Forex News

Rabobank’s Senior FX Strategist Jane Foley notes the US Dollar (USD) has been the weakest G10 currency over the past week, with US Dollar Index (DXY) down about 2% from late July. The report reviews how the Middle East and Iran conflicts, Trump’s tariffs and rate-cut rhetoric, and Fed expectations have shaped USD sentiment. It argues recent declines revive concerns about safe-haven status and reserve-currency privilege.

Dollar slide revives safe-haven doubts

"The USD is the worst performing G10 currency on a 5-day view, with the DXY dollar index having lost around 2% since its late July levels. Consequently, questions are already being asked if the USD rally, which has been in evidence through the duration of the Middle East crisis, is over. The context to these questions harps back to the sharp losses in the value of the USD last spring and the sour tone that hung over the greenback into the start of the Iran war in late February."

"When both the USD and US treasuries lost their footing in April 2025 following the tariffs announcements by US President Trump that month, confidence in the USD as a safe haven was undermined. This fanned the discussion about the USD’s role as the prime reserve currency, its place in international payments systems and the pace of de-dollarisation. Trump’s calls for rate cuts and concerns about Fed credibility also had a role in clouding the USD’s performance last year."

"Since then, the USD has proved that it is still the primary safe haven currency. Since May, it has found additional support from Fed rate hike speculation. Nevertheless, its recent decline has stirred up fears that last year’s negative sentiment could return."

"On top of that, safe haven USD buying will likely have been knocked back by the weekend announcement from Trump that he had paused further attacks on Iran on the hope of a diplomatic solution."

"While the market will continue to debate the long-term outlook for the greenback and its place as the world’s primary reserve currency, its short-term outlook should continue to find support from relatively good US economic data."

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

Michael Wan at MUFG explains that South Korean Won (KRW), Thai Baht (THB), Singapore Dollar (SGD) and, to a smaller extent, Philippine Peso (PHP) are the main Asian FX beneficiaries if Japanese Yen strength persists, given their higher sensitivity to USD/JPY. He notes that correlation and conditional beta to Yen moves have fallen for Chinese Yuan (CNH), Taiwan Dollar (TWD) and Indian Rupee (INR) since 2025. Robust Asia PMI data suggest strong export momentum, with growth expected to slow into 2027 but stay elevated.

KRW, THB, SGD, PHP sensitivity to JPY

"Overall, the Asia PMI numbers that were out yesterday suggests that export momentum remains quite robust, and this fits in as well with the lead indicators we track which tells us that export growth should slow into 2027 but remain at a high level overall."

"Looking across the Asian FX complex, our analysis shows that the South Korea won, and to a smaller extent the Thai Baht, Singapore dollar and Philippines Peso in that order are more sensitive to Japanese Yen moves."

"For most currencies this sensitivity has come down since 2025, and certainly for the likes of CNH, TWD and INR."

"KRW is the one which stands out where both conditional beta measures and correlation have risen over the last 2 years."

"As such, if the Japanese Yen strengthening moves continue, we would expect KRW, THB, SGD, and to a much smaller extent PHP to benefit in Asia FX context."

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

Scotiabank’s analysts observe that the Euro is consolidating around the 1.15 area against the Dollar, with limited Eurozone data to drive price action. They point to last week’s sharp move higher stalling at a broader bear-trend line and stress that a break above 1.1565 is needed to extend gains, while support is seen in the 1.1460/1.1480 region.

Euro holds gains near 1.15

"The EUR is little changed on the session. There were no major data reports from the Eurozone area on the session and spot appears to be content to consolidate recent gains through the 1.15 area."

"Reports suggest some net inflows into Eurozone bonds as global investors reduce exposure to US Treasury debt"

"Neutral—The snap higher in EUR/USD last week stalled at a key technical point—the broader bear trend that has guided the EUR lower from the January peak."

