Forex News

Societe Generale analysts highlight that Brent has resumed a steady advance after defending its 200-DMA in August and crossing a multi-month descending trend line. They see the contract gradually moving toward the July peak around $102, with last week’s low near $89 offering short-term support and further upside projections toward $108/$110 and $117 if resistance breaks.

Uptrend eyes July peak and beyond

"Brent has staged a steady upward move after defending its 200-DMA in August."

"It has crossed a multi-month descending trend line and is gradually advancing toward the July peak around $102."

"Signals of a large pullback are not yet visible, last week's low near $89 could provide short-term support."

"A move above $102 may extend the uptrend toward the next projections around $108/$110 and $117."

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

• The Indian Rupee trades higher against the US Dollar at the start of the week.
• Market experts warn INR’s rally due to strong FCNR(B) deposits could be capped.
• Investors shift their focus to the US CPI data for August.

The Indian Rupee (INR) gains against the US Dollar (USD) at the start of the week. The USD/INR pair drops to near 94.38 as the significant increase in forex reserves due to overwhelming response by Non-Residents to Reserve Bank of India’s (RBI) special foreign deposits window has strengthened the Indian currency.

INR outperformance underpinned by RBI Dollar inflows and reduced left-tail risks

Analysts at MUFG highlight that the Indian Rupee has been a notable outperformer, pointing to “strong outperformance in the Indian Rupee, driven by much higher-than-expected Dollar inflows from RBI’s FCNR(B) FX measures, reaching above US$130bn in total as of 31 Aug.”

The bank advised that investors should not be gung-ho about the Indian currency, as it still thinks USD/INR should trend higher over time. But it ruled out the possibility of a sharp INR depreciation, clarifying that RBI’s FX measures have given authorities meaningful firepower and ammunition.

Higher oil prices could weigh on INR

Rising oil prices due to restricted energy supply through the Strait of Hormuz on the back of US-Iran conflicts could dent the rally in the Indian Rupee.

The continued exchange of attacks between the US and Iran regarding the control of Hormuz is keeping oil prices higher.

On Sunday, the Iranian government said that it targeted three oil tankers using an unauthorized route through the Strait of Hormuz, as well as a number of US-linked ships, in retaliation for US attacks on Iranian tankers over the weekend.

In the opening session on Monday, the MCX Crude Oil contract expiring on September 21 is up 1.75% to near Rs. 8,730, closer to its over three-month high of Rs. 8,791.

US Inflation data in focus

This week, the major event for global markets is expected to be the US Consumer Price Index (CPI) data for August, which will be published on Friday.

Investors will closely track the data as Fed Chairman Kevin Warsh has warned of upside inflation risks several times and has stated that the central bank is committed to bringing price pressures down.

However, recent comments from board members: New York Fed Bank President John Williams and Governor Christopher Waller have signaled that recent data on inflation has been “encouraging”.

Meanwhile, traders are expected to reassess the Fed’s interest rate expectations due to stronger-than-expected Nonfarm Payrolls data for August released on Friday. The data showed that employers hired 162K fresh workers, significantly higher than 56K estimate. July’s NFP data was also revised higher to 21K from -23K.

The CME FedWatch tool shows the odds of the Fed hiking interest rates at the policy meeting next week have increased to 60% from 50% seen before the employment data release.

USD/INR Technical Analysis

In the daily chart, USD/INR trades at 94.45. The pair maintains a bearish near-term bias as price holds below the 20-day Exponential Moving Average (EMA) at 95.17.

The shift in the Relative Strength Index (14) range from the 40.00-60.00 zone to below 40.00 suggests downside momentum remains dominant but also warns that selling pressure could be stretched.

On the downside, the June low at 94.15 will be the key support level for the USD/INR pair. On the topside, the 20-day EMA at 95.15 stands as the first meaningful resistance that the pair would need to reclaim to ease the current bearish tone and open the door to a corrective rebound.

