious metal corrects lower in the European morning on Thursday and trades at around $4,370.

Crude Oil prices remain flat early Thursday as the uncertainty in the Middle East persists, with the US and Iran offering conflicting claims regarding the activity in the Strait of Hormuz. At the time of press, the barrel of West Texas Intermediate was virtually unchanged on the data $81.50.

Oil gains seen keeping December Fed hike on the table

According to TD Securities, “we continue to see crude oil moving higher,” a trend they argue “should keep the possibility of a December rate hike alive.” The bank notes that “this means that inflation, at least on the headline, will move higher later,” which in turn “could get the market to reprice Fed hikes and gold this year.”