Forex News
Deutsche Bank strategists highlight a mixed global equity picture, with the Nikkei, CSI 300, Shanghai Composite and Hang Seng all advancing, while US equity futures, led by NASDAQ, also point higher. They note that underwhelming domestic growth has weighed on China’s main indices, which are flat year-to-date versus strong gains in the S&P 500, Stoxx 600 and Nikkei.
Regional stock indices show divergent trends
"European equities were more subdued, with the STOXX 600 (-0.36%, -0.21% Friday), the CAC (-0.90%, -0.16% Friday) and the FTSE 100 (-1.38%, -0.21% Friday) falling back, though the DAX (+0.46%, +0.53% Friday) reached a new record. And in Asia, we saw strong gains for the KOSPI (+11.49%) and Nikkei (+4.74%), which saw their best weeks since May and June respectively."
"While bonds struggled, US equities put in a more positive performance. The S&P 500 rose +0.36% despite a -0.17% pullback on Friday from Thursday’s record high, with the small cap Russell 2000 (+1.12%, +0.51% Friday) also reaching a record high. "
"Underwhelming domestic growth has also contributed to the underperformance in China’s equity market, with the main indices essentially flat YTD, in contrast to a +13.7% rise for the S&P 500, +11.1% for the Stoxx 600 and +36.5% for the Nikkei."
"Following Japan’s GDP data, the Nikkei (+0.30%) is slightly higher but underperforming gains in China’s markets including the CSI 300 (+0.76%) and Shanghai Composite (+0.84% ) as well as the Hang Seng (+1.61%) in Hong Kong."
"Equity futures are also advancing, with NASDAQ futures (+0.35%) leading those on the S&P 500 (+0.10%) and Europe’s Stoxx 50 (+0.30%) this morning."
"As the earnings season begins to wind down, the spotlight will be on the US retailers Home Depot (Tuesday), Target, TJX (Wednesday) and Walmart (Thursday) to gauge the health of the US consumer. Other names to watch include Analog Devices and Deere in the US and Alibaba and Baidu in China."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Brown Brothers Harriman’s (BBH) Elias Haddad says improving United Kingdom (UK) disinflation alongside solid Q2 Gross Domestic Product (GDP) should support the British Pound (GBP) against the US Dollar (USD) and Euro (EUR), but sees limited scope for a lasting rally. With spare capacity allowing markets to trim Bank of England (BoE) hike expectations, upcoming labour, Consumer Price Index (CPI) and retail sales data are expected to broadly match BoE projections.
Disinflation supports but caps Pound
"Signs the UK disinflation trend is gaining traction, following the recent solid Q2 real GDP print, would improve the growth-inflation mix and underpin GBP vs. USD and EUR. However, ample spare capacity in the UK economy leaves room for markets to trim BoE rate hike bets (60bps in the next twelve months) and argues against a sustained GBP rally."
"UK June labor market to show wage growth slowing (Tuesday). The unemployment rate is expected to dip to 4.8% vs. 4.9% in May and the policy-relevant private sector regular pay growth is seen slowing to 2.8% y/y vs. 2.9% in May. If so, both data would match the Bank of England’s forecast."
"UK July CPI to show underlying inflation easing (Wednesday). Headline CPI is expected at 2.9% y/y (BoE projection: 2.8%) vs. 2.6% in June, core CPI is seen at 2.5% y/y vs. 2.6% in June, and services CPI is projected at 3.4% (BoE projection: 3.4%) vs. 3.6% in June."
"UK July retail sales are set for payback after two unusually strong months (Friday). Total retail sales volumes are expected to fall -0.4% m/m vs. 1.0% in June."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Commerzbank’s Volkmar Baur says solid nominal growth and higher-than-expected inflation should keep pressure on the Bank of Japan (BoJ) to raise rates again as early as September or October. Alongside a potentially improving fiscal outlook, these factors support a modestly stronger Japanese Yen (JPY) despite continued market caution after recent interventions.
Higher inflation keeps BoJ under pressure
"The Japanese economy grew by 0.3% in real terms in the second quarter compared to the previous quarter, which was significantly slower than most analysts had expected. In nominal terms, however, the economy grew by 1.2% compared to the previous quarter, as expected, meaning that overall economic inflation (the deflator) was higher than anticipated."
"The Japanese yen has shown little reaction to this news this morning. However, there are two reasons why this should actually provide support for the yen:"
"First, growth of 0.3% compared to the previous quarter is still robust. Although the details were somewhat weaker, an annualized growth rate of 1.1% is still positive for Japan. The higher inflation should also keep up the pressure on the Bank of Japan to raise interest rates again as early as September or October, which should support the JPY."
"Furthermore, there have been regular reports in recent weeks suggesting that Japan’s fiscal problems and high debt levels are weighing on the Japanese yen. We consider this view to be exaggerated. After all, Japan has one of the lowest budget deficits among the G10 countries, and while its debt level is high, it is at least declining."
"However, rising yields on Japanese government bonds are making many market participants nervous. From this perspective, the high nominal growth should have a positive effect, as it should lead to higher tax revenues and thus an improved fiscal situation. The market remains cautious in the wake of the interventions. In our view, however, the fundamental improvements in the Japanese economy continue to point toward a slightly stronger Japanese yen."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- XAG/USD trades near $66.00 on Monday after bouncing from $63.50 lows on Friday.