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

OCBC’s Christopher Wong notes that stronger US payrolls initially lifted the US Dollar (USD) and US Dollar Index (DXY), but softer wage growth and only modest Fed repricing capped gains. He argues the resilient US labour market keeps the risk of further Fed tightening alive, helping to limit Dollar downside before Consumer Price Index (CPI). Technicals show DXY holding mild bullish momentum with clear resistance and support levels.

Dollar supported but capped by CPI risk

"The payrolls report is supportive of the USD at the margin, but not sufficient on its own to drive a sustained leg higher. The stronger jobs data reinforces the resilience of the US economy and should keep the risk of Fed tightening alive, which in turn may restrain USD downside. That said, with wage pressures still contained, markets are likely to require firmer inflation evidence before pricing a Sept hike with greater conviction."

"This partially helps explain the relatively muted USD follow-through. Fed hike expectations increased after the release, with the implied probability of a Sept hike briefly rising to around 65% from 55% but subsequently eased towards 62%."

"Focus therefore shifts to this week’s CPI, where an upside surprise could provide the catalyst for renewed USD strength, while a softer print would likely keep price action more two-way."

"DXY last seen at 99.20 levels. Mild bullish momentum on daily chart remains intact while RSI is flat. 2-way trades likely."

"Resistance at 99.40 (21DMA, 38.2% fibo), 99.75 (100 DMA). Support at 98.60/70 levels (50% fibo retracement of 2026 low to high), 98 (61.8% fibo)."

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

• Saudi Aramco’s Oil facilities in Jizan were hit by fresh strikes on Monday, according to the Financial Times.
• The extent of the damage is currently being assessed.
• Oil prices jump following the reports, with US Crude gaining more than 1% on Monday.

According to the Financial Times, Saudi Aramco’s Oil facilities in Jizan were hit on Monday. The extent of the damage is currently being assessed, the newspaper reported.

The reports revive concerns over potential disruptions to Saudi Oil supplies and trigger an immediate reaction in the energy market.

West Texas Intermediate (WTI) US Oil accelerates sharply following the headlines and moves back above the $90 mark. The Crude Oil gains 1.27% on Monday and trades around $90.40 at the time of writing, after trading below $90 before the reports of the strikes emerged.

• EUR/USD trades broadly sideways to near 1.1625 amid an extended weekend in the US.
• Investors keenly await the ECB’s policy decision and the US CPI data.
• The ECB is expected to hike policy rates on Thursday.

The Euro (EUR) is marginally higher to near 1.1625 against the US Dollar (USD) during the European trading session on Monday. The major currency pair trades broadly sideways amid an extended weekend in the United States (US) due to Labor Day.

This week, the major trigger for the major currency pair will be the European Central Bank’s (ECB) monetary policy announcement on Thursday and the release of the United States (US) Consumer Price Index (CPI) data on Friday.

Euro focus turns to ECB

According to Deutsche Bank, the upcoming ECB policy decision on Thursday will be “the key event” for European markets. The bank’s European economists “expect a 25bp rate increase, taking the deposit rate to 2.50%,” and they note that investors will be closely watching “any guidance regarding the likelihood of further tightening” beyond this week’s move.

On the US Dollar front, investors will pay close attention to the US CPI data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

Meanwhile, upbeat US Nonfarm Payrolls (NFP) data has prompted Fed’s interest rate hike expectations.

Strategists at BNY highlight that last week’s upside surprise in U.S. labour data, with "nonfarm payrolls (NFP) at 162,000 vs. the expected 55,000," pushed "market-implied odds of a September Fed hike back up to around 60% from 50%," underscoring "how much rate expectations remain tethered to the data backdrop.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1623, keeping a modest bullish tone as it holds above the 20-day Exponential Moving Average (EMA) at 1.1600.

The pair consolidates after its recent advance, and the Relative Strength Index (RSI) around 56 suggests constructive but not overextended upside momentum.

