Forex News

United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann note that USD/CNH remains in a consolidation phase, with intraday price action confined to tight ranges. They describe recent moves as part of a broader sideways pattern and reiterate that, for now, the Dollar is expected to trade within defined boundaries between 6.7700 and 6.8100 against the Chinese Yuan.

Dollar-Yuan pair stuck in range

"24-HOUR VIEW: Last Friday, USD dropped to 6.7766 before rebounding to close at 6.7818. Yesterday, when USD was at 6.7845, we highlighted that “the sharp decline appears to have stabilised somewhat, and today USD is likely to consolidate between 6.7780 and 6.7920.” Our view of consolidation was not wrong, even though USD traded within a slightly narrower range than expected (6.7779/6.7895). The price action still appears to be part of a consolidation phase. Today, we expect USD to trade between 6.7785 and 6.7915."

"1-3 WEEKS VIEW: We continue to hold the same view as last Friday (10 Jul, spot at 6.7930). As highlighted, “for the time being, we expect USD to trade in a range, most likely between 6.7700 and 6.8100.”"

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

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann note that USD/SGD stayed firm on Monday, closing at 1.2945 after trading between 1.2906 and 1.2950, with the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) holding 1.68% above its mid-point. They see short-term upward momentum building, but expect gains to be capped below 1.2990, with support around 1.2935/1.2920 and a broader 1.2890–1.2990 range.

Dollar strength capped below resistance

"24-HOUR VIEW: After USD opened on a firm note yesterday, we highlighted the following: “Upward momentum is tentatively building, and the bias for USD today is tilted to the upside. However, it is unclear for now whether there is sufficient momentum for a break above 1.2955 (there is another resistance level at 1.2945).” USD then rose to a high 1.2950. Upward momentum has increased further, but not significantly. Today, USD could edge above 1.2955 and test 1.2965. We do not expect the major resistance at 1.2990 to come under threat. Support is at 1.2935, followed by 1.2920."

"1-3 WEEKS VIEW: In our most recent narrative from last Thursday (09 Jul, spot at 1.2940), we indicated that the recent “mild downward pressure has eased,” and USD “is likely to trade in a range between 1.2890 and 1.2990.” While USD has remained within the range, the tentative build-up in short-term upward momentum suggests USD is likely to edge higher from here. However, the likelihood of a break above 1.2990 is not high for now. To sustain the momentum build-up, USD must hold above 1.2900 (‘strong support’ level)."

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

Here is what you need to know for Wednesday, July 15:

The US Dollar Index (DXY) fell around 0.4% to 100.90 on Tuesday after softer-than-expected United States (US) inflation data weakened demand for the Greenback. The headline Consumer Price Index (CPI) declined 0.4% MoM in June and slowed to 3.5% YoY, while Core CPI remained unchanged monthly and eased to 2.6% annually.

Chicago Fed President Austan Goolsbee described the inflation report as “surprisingly benign” and said the services component was encouraging. However, he cautioned against overreacting to a single month and noted that several similar readings would be needed for him to feel more comfortable about inflation.

EUR/USD rises around 0.4% toward 1.1420, benefiting primarily from broad US Dollar weakness. On Wednesday, traders will monitor Eurozone Industrial Production for fresh signs regarding the health of the region’s manufacturing sector.

GBP/USD advances around 0.3% toward 1.3390 as softer US inflation figures outweigh concerns about elevated energy prices and their potential impact on the United Kingdom’s inflation outlook.

USD/JPY falls around 0.2% toward 162.20 as the weaker Greenback allows the Japanese Yen to recover modestly. However, the pair remains close to multi-decade highs, keeping possible intervention by Japanese authorities in focus.

AUD/USD gains around 1.0% toward 0.6970 as the Australian Dollar benefits from US Dollar selling and higher commodity prices. China’s second-quarter Gross Domestic Product, Retail Sales and Industrial Production figures will be released on Wednesday and could provide fresh direction for the Aussie.

West Texas Intermediate (WTI) Oil rises around 2.1% toward $79.60 amid renewed geopolitical concerns after US President Donald Trump announced a another blockade on vessels traveling to and from Iranian ports.

Gold climbs around 1.3% toward $4,053, supported by the weaker US Dollar, softer inflation data, and continued uncertainty surrounding Iran and global energy supplies.

