Forex News

Brown Brothers Harriman's (BBH) Elias Haddad notes Norwegian Krone (NOK) underperformance after Norway’s mixed August Consumer Price Index (CPI) data reduced the perceived likelihood of a near-term Norges Bank hike, with September odds falling from 65% to 38%. He highlights that inflation remains above the 2% target and still supports one more 25 bps increase to 4.50% by year-end, with Norway’s carry and energy exposure seen as ongoing tailwinds for NOK.

Rate expectations recalibrated for Norway

"NOK is underperforming. Norway’s mixed August CPI offered little support for an imminent hike, pushing September odds down to 38% from 65%. Headline CPI ran hot at 3.3% y/y vs. 3.0% in July, which was above the 3.2% consensus and 3.0% Norges Bank projection."

"Underlying CPI matched consensus at 3.0% y/y vs. 2.7% in July but was cooler than the Norges Bank’s 3.3% projection. Also, the month-on-month decline in underlying CPI was a tick more than anticipated at -0.5% (consensus: -0.4%) vs. +0.8% in July."

"Nonetheless, inflation has been running above the Norges Bank's 2% target for several years now and argues for one more 25bps hike to 4.50% by year-end. Norway’s attractive carry and energy exposure remain key tailwinds for NOK."

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

• GBP/JPY stages a limited recovery as the Japanese Yen pauses its recent advance.
• The cross holds near its lowest level in nine months after breaking several key supports.
• Downside momentum persists, although the oversold RSI leaves room for a rebound.

GBP/JPY edges higher on Wednesday as the Japanese Yen (JPY) weakens across the board, likely reflecting some profit-taking after the currency’s strong run since the start of the month. Meanwhile, oversold conditions shown by the daily Relative Strength Index (RSI) suggest scope for a short-term rebound in the cross.

At the time of writing, the cross trades around 208.55 after touching 207.10 earlier this week, its lowest level since December 2025.

GBP/JPY has slid around 4% from above 216 in a steep decline, pushing the cross below its 50-day, 100-day and 200-day Simple Moving Averages (SMAs), as well as the long-standing 210 psychological support level. This breakdown has weakened the broader bullish structure, with 210 now likely to act as resistance during recovery attempts.

All three major moving averages sit above the current price, creating a broad resistance area between 213 and 215.50. However, the averages are still arranged in a longer-term bullish order, with the 50-day SMA above the 100-day and 200-day averages. This suggests the latest decline has damaged the trend, although it has not produced a fully bearish moving-average alignment.

The Relative Strength Index near 27 shows that the cross is oversold, leaving room for a corrective rebound or a period of consolidation. However, the Moving Average Convergence Divergence indicator remains below zero, suggesting that downside momentum is still in place.

On the topside, initial resistance is seen at the 23.6% Fibonacci retracement of the decline from 216.63 to 207.10 at 209.35. The 210psychological mark follows, ahead of the 38.2% retracement at 210.74. A sustained recovery could target the 50.0% retracement at 211.86 and the 61.8% level at 212.98.

Above this area, the 200-day SMA at 213 provides another key barrier. Stronger buying would bring a dense resistance zone in the mid-214.00s into view, where the 78.6% Fibonacci retracement and the 100-day SMA converge. The 50-day SMA at 215 forms the final major hurdle before the previous swing high.

On the downside, initial support is located around 207. A clear break below this level could extend the decline, while holding above it may encourage a short-covering recovery toward 210.

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

UOB’s Quek Ser Leang and Lee Sue Ann describe EUR/USD as range-bound near 1.1630, with recent trading contained between 1.1619 and 1.1653. They maintain an upside bias but expect the Euro to stay within 1.1585–1.1670 in the coming weeks. Longer term, they see near-term downward pressure but doubt a sustained break below 1.1505 given prevailing momentum.

Euro bias positive but capped in range

"24-HOUR VIEW: When EUR was at 1.1625 in the early Asian session yesterday, we indicated that “the current price movements are likely part of a rangetrading phase between 1.1605 and 1.1640.” Although EUR subsequently traded within a higher range of 1.1619/1.1653, it closed largely unchanged at 1.1632 (+0.08%). There has been no shift in either downward or upward momentum. Today, we expect EUR to trade in a range between 1.1610 and 1.1650."

"1-3 WEEKS VIEW: Last Friday (04 Sep, spot at 1.1635), we highlighted that while the strong surge from last Thursday “suggests the bias has shifted to the upside, but any advance could stay within a 1.1585/1.1690 range.” On Monday (07 Sep, spot at 1.1625), we highlighted that “the upside bias remains intact, but EUR should stay within a narrower range of 1.1585/1.1670.” EUR traded in a relatively quiet manner over the past few days, and we continue to hold the same view for now."

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

ING’s Frantisek Taborsky reports that the National Bank of Poland left rates at 3.75% and provided limited new guidance, shifting focus to Governor Glapinski’s press conference. With markets already pricing around 85bp of tightening, ING sees a high bar for a hawkish surprise. They expect some easing in rate expectations and a rise in EUR/PLN, potentially back above 4.320, helped by record gas prices.