"Technical pointers lean EUR-bullish after a solid rise overall last week but a break above 1.1565 trend resistance is needed to lift the EUR further. Support is 1.1460/80."

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

• USD/JPY remains stuck near 157.40 after US job openings fall short of expectations.
• JOLTS Job Openings dropped to 7.359 million in June, below the 7.4 million forecast and the previous 7.537 million.
• Reports of an imminent reopening of the Strait of Hormuz lift risk appetite and pressure Crude Oil prices further.

USD/JPY trades on the back foot near the 157.40 area during Tuesday's American session as the Japanese Yen (JPY) builds on the gains secured over the past week. Softer United States (US) labor demand data has taken the edge off the US Dollar (USD), while lower energy prices offer an additional tailwind to the currency of a major net energy importer.

The Job Openings and Labor Turnover Survey showed vacancies fell to 7.359 million in June from a revised 7.537 million in May, undershooting the 7.4 million consensus and marking a further cooling in labor demand. The reading tempers the message from Monday's robust ISM Manufacturing Purchasing Managers Index and complicates the case for an additional Federal Reserve (Fed) rate increase, dragging US Treasury yields lower and narrowing the interest rate differential that has underpinned the pair for much of the year.

Al Arabiya reports that an announcement regarding the reopening of the Strait of Hormuz is expected, adding that communications are proceeding at full tilt and that progress has been made. Al Hadath, quoting a high-level source, indicated that arrangements for a full reopening could be announced within hours or on Wednesday.

Investors now look ahead to the Bank of Japan (BoJ) Monetary Policy Meeting Minutes, scheduled for release late in the Asian session. The document covers the June gathering and, therefore, predates both the suspected intervention and last week's hawkish hold, limiting its capacity to surprise.

Japan will also publish Labor Cash Earnings, forecast to accelerate to 3.4% YoY in June from 3.2%. With Governor Kazuo Ueda repeatedly framing the wage-price cycle as central to the policy outlook, a firm wage print would strengthen the hawkish case and could compound the pressure on USD/JPY.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 157.37, holding a bearish near-term bias as it remains well below the 20-period Simple Moving Average (SMA) at 158.52 and the 100-period SMA at 162.06. The pair is attempting to stabilize after the recent slide, while the Relative Strength Index (RSI) at 31 hovers just above oversold territory, hinting that downside momentum could be slowing but not yet reversing.

On the downside, immediate support is located at 157.23, ahead of lower floors at 156.62 and 156.30, which define the next bearish targets if selling resumes. On the topside, initial resistance comes at the horizontal barrier at 157.99, followed by the 20-period SMA at 158.52, with the 100-period SMA at 162.06 reinforcing a wider ceiling that would need to be reclaimed to ease the current bearish pressure.

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

National Bank of Canada’s (NBC) Jocelyn Paquet reports Canada’s merchandise trade surplus in goods reached a four-year high of C$3.86 billion in June, beating expectations. Exports rose for a fifth consecutive month to a record C$77.5 billion, driven by strong Gold and copper shipments, while energy exports fell. Quarterly data suggest merchandise trade made a strong contribution to Q2 Gross Domestic Product (GDP) growth.

Record exports and shifting composition

"Excluding gold and copper, exports were down by as much as 3.0% during the month, as falling commodity prices amid easing tensions in the Middle East led to a 10.0% decline in the energy segment."

"A study of quarterly trade volumes hints at a strong contribution to Q2 GDP growth from merchandise trade, with exports (+28.5% q/q ann.) growing at a much faster pace than imports (+10.6%)."

"Meanwhile, the increase in import volumes in the machinery and equipment category (+9.6%) suggests that business equipment spending may also have had a positive impact on growth during the quarter."

"Since the United States is the primary destination for our energy exports, it was perhaps not surprising to see the merchandise trade surplus with our southern neighbour narrow in June."

"Canada's merchandise trade surplus reached a four-year high in June, as exports rose for the fifth consecutive month and hit an all-time high of C$77.5 billion."

