Forex News

• NZD/USD pulled back from eight-week highs at 0.5885 but remains above previous highs, at 0.5860.
• The Kiwi is on track for a nearly 1.5% weekly rally, buoyed by the US Dollar's weakness following the Fed's monetary policy meeting.
• The pair is in a corrective pullback after reaching overbought levels on intraday RSI.
  

The New Zealand Dollar (NZD) ticks lower against the US Dollar (USD) on Friday, but remains steady near eight-week highs at 0.5885, with downside attempts contained above a previous resistance area at 0.5860 so far.

The Kiwi Dollar has rallied nearly 1.5% this week, boosted by a weak USD after the Federal Reserve’s (Fed) monetary policy meeting on Wednesday. The US central bank left its Federal Funds Rate unchanged at the 3.50%-3.75% range, as expected, but the lack of guidance shown by Chairman Warsh was taken by the market as a dovish sign, and sent the USD tumbling against its main peers.

Kiwi bulls have lost some momentum on Friday, as Chinese NBS Manufacturing Purchasing Managers Index (PMI) figures showed that business activity contracted unexpectedly in July, weighed by weak domestic demand and the disruptive impact of typhoons. China is New Zealand’s major trading partner and the NZD is closely correlated to Chinese economic growth.

Technical Analysis: Correcting lower within a bullish trend

NZD/USD trades at 0.5875, keeping a constructive near-term bias although the overbought Relative Strength Index (RSI) levels suggest that the pair is ripe for a deeper correction. The 4-Hour RSI remains above 70, hinting at a stretched condition, while the Moving Average Convergence Divergence (MACD) remains above its signal line, which suggests that upside pressure is still intact.

A sharper reversal below the mid-July highs in the mentioned 0.5860 level is likely to find support in the area between the ascending trendline from June 25 lows, now at 0.5785, and the July 23, 27 and 29 lows, around 0.5865. On the topside, above Thursday's highs at 0.5885, bulls might find resistance at the 78.6% Fibonacci retracement of the June sell-off, at 0.5911 ahead of June's peak, in the 0.6000 area.

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

ING analysts Warren Patterson and Ewa Manthey note that Oil prices have pulled back, with ICE Brent dropping below $90/bbl even as US–Iran tensions stay high. They highlight recovering flows from the Persian Gulf via the Strait of Hormuz and pipelines, and stress that US SPR constraints and Russia’s extended diesel export ban keep middle distillate markets tight, with European supply risks via the Red Sea.

Brent pressured as distillates stay tight

"Oil prices came under pressure yesterday, with ICE Brent settling 1.9% lower on the day, taking it back below $90/bbl. This weakness comes despite little improvement in tensions between the US and Iran."

"There are signs of an increase in oil flows through the Strait of Hormuz. Ship tracking data shows that tanker crossings have increased slightly."

"However, the US energy secretary has said that around 13m b/d of oil is coming out of the Persian Gulf, with roughly half coming through the strait. The other half is using pipelines to bypass the strait."

"The US also appears to have ruled out further releases from its strategic petroleum reserves (SPR), once the ongoing release of 172m barrels is complete. The SPR currently stands at a little under 308m barrels, and there’s growing concern over how much further this reserve could be tapped, given operational minimum levels."

"Middle distillate markets are set to remain tight, with Russia extending its ban on diesel exports until 1 September. Russia is the second-largest exporter of diesel, shipping more than 700k b/d in 2025."

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

• Dow Jones futures advance following Wall Street gains, driven by renewed AI optimism and surging semiconductor stocks.
• Strong Microsoft and Amazon earnings boosted confidence in sustained hyperscaler spending and resilient AI demand.
• Market sentiment boosted as falling Treasury yields, lower oil prices, and US-Iran diplomatic progress eased inflation concerns.

Dow Jones futures surge 0.59% to trade around 52,680 during European trading hours on Friday. Meanwhile, S&P 500 futures rise 0.44% to trade near 7,500, while Nasdaq 100 futures rise 1.10%, trading near 28,540, respectively.

US stock futures advanced following overnight Wall Street gains, fueled by renewed AI optimism and a global surge in semiconductor stocks. Strong quarterly earnings from Microsoft and Amazon reinforced investor confidence in sustained hyperscaler spending and resilient demand for artificial intelligence. Amazon jumped over 9% in extended trading on upbeat results, while Microsoft steadied after its own strong release.

This momentum built on Thursday’s regular session, where the tech-heavy Nasdaq Composite surged 2.78%, the S&P 500 added 1.66%, and the Dow gained 1.19%, with technology, consumer discretionary, and industrial sectors leading the broader market recovery.

Market sentiment improved as the US 10-year Treasury yield dropped below 4.65% at the time of writing, while cooling oil prices helped ease inflation concerns. Diplomatic progress in US-Iran talks over the Strait of Hormuz, alongside a landmark Gaza peace agreement announced by US President Donald Trump, further reduced geopolitical risks and calmed energy markets. However, the CME FedWatch tool suggests that the markets are currently pricing in an over 65% chance of a Federal Reserve rate hike in September.

Fed doubles down on 2% goal as resilient economy keeps Dollar bid

Warsh delivered a more hawkish tone relative to the historical average, with the FXS Speechtracker score rising to 7/10 versus a 6/10 baseline, underscoring a firmer commitment to the inflation fight. The repeated emphasis that “only one target and it is 2%,” coupled with remarks that inflation “cannot be cured in 9 weeks” and that the Committee “will not hesitate to act,” signals a clear rejection of any tolerance for a higher inflation target and a willingness to keep policy restrictive for longer. While Warsh stressed collegial, data-informed debate and an economy showing “impressive resilience,” the message to markets is that any recent easing in inflation data does not justify a premature pivot.

