Forex News

Rabobank’s Senior FX Strategist Jane Foley highlights the strong year-to-date performance of the Australian Dollar (AUD), supported by the Reserve Bank of Australia’s (RBA) hawkish stance and Australia’s commodity-linked profile. However, Foley notes headwinds from a firmer US Dollar (USD) and a weaker Australian trade balance, and expects AUD/USD to consolidate around 0.70 over a three‑month horizon.

RBA pricing caps near term gains

"Despite higher prices for petrol and diesel, it is undeniable that the Australian labour market has remained resilient. The release of June employment data showed an increase of 76.3K jobs, far stronger than expected. The news increased market bets on an August rate hike."

"Even though the next RBA policy meeting is not until August 11, next week brings the release of the Australian quarterly CPI inflation report. This, in addition to a scheduled speech by RBA Governor Bullock, will be closely examined for policy signals. Q2 trimmed mean CPI inflation is expected at 3.7% y/y according to the Bloomberg survey, up from a previous figure of 3.5%."

"Currently the market is priced for another 25-bps RBA rate hike on a 6-month view."

"Given the current strength of market expectations regarding the likelihood of a further RBA rate hike, we see limited upside potential for AUD/USD on a 3-month view. Indeed, the RBA already described financial conditions as “probably somewhat restrictive” at its last policy meeting in June and noted that underlying momentum in household consumption had already started to ease before the onset of the Iran war."

"That said, the recovery in the value of the USD in recent months is a headwind for the AUD/USD as is the weakening in Australia’s trade balance. We favour continued consolidation around the AUD/USD 0.70 area on a 3-month view."

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

Commerzbank’s Volkmar Baur notes that the Japanese Yen remains historically weak, with USD/JPY above 162 and EUR/JPY near 186, but still forecasts gradual appreciation over the coming quarters. The bank has revised its projections to a slightly weaker JPY near term, yet expects USD/JPY to fall toward 145 and EUR/JPY toward 175 by end-2027 as fundamentals and rate differentials improve.

Yen seen recovering over coming quarters

"At the beginning of the year, we had assumed that the Japanese yen would likely have already overcome its weakness by this point. For now, however, we acknowledge that there are good reasons for the yen’s weakness to persist for some time. We also continue to see good reasons for a stronger yen over the coming months."

"We are therefore adjusting our forecast slightly upward (weaker yen), but we still expect the yen to appreciate by the end of next year."

"Fundamentally, we remain convinced that economic developments should support a stronger Japanese yen. However, the market does not yet seem convinced of this. We believe, however, that a shift in sentiment could occur in the coming weeks."

"Regardless, we still do not expect the Fed to raise its benchmark interest rate this year, even though the market is currently pricing this in. Next year, our economists also continue to anticipate interest rate cuts by the Fed. Such a development would certainly weigh on the US dollar over the coming months."

"We therefore also expect the JPY to appreciate more strongly against the US dollar than against the euro in the coming months."

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

BNY’s Geoff Yu notes the Euro is stabilizing ahead of the ECB decision, with improving spot flow and hedge unwinding supporting Eurozone assets. However, forward and swaps demand remain weak, limiting conviction. EUR/USD is seeing light bids, while EUR/GBP appears more attractive on a risk-reward basis given under-owned positions and potential recovery if Pound momentum fades.

Spot-led Euro recovery before ECB

"EUR is finding a steadier footing ahead of today’s ECB decision, but the recovery is still incomplete. Spot flow is improving and hedge unwinding continues to support the currency, reinforcing the broader Eurozone asset recovery story. The move is not yet backed by strong forward or swaps demand, however, and this matters because EUR holdings still need meaningful recovery flow before they return to more normal levels."

"Hedge unwinding is the clearest source of EUR resilience. Cross-border hedging is continuing to decline, and net exposure to Eurozone assets is at its highest level in more than two years. Still, onshore investors are not yet forward-buying EUR, which is limiting conviction."

"The cross picture is also important. EUR/USD is drawing light bids, but the flow signal remains thin. EUR/GBP looks more attractive on a risk-reward basis, even though it is facing net sales this week, because current holdings have struggled more sharply and leave greater scope for recovery if GBP momentum fades."

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

• Gold dips below $4,100 after rejection at $4,185 on Wednesday.
• Rising Oil prices have reactivated concerns about higher inflationary risks, pushing US Treasury yields to fresh highs.
• Technical indicators show bullish pressures unwinding.

Gold (XAU/USD) trades lower on Thursday, snapping a four-day rally. Price action is exploring levels below $4,100 at the time of writing, following a rejection at $4,165 on Wednesday as the surge in Oil prices, with the Brent barrel trading above $90.00, has reactivated concerns about higher inflationary risks, sending US Treasury yields to fresh highs, and posing a heavy weight for precious metals

Analysts at TD see the recent Gold recovery as a corrective reaction, likely to be short-lived, as the move "does not seem to be an aggressive extension of long positions, but is rather driven by short covering and dip buying, after technical supports held during the preceding selloff."