On the downside, immediate support emerges at the 20-day EMA near 1.1600, with a break below this level likely to weaken the current upward bias and open the door to a deeper pullback towards the psychological level of 1.1500. Looking up, the August high at 1.1713 is the immediate resistance level, followed by the April high at 1.1849.

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

• Silver falls nearly 0.8% on Monday, weighed down by renewed expectations of monetary tightening in the United States.
• The strong US employment report supports the US Dollar and puts pressure on precious metals.
• Geopolitical tensions keep safe-haven demand alive, while attention turns to US inflation data.

Silver (XAG/USD) trades under pressure on Monday, falling 0.79% on the day to around $65.70 at the time of writing. The white metal is feeling the impact of the strong US employment report, which has revived expectations of an interest rate hike by the Federal Reserve (Fed) and supports the US Dollar (USD).

The Nonfarm Payrolls (NFP) report released on Friday showed that the US economy added 162K jobs in August, well above the market consensus of 56K. The Unemployment Rate remained unchanged at 4.1%, in line with expectations, while annual Average Hourly Earnings growth eased slightly to 3.1% from 3.2% previously.

These figures reinforce the view that the US labor market remains strong enough to allow the Fed to maintain a restrictive monetary policy stance. Inflation risks stemming from higher energy prices are also contributing to expectations of a potential interest rate hike as soon as the central bank's next meeting.

The prospect of higher US interest rates is a negative factor for Silver, which does not offer any yield. At the same time, it provides support to the US Dollar, making the precious metal more expensive for investors using other currencies.

However, expectations of monetary tightening remain dependent on incoming data. Fed Governor Christopher Waller said on Thursday that he would favor keeping interest rates unchanged if upcoming indicators confirmed that inflationary pressures were easing.

Investors' attention therefore turns to the US Producer Price Index (PPI) and Consumer Price Index (CPI), due on Thursday and Friday, respectively. These releases should provide fresh clues about the inflation trajectory and could play a key role in shaping expectations for the Fed's next policy decision.

Meanwhile, escalating tensions between the US and Iran in the Strait of Hormuz keep a geopolitical risk premium embedded in financial markets. US forces struck three Iranian Oil tankers on Saturday, while Iran's Islamic Revolutionary Guard Corps said it had targeted six vessels in retaliation.

The exchange of attacks is fueling concerns over the security of shipping through the strategic waterway and the risk of prolonged disruptions to energy supplies from the Middle East. This backdrop supports energy prices and reinforces inflation risks, potentially keeping expectations of restrictive Fed monetary policy elevated.

Geopolitical tensions could nevertheless limit Silver's downside by simultaneously fueling demand for safe-haven assets. The white metal therefore remains caught between potential support from defensive flows and pressure from higher US interest rate expectations and a stronger US Dollar.

• EUR/GBP is testing support at 0.8585 after failing to break above 0.8600.
• Eurozone final Q2 GDP has been revised up, but German Industrial Production disappointed.
• In the UK, Lloyds data revealed that house prices contracted against expectations in August.

The Euro (EUR) is trading lower against the British Pound (GBP) following mixed Eurozone macroeconomic figures on Monday. The EUR/GBP pair is testing support at a previous resistance area, at 0.8585 ahead of the US session opening, after failing to find acceptance above the 0.8600 area last week. 

In the Eurozone, data released by Destatis earlier on Monday revealed that the economy grew at a faster rate than previously thought in the second quarter, as the Gross Domestic Product (GDP) was revised up to 0.6% from the previously estimated 0.4% growth, which is a significant improvement from the first quarter’s 0.1% uptick. Year-over-year, Eurozone GDP has been revised to 1.2% growth from previous estimates of a 1% increase.