- Weak US data curbed hopes of a September Fed rate hike and weighed on the US Dollar last week.
- The key resistance area for Silver bulls is around $67.00.
Silver (XAG/USD) trades on a strong footing on Monday, reaching levels above $65.80 at the European session opening times, after bouncing from the $63.50 area on Friday. Precious metals are being boosted by US Dollar (USD) weakness, as recent US macroeconomic data has curbed hopes of Federal Reserve (Fed) interest rate hikes this year.
US data released on Friday endorsed this view, as July's Retail Sales dropped 0.6% against market expectations of a 0.1% gain, following a 0.2% increase in June. These figures follow relatively soft producer and consumer price figures released earlier in the week and another disappointment in Nonfarm Payrolls in the previous week. Against this background, investors have dialed back bets of a Fed hike in September to 30%, from above 50% one week ago, according to data by the CME Group's FedWatch Tool.
Technical Analysis: Key resistance is at the $67.00 area
XAG/USD reached the target of a bullish Head & Shoulders pattern at the $67.00 area last week, and has been consolidating ever since, with bearish attempts limited above previous highs, at $63.30. The pair, thus, holds a constructive near-term pattern and momentum indicators in the daily chart remain within bullish territory. The Relative Strength Index (14) is hovering above 60, and the Moving Average Convergence Divergence (MACD) line maintains a firm positive reading near 0.81, highlighting persistent upside pressure.
Bulls remain capped below the $66.00 area on Monday, which is closing the path towards the June 22 high, at $67.17. Further up, there is a heavier supply zone defined by the June 17 high, at $71.56, and the 200-day Simple Moving Average (SMA) around $71.70.
On the downside, the mentioned $63.30 area is expected to challenge bears, ahead of the August 6 and 7 lows, around $62.00 and the late July lows, in the mid-range of the $56.00s.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
United Overseas Bank’s (UOB) Quek Ser Leang highlights that EUR/USD surged to 1.1585, leaving the Euro (EUR) with a firmer tone against the US Dollar (USD). Intraday, the pair could extend gains toward 1.1590, though 1.1610 is seen as strong resistance. Over 1–3 weeks, EUR/USD is expected to trade with an upside bias while holding above 1.1525, with 1.1610 a key hurdle.
Euro retains constructive short term tone
"24-HOUR VIEW: While we expected EUR to “trade in a range” last Friday, we pointed out that “the slightly firmer underlying tone suggests it is likely to trade within a higher range of 1.1515/1.1550.” EUR subsequently dipped to 1.1524, but it surged during the NY session, reaching a high of 1.1585. The rapid rise appears to be running ahead of itself, but as long as 1.1545 (minor support is at 1.1555) is not breached, EUR could rise to 1.1590. Based on the prevailing momentum, a sustained rise above this level appears unlikely. The major resistance at 1.1610 is unlikely to come under threat."
"1-3 WEEKS VIEW: We revised our EUR view from conditional positive to neutral last Thursday (13 Aug, spot at 1.1525), indicating that EUR “appears to have entered a range-trading phase, between 1.1480 and 1.1580.” On Friday, EUR broke slightly above 1.1580 with a high of 1.1585. EUR closed 0.36% higher at 1.1569. While we would have preferred a more decisive close above 1.1580, the price action suggests that EUR is likely to trade with an upside bias from here. Currently, it is unclear whether EUR has sufficient momentum to reach the major resistance at 1.1610. On the downside, a break below 1.1525 would indicate that EUR is likely to continue range-trading."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/USD gains ground to around 1.3555 in Monday’s early European session.
- Softer US Retail Sales data have tempered expectations that the Fed will raise rates in September.
- BoE’s Pill said UK growth supports case for higher interest rates.
The GBP/USD pair gains traction to near 1.3555 during the early European trading hours on Monday. The US Dollar (USD) weakens against the British Pound (GBP) as bets for a US Federal Reserve (Fed) rate hike come down. Traders will keep an eye on the UK employment and inflation reports, which are due later this week.
US Retail Sales fell in July for the first time in nine months as the boost from big tax refunds faded, the US Census Bureau reported on Friday. Signs of tame US inflation data added to unexpected job losses last month in bolstering financial market expectations that the Fed would not raise interest rates at its September 15-16 policy meeting.
Markets are now pricing a 31% probability of a Fed rate hike at the upcoming policy meeting, down from 35% immediately after the US Retail Sales report, according to the CME FedWatch Tool.
"This points to a material slowdown in real consumer spending growth in the third quarter," said Sal Guatieri, a senior economist at BMO Capital Markets. "This, together with a weaker jobs report and subdued core CPI inflation, raises the odds of the FOMC staying patient again in September,” Guatieri added.
Bank of England (BoE) Chief Economist Huw Pill stated that stronger-than-expected UK economic growth readings reinforced the case for higher borrowing costs to bring inflation back to target. Pill said that data showing the UK economy grew 0.4% in the second quarter suggested the country was not heading into a sharp downturn.
Pound support underpinned as BoE tone stays hawkish
According to strategists at Scotiabank, the broader data calendar has offered little fresh direction, but policy messaging remains a key pillar of support for the Pound. They note that while “fundamental releases have been limited,” recent BoE communication has “remained hawkish,” with