NBP stance leaves zloty vulnerable

"As expected, the National Bank of Poland kept rates unchanged at 3.75% yesterday. The statement offered little new guidance, leaving attention on Governor Adam Glapinski’s press conference today at 3pm local time."

"We expect a somewhat more hawkish tone than in July, reflecting higher inflation and a firmer outlook. However, with markets pricing in around 85bp of tightening, the bar for a hawkish surprise is high."

"We therefore see scope for some easing in rate expectations and a rise in EUR/PLN, also supported by record gas prices, potentially taking the pair back above 4.320."

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

• The US Dollar Index recovers early losses and turns positive to near 99.93 with the US PPI data in focus.
• Investors expect the US PPI data to have grown at a faster pace.
• Markets also await the US CPI data for August, releasing on Friday.

The US Dollar (USD) claws back its early losses and turns positive ahead of the United States (US) Producer Price Index (PPI) data for August, which will be published at 12:30 GMT.

In European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.15% higher at around 99.93.

Financial markets will closely monitor the US PPI data to get fresh cues regarding the Federal Reserve’s (Fed) interest rate decision next week.

The US headline PPI is expected to have grown at a faster pace of 5.3% Year-on-Year (YoY) against 4.7% in July. The core PPI – which excludes volatile food and energy items – is also seen higher, arriving at 4.6% YoY from the previous reading of 4.2%.

Hot US PPI figures could prompt fears of high inflation expectations, a scenario that could boost hawkish Fed prospects.

This week, investors will also focus on the US Consumer Price Index (CPI) data for August, which is scheduled for Friday.

According to TD Securities, the upcoming August CPI report should show that underlying price pressures remain contained, with the bank expecting that "underlying inflation stayed under control, with core likely rising 0.19% m/m (2.3% y/y)." Strategists there highlight that "the services segment should be the main driver, while core goods prices likely acted as a drag by posting a modest m/m drop." In contrast, they anticipate that "headline CPI will likely be a stronger 0.37% m/m (3.4% y/y) due to rising energy prices and a slight pickup in food inflation."

US Dollar Index Technical Analysis

In the daily chart, the Dollar Index Spot trades at 98.91, keeping a bearish near-term tone as it holds beneath the 20-day Exponential Moving Average (EMA) at 99.27 and the 61.8% Fibonacci retracement at 99.20.

The Relative Strength Index (RSI) at 40.7 sits below the neutral 50 line, hinting that downside pressure remains in place even as the latest pullback shows some moderation.

On the topside, immediate resistance is seen at the 61.8% retracement near 99.20, closely followed by the 20-day EMA at 99.27, with further barriers at the 50% retracement around 99.70 and then 100.19 and 100.80 from the 38.2% and 23.6% retracements, respectively. On the downside, initial support emerges at the 78.6% retracement around 98.50, ahead of a more substantive floor at the 100% retracement level near 97.61, where buyers could attempt to stabilize the index.

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

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• EUR/USD remains steady above 1.1600 with rallies capped below Wednesday's highs at 1.1654.
• Risk aversion is keeping Euro gains subdued, with all eyes on the ECB monetary policy decision.
• The Dollar remains on its back foot ahead of the US CPI release, which keeps the pair from depreciating further.

The Euro (EUR) has given away previous gains against the US Dollar (USD) on Thursday, pulling back to the 1.1620 area, from session highs above 1.1640. The risk-off sentiment amid high Oil prices and surging global yields is keeping EUR/USD rallies subdued, with investors awaiting the outcome of the European Central Bank’s (ECB) monetary policy meeting, due later on the day.

The ECB is widely expected to hike rates for the second time this year, bringing its benchmark Rate on Deposit Facilities to 2.5% from the current 2.25%. The main focus of the event, however, will be on President Lagarde’s press conference for further insight into the bank's plans, amid rising inflationary pressures as the Middle East Conflict pushes energy prices higher.

Earlier in the day, Germany’s final Harmonised Index of Consumer Prices (HICP) confirmed preliminary figures of a 0.2% increase in August and a 2.9% year-over-year (Y-o-Y) gain, from 0.9% and 2.8% respectively in July. The impact of these figures on the Euro has been marginal.

Euro holds within range as the USD loses its safe-haven role

The Greenback, on the other hand, is failing to draw support from its traditional safe-haven status, weighed down by a mix of circumstances, namely the US Dollar debasement trade, amid the disappointment over the US Treasury's bond buyback program, USD/JPY carry trade unwinding, and growing concerns about the ballooning US government debt.

FX Strategists at Brown Brothers Harriman argue that “even if a September Fed hike becomes a done deal, we doubt USD will make new cyclical highs,” as “tightening by other major central banks limits policy divergence, with the ECB widely expected to deliver a 25bps hike.”

In the US calendar, Producer Price Index (PPI) data, due later in the day, is expected to show that inflation accelerated to a 5.3% Y-o-Y rate in August from 4.7% in July. The main focus this week, however, is on the Consumer Price Index (CPI) release, due on Friday, which will be analysed in detail to confirm market expectations of a Federal Reserve (Fed) rate hike next week.