Earlier on the day, however, downbeat German Industrial Production figures cast doubt on the Eurozone's growth outlook and put negative pressure on the Euro. German factory output dropped 1.1% in July, against market expectations of a 0.3% increase, while June's reading was revised down to 0% from the 0.2% rise previously estimated.

In the UK, the Lloyds Housing Price Index, released earlier on Monday, showed that property prices contracted against expectations in August, but these figures failed to make any significant impact on the Pound.

Technical Analysis: Key support is at the 0.8565 area

EUR/GBP trades just above previous resistance, now turned support at 0.8585, with momentum indicators on intraday charts turning bearish. The Relative Strength Index (14) on the 4-hour chart has eased back toward 51, hinting at fading upside momentum, while the Moving Average Convergence Divergence (MACD) has slipped slightly negative, suggesting consolidation rather than a clear directional push.

A break below 0.8585 (July 30, August 19 highs) would expose the 0.8565 area where the trendline from mid-August lows crosses the September 2 trough. A break below here would negate the upside trend. On the topside, last week's high at 0.8607 is closing the path towards the June 29 and 26 peaks at 0.8632 and 0.8651, respectively.

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

(This story was corrected at 11:01 GMT to say that the EUR/GBP was rejected at 0.8600 last week, and not at 186.00 as previously stated.)

• USD/JPY resumes its downtrend on Monday and hits fresh six-month lows near 154.00.
• Market expectations of a faster BoJ tightening path have sent the Yen rallying across the board over the last few weeks.
• The pair is trading below the neckline of a large bearish Head & Shoulders pattern.

The Japanese Yen (JPY)  resumes its uptrend against the US Dollar (USD) on Monday, as the dust from a bright US Nonfarm Payrolls (NFP) report settles, and Japanese officials hint at some steepening of the Bank of Japan’s (BoJ) tightening cycle ahead. The USD/JPY pair has breached the support area around 155.15 to hit fresh six-month lows near 154.00 on Monday.

Analysts at Danske Bank note a marked shift in Japanese policy expectations, highlighting that in Japan, "Takuji Aida, economic adviser to PM Takaichi and seen as one of the most vocal opponents of BoJ rate hikes, now expects the Bank of Japan to raise rates at its 17-18 September meeting, followed by another hike by January next year."

"Aida warns that a faster tightening pace could weigh on the economy," affirm the Danske Bank experts in a note, which suggests that more rate hikes might be on the BoJ's pipeline.

NBIM shift underscores rotation from US Treasuries into Japan

Beyond that, Shreyas Gopal, Deutsche Bank’s FX analyst, has examined the implications of the Norges Bank Investment Management (NBIM) portfolio changes, concluding that the planned reallocation is “likely to, on net, result in a notable reduction in ownership of US Treasuries and a significant increase in allocation to Japanese government bonds.”

The report frames this shift as part of a broader reassessment of sovereign risk and diversification priorities, with the move into Japan’s government bond market seen as a potentially supportive medium-term factor for the Yen, even if the absolute flow size remains modest relative to global benchmarks.

Technical Analysis: USD/JPY highlights a large H&S formation

USD/JPY has pierced a support area a few pips above 155.00 on Monday, which is the neckline of a bearish Head & Shoulders (H&S) pattern on the daily chart, a common figure for trend shifts. Momentum indicators show the daily Relative Strength Index (RSI) (14) reaching oversold levels near 27, and the Moving Average Convergence Divergence (MACD) on the same timeframe heading lower at levels sub-zero. This reinforces the current downward momentum despite the risk of a corrective bounce.

The pair is now testing support at the February 24 low in the 154.00 area. Further down, the late January lows just above 152.00 will be targeted. The H&S's measured target is at the October 2025 low, at the 149.60 area. Upside attempts above the mentioned 155.15 area, on the other hand, are likely to meet resistance at the August 7 low, in the 156.60 area, and the August 20 low, near 158.00.