The FXS Fed Sentiment Index jumped by 18.94 points to 147.58, reinforcing that the overall communication landed firmly in hawkish territory according to the FXS Speechtracker. With the index far above the neutral 100 line, markets are likely to interpret this as a strong bias toward maintaining or even tightening restrictive policy, a backdrop that typically supports the Dollar against lower-yielding peers.

Commerzbank’s Volkmar Baur notes that EUR/USD has broken back above 1.15 for the first time since mid-June as Eurozone Gross Domestic Product (GDP) outpaced United States (US) growth in annualised terms. He highlights a very low US savings rate as a potential drag on future US GDP and sees recent inflation data making it easier for the European Central Bank (ECB) to raise rates in September. Baur cautions that part of the latest EUR/USD move may reverse if BoJ-related flows fade.

Euro benefits from relative growth

"So, as of yesterday evening, we’re back above 1.15 - for the first time since June 17. And there was certainly no shortage of data yesterday to justify this jump: Looking at the details, US GDP growth was quite robust. At the end of the day, however, the 1.5% increase was lower than the consensus had expected."

"And what seems even more decisive with regard to the EUR/USD exchange rate: Eurozone GDP grew by 0.4% in the second quarter compared to the previous quarter, which, according to the US method of calculation (seasonally adjusted and annualized), amounts to 1.6%. That’s faster than in the US."

"In addition to the growth figures, inflation data from individual EU countries and the PCE deflator from the US were also released. And while the annual rate of the PCE deflator declined slightly and the monthly figure was even slightly below expectations, the annual rates in Spain, Belgium, and Germany rose slightly - at least in terms of the overall rate. All in all, then, a picture that should make it somewhat easier for the ECB to raise interest rates again in September."

"It must be noted although, that a major driver of yesterday’s movement in EUR/USD came at around 4 pm from the US dollar side and corresponded with a sudden appreciation of the Japanese yen. According to media reports, this appears to have been an intervention by the Bank of Japan with the assistance of the US Treasury Department"

"Some of yesterday’s EUR/USD movement could therefore be reversed in the coming days. However, that does not change the fact that yesterday was a good day for the euro."

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

UOB strategists highlight that the Bank of England (BoE) kept its policy rate at 3.75%, with Governor Bailey stressing no move toward a hike despite US-Iran conflict risks. The BoE reiterated it stands ready to act if inflation stays elevated, but softer price pressures led markets to scale back September hike expectations, even as a three-member minority backed a 25 bps increase.

Dovish stance tempers rate hike bets

"The Bank of England (BoE) kept its policy rate unchanged at 3.75%, with Governor Andrew Bailey stating that the committee is not moving closer to a rate hike."

"While the Monetary Policy Committee remains attentive to the inflationary risks stemming from the US-Iran conflict and the possibility of a prolonged escalation, it noted that price pressures have been softer than expected."

"The BoE maintained its guidance that it "stands ready to act" should inflation remain persistently elevated."

"Following the decision, traders reduced expectations of a rate increase at the September meeting."

"Catherine Mann joined Megan Greene and Chief Economist Huw Pill in voting for a 25bps rate hike, while the remaining six members, including Bailey, voted to keep rates unchanged, citing softer inflationary pressures."

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

• USD/JPY surrenders some of its early gains, but remains positive at around 160.30.
• The US Dollar underperforms due to confusion over the Fed’s policy outlook.
• The BoJ leaves interest rates unchanged at 1%, but retains a hawkish stance.

The US Dollar (USD) gives back some of its early gains against the Japanese Yen (JPY), but is still 0.5% higher at around 160.30 during the European trading session on Friday. The USD/JPY pair performed positively in the opening session after a juggernaut decline the previous day, as the US Dollar rebounded.

The pair fell like a house of cards on Thursday due to weakness in the US Dollar amid ambiguity over the Federal Reserve’s (Fed) monetary policy outlook, and an intervention from Japan to support the Japanese Yen.

In the Fed’s policy announcement on Wednesday, the Fed left interest rates unchanged in the range of 3.50%-3.75%, warned of upside inflation risks, and retained its position on “no forward-looking guidance”.

Yen intervention underscores Japan’s concern over currency weakness

Commerzbank’s analysts note that “the stage was set” for official action, with yesterday’s intervention in the foreign exchange market by Japan’s Ministry of Finance “clearly” demonstrating that the government is worried about the Japanese Yen being “too weak.” They add that explicit “support from the US Treasury Department” signaled the move would “likely be met with a favorable response internationally,” reinforcing the sense that Tokyo’s efforts to stabilize the currency have backing from key international partners.

Meanwhile, the Bank of Japan (BoJ) has left interest rates unchanged at 1%, and has reiterated a hawkish monetary policy guidance, while warning that risks to inflation remain tilted to the upside. BoJ Governor Kazuo Ueda also said in the press conference, “Here is risk that underlying CPI will deviate upward to level above 2% price stability target,” Ueda said.

USD/JPY technical analysis

USD/JPY trades higher at around 160.30, but is keeping a bearish near-term tone as spot holds below the 20-period exponential moving average (EMA) at 162.23.

The pair has retreated sharply from recent highs, and the Relative Strength Index (RSI) at 35.94 hovers just above oversold territory, suggesting downside momentum remains in place even if short-term selling pressure is starting to ease.

On the topside, the 20-day EMA at 162.23 stands as immediate resistance and the first pivot that bulls would need to reclaim to alleviate the current downside bias. Looking down, Thursday's low at 158.00 is the key support level; a break below the same would expose it to 157.00.

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