Looking ahead, TD Securities experts observe that "there are no fundamental reasons to think that the US rate and FX environment will be conducive to increasing long gold exposure any time soon." In their view, "it is likely that the Middle East war-driven oil price increases will continue to increase the probability of a Fed rate hike," limiting the scope for a more durable upside extension for Gold.

Technical Analysis: Momentum indicators show bearish signals

XAU/USD trades at $4,087.60, holding a constructive near-term bias although the 4-hour Relative Strength Index is nearing the 50 midline, which, together with the bearish cross of the Moving Average Convergence Divergence (MACD) line, suggests that bulls have given up and sellers are taking back control.

On the downside, immediate support is seen at the reverse trendline now around $4,005, followed by the year-to-date lows at the $3,940 area. Furhter down, the late October 2025 low just below $3,900 emerges as the next target. Rallies, on the other hand, are expected to meet significant resistance at the $4,200 area, where bulls were capped in late June and early July. This area needs to give way to confirm a deeper recovery, aiming for mid-June highs at the $4,385 area.

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

Brown Brothers Harriman’s Elias Haddad notes that the US Dollar is holding on to most of its weekly gains as US Treasury yields remain elevated. BBH sees near-term USD risks skewed to the upside, supported by US economic outperformance, hawkish Fed pricing and strong foreign demand for long-term US securities. Upcoming PMI releases will test whether the US growth advantage remains intact.

Dollar supported by yields and growth

"USD is clinging to most of this week’s advance, though performance is uneven."

"In our view, USD risk remains skewed to the upside in the near-term underpinned by: (i) US economic outperformance, (ii) the Fed's resolve to get inflation back to 2% anchoring hawkish rate pricing, and (iii) strong foreign demand for US long term securities."

"The July PMI readings for the major economies, due tomorrow, will test whether the US growth advantage remains intact."

"Today, second-tier US economic data is on deck: weekly jobless claims, June Chicago Fed activity index, and July Kansas City Fed manufacturing index."

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

Lee Hardman at MUFG notes that Euro-zone yields have climbed to fresh year-to-date highs ahead of the European Central Bank (ECB) meeting, with markets pricing 2–3 further rate hikes and almost fully discounting another move in September. The report aligns with Hardman's forecast for one final September hike, while warning that sustained higher energy prices could increase risks of additional tightening and weigh on Euro-area growth.

Rising yields and ECB pricing

"In response to rising energy prices, market participants have been moving to price in more hawkish expectations for major central banks including the ECB and Fed resulting in short-term yields rising to fresh year-to-date highs. The euro-zone rate market is now pricing in two to three further ECB rate hikes in the year ahead while the US rate market is pricing in around two Fed hikes over the same period. Short-term yields have risen more recently in Europe than in the US resulting in yield spreads moving against the USD."

"Another hike as soon as the following policy meeting in September is almost fully priced in. It fits with our own forecast for one final hike in September, although we acknowledge that the risk of an additional hike later this year would is increasing if higher energy prices are sustained during the second half of this year."

"We see little scope today for President Lagarde to push back strongly against market expectations for multiple rate hikes given inflation risk are increasing. Higher energy prices will add to downside risks for growth in the euro-zone as well. Like in the US, the euro-zone economy has held up better than expected so far to the energy price shock providing some reassurance."

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

Commerzbank’s Volkmar Baur sees it as almost certain that South African Reserve Bank (SARB) will hike 25 bps to 7.25%, reversing a third of its 2024–25 easing after inflation re-accelerated on fuel and core components above target. He argues future South African Rand (ZAR) performance hinges on how resolute SARB remains, with a continued hawkish tone and focus on the inflation target likely best for the Rand.

Hawkish SARB supports ZAR outlook

"If there were any doubts remaining, they should have been dispelled by the inflation figure released yesterday. It seems certain that the South African Reserve Bank (SARB) will raise interest rates again today by 25 basis points to 7.25%."

"This would mean that one-third of the rate-cut cycle from 2024–25 -when the policy rate was lowered from 8.25% to 6.75% - would have been reversed after just two meetings. However, the SARB is likely justified in feeling compelled to take this step."

"The conflict in Iran and rising fossil fuel prices have halted and even reversed the decline in inflation in the country. At an annual rate of 5%, prices rose in June at their fastest pace in two years. Gasoline prices, which have risen by about 35% compared to the previous year, are the main driver of this trend."

"However, this development can no longer be attributed solely to energy costs. The core rate - excluding energy and food - also rose in June at an annual rate of 4.1%, the fastest pace in nearly two years. More importantly, it exceeded the upper end of the central bank’s inflation target range (3% ± 1)."

"For the ZAR, the key factor will be how resolute the SARB continues to be. At its last meeting, the SARB announced that, if necessary, it would raise interest rates three more times to defend the inflation target."

"Now that the geopolitical situation has improved in the meantime, it is likely more difficult than before to assess future developments. A continued hawkish tone, keeping the inflation target at the center of the central bank’s efforts, would therefore probably be best for the ZAR."

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