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

• EUR/JPY falls more than 1% on Monday, pressured by a sharp strengthening of the Japanese Yen.
• Markets now widely expect an interest rate hike in Japan at the September meeting.
• German Industrial Production disappoints in July, while Eurozone investor confidence improves significantly.

EUR/JPY falls 1.11% on Monday and trades around 179.45 at the time of writing. The sharp decline in the cross mainly reflects the strong appreciation of the Japanese Yen (JPY), supported by growing expectations of monetary policy tightening by the Bank of Japan (BoJ).

Investors now appear to have fully priced in a 25-basis-point interest rate hike at the next BoJ meeting, scheduled for September 17-18. Some analysts also see the possibility of a larger move aimed at containing inflation expectations and rising long-term bond yields.

Speculation about a potential intervention by Japanese authorities in the foreign exchange market provides additional support to the Japanese Yen. The combination of prospects for higher interest rates in Japan and intervention risks therefore benefits the Japanese currency and intensifies the downward pressure on EUR/JPY.

On the European side, the Euro (EUR) received mixed macroeconomic signals on Monday. Germany's Federal Statistical Office (Destatis) reported that German Industrial Production declined by 1.1% MoM in July, following stagnation in June, revised from the 0.2% increase initially reported. The reading came in well below the 0.3% growth expected by markets.

On an annual basis, German Industrial Production fell by 1.6% YoY in July, following a 0.5% contraction in June. The figures highlight the persistent difficulties facing the industrial sector of the Eurozone's largest economy.

Data from the rest of the region were more encouraging. The Eurozone Sentix Investor Confidence Index rose to 5.1 in September from 0.9 in August, signaling a significant improvement in investor sentiment.

Meanwhile, Eurozone growth was revised higher. Gross Domestic Product (GDP) expanded by 0.6% QoQ in the second quarter, compared with the previous estimate of 0.4%, marking its strongest quarterly growth rate since the second quarter of 2022. On an annual basis, growth is also revised higher to 1.2% YoY, from the previously estimated 1% and compared with 0.6% in the first quarter.

Despite these more encouraging developments for the Eurozone economy, EUR/JPY dynamics remain dominated on Monday by the strengthening of the Japanese Yen and expectations of imminent monetary tightening in Japan.

Brown Brothers Harriman’s (BBH) Elias Haddad expects Chile, Poland, Peru and Türkiye to keep policy rates unchanged at upcoming meetings. Haddad highlights that Chilean Peso (CLP) should trade stronger given copper, Polish Zloty (PLN) benefits from positive real rates and external balances, Peruvian Sol (PEN) may underperform if real rates stay negative, and tight policy in Türkiye is justified as disinflation stalls around 30% year-on-year.

Central bank holds and EM currency risks

"Chile’s central bank is widely expected to keep the policy rate on hold at 4.50% for a fifth straight meeting (Tuesday). The bank is in a good place to keep rates steady for some time. Two-year inflation expectation surveys remain close to its 3% inflation target and the policy rate is near the top of the bank’s 3.75%-4.75% neutral range estimate."

"USD/CLP should be trading much lower given the rally in copper prices, Chile’s main commodity export."

"National Bank of Poland (NBP) is widely expected to keep the policy rate at 3.75% for a fifth straight meeting (Wednesday). NBP delivered 200bps of cuts since July 2025 and the swaps curve implies 75bps of tightening to 4.50% in the next twelve months as inflation is gaining traction."

"Still, Poland’s positive real rates and favorable balance of payments backdrop continue to support PLN."

"Peru’s central bank (BCRP) is widely expected to keep rates unchanged at 4.25% for a 12th consecutive meeting (Thursday). PEN risks underperforming if the bank remains relaxed about above target inflation as it could keep real rates negative for longer."

"Türkiye central bank (CBRT) is widely expected to keep rates on hold at 37.00% for a fifth straight meeting (Thursday). The disinflationary process has stalled around 30% y/y and argues for continued tight monetary policy."

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