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

• Gold rebounds as hopes for reopening the Strait of Hormuz weigh on the US Dollar and Oil prices.
• Attention shifts to ADP and Nonfarm Payrolls after weaker-than-expected JOLTS Job Openings.
• XAU/USD remains trapped below $4,100, with the 21-day SMA providing near-term support.

Gold (XAU/USD) catches a fresh bid on Tuesday as traders react to encouraging headlines about the possible reopening of the Strait of Hormuz. At the time of writing, XAU/USD trades around $4,087, recovering from an intraday low near $4,042.

In an interview with CNBC, US Treasury Secretary Scott Bessent said, “We are in talks with the Iranians,” adding that “there is a chance we may have a deal today or tomorrow to open the Strait and move towards a more normalized position in this conflict.”

Separately, Al Arabiya reported, citing a high-ranking source, that an announcement on reopening the Strait of Hormuz is expected shortly. However, no official confirmation has been released.

The latest developments lifted market sentiment, sending the US Dollar (USD) and Oil prices lower. West Texas Intermediate (WTI) fell towards $75.50, its lowest level in three weeks.

Lower Oil prices ease inflation risks and reduce pressure on the Federal Reserve (Fed) to raise interest rates. The move also dragged US Treasury yields lower, providing additional support to Gold.

Expectations of a September Fed rate hike have weakened, with the CME FedWatch Tool showing the probability falling to 57.1% from 67.2% a day earlier. Higher interest rates typically weigh on non-yielding assets such as Gold.

The combination of a weaker US Dollar and lower Treasury yields helped the precious metal regain ground. However, traders may avoid chasing Gold aggressively higher as the situation remains fluid and Tehran has yet to confirm either direct talks with Washington or an agreement to reopen the Strait.

Meanwhile, US JOLTS Job Openings fell to 7.359 million in June from 7.594 million, slightly below the 7.4 million expected. Traders now await ADP Employment Change on Wednesday and Nonfarm Payrolls (NFP) on Friday for clearer signals on the US labour market and monetary policy path. Softer labour figures could further reduce Fed rate-hike expectations and support Gold.

Technical analysis: Consolidation continues below $4,100

In the daily chart, XAU/USD is consolidating in a neutral tone, holding above the 21-day Simple Moving Average (SMA) at $4,062 but still well below the longer-term 100-day SMA, which keeps the broader uptrend in check.

The Relative Strength Index (RSI) around 49 suggests balanced momentum, while the Moving Average Convergence Divergence (MACD) indicator stays modestly positive, hinting at a lack of clear directional conviction in the near term.

On the topside, initial resistance emerges at the horizontal barrier of $4,100, followed by a higher cap at $4,200 before the 100-day SMA at $4,407. On the downside, nearby support is seen around the current price zone, with the 21-day SMA at $4,062 protecting the short-term floor, ahead of the more important horizontal support at $4,000.

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

Anna Paulson, President of the Federal Reserve (Fed) Bank of Philadelphia, said in an interview with CNBC on Tuesday that underlying inflation remains too high and that monetary policy needs to stay mildly restrictive, adding that the current environment likely meets that description.

Key takeaways:

Underlying inflation is too high.

Committed to getting inflation back to target.

This is a complicated time for monetary policy.

Data suggests Fed policy is 'mildly restrictive'.

Need mildly restrictive monetary policy and Fed likely has that now.

Committed to having an 'open mind' about the monetary policy outlook.

Was not a close call to keep rates steady at the FOMC.

If policy is in the right place, inflation will ease.

If monetary policy is not restrictive enough, data will show sticky, high inflation.

If progress is not made on inflation, the Fed will need to act.

Job market is stable right now.

Energy prices are volatile, data suggests it can be looked through.

It is right to look through supply shocks.

Uncertainty of the current environment makes it hard to provide forward guidance.

It's great to take a fresh look at how the Fed does its work."