Wednesday’s US calendar will feature the Producer Price Index (PPI), the Empire State Manufacturing Index, Fed Chair Kevin Warsh’s second day of congressional testimony and the Federal Reserve’s (Fed) Beige Book.

• EUR/USD rises as softer-than-expected US CPI data weighs on the US Dollar, reducing expectations of a July Fed rate hike.
• US inflation and employment indicators weakened, with headline CPI falling 0.4% MoM, annual inflation easing to 3.5%, and the ADP four-week average declining to 19.75K.
• Fed Chair Kevin Warsh maintained a hawkish tone, while markets also assessed Trump’s decision to limit the blockade to vessels linked to Iranian ports.

EUR/USD trades higher near 1.1420 on Tuesday as the US Dollar (USD) weakens following softer-than-expected United States (US) inflation data. The Euro’s recovery remains mainly driven by broad Greenback selling rather than Eurozone developments.

The US Consumer Price Index (CPI) declined 0.4% MoM in June, compared with expectations for a 0.1% decrease and May’s 0.5% increase. Annual inflation slowed sharply to 3.5% from 4.2%, below the 3.8% market forecast. Core CPI remained unchanged on the month, while the annual underlying rate eased to 2.6% from 2.9%.

US employment indicators also softened, with the ADP Employment Change four-week average declining to 19.75K from 21K. The figures reduced expectations of a Federal Reserve (Fed) interest-rate increase in July, placing additional pressure on the US Dollar.

However, Fed Chair Kevin Warsh maintained a relatively hawkish tone during his congressional testimony, reiterating the central bank’s commitment to controlling persistent inflation. Warsh also described the US labor market as broadly stable, highlighting low unemployment, limited layoffs and solid nominal wage growth.

Geopolitical developments remain in focus after US President Donald Trump said the United States would impose a full blockade, but only on vessels traveling to and from Iranian ports. Trump also abandoned the proposed 20% US reimbursement fee for cargo crossing the Strait of Hormuz, replacing it with trade and investment agreements involving Gulf states.

Short-term technical analysis:

In the four-hour chart, EUR/USD trades at 1.1423, holding a mildly bullish bias as it sits above both the 20-period Simple Moving Average (SMA) at 1.1418 and the 100-period SMA at 1.1408. The clustering of these averages just beneath spot suggests underlying demand on shallow dips, while the Relative Strength Index (RSI) around 52.7 leans slightly positive without yet signaling overbought conditions.

On the topside, immediate resistance emerges at the horizontal barrier at 1.1434, followed by a stronger cap at 1.1446. On the downside, initial support is seen at the 20-period SMA at 1.1418, ahead of the nearby horizontal floor at 1.1416. A deeper pullback would expose the 100-period SMA at 1.1408 and the lower horizontal level at 1.1404 as the next key demand areas.

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

Dr. Henry Hao at Commerzbank reports a strong upside surprise in China’s June trade data, with exports up 27% and imports 36% year-on-year, driven by global AI infrastructure demand. He notes booming external accounts contrast with weak domestic consumption, but the sustained surplus and a CFETS RMB index above 102 underpin Yuan resilience, even as USD/CNY and USD/CNH edge higher on broader Dollar firmness.

Trade surplus anchors yuan strength

"China’s June trade data delivered an upside surprise, cementing the AI-driven export boom as the major force shaping the country's external accounts. Exports rose 27.0% yoy in June (Bloomberg consensus: 19.0%) vs 19.4% gain in May."

"Attention is now turning to Wednesday’s Q2 GDP release, where the Bloomberg consensus points to growth of 4.5% yoy, a deceleration from 5.0% in Q1. On Monday, Premier Li Qiang pledged to step up countercyclical policy adjustment and unlock domestic demand potential, reinforce our view that policymakers are alert to the growth slowdown risk and stand ready to act if the data disappoints."

"The structural divergence between a booming external sector and persistently weak domestic consumption remains the central tension in China's K-shaped economic narrative."

"The trade beat reinforces the case for continued yuan resilience. The CFETS RMB index has been trading above 102 since late June, a level last seen four years ago."

"The sustained surplus flow provides a fundamental anchor for CNY strength. In FX, USD/CNY rose 50 pips to 6.78 and offshore USD/CNH edged up 30 pips to 6.79 yesterday, reflecting modest USD firmness ahead of the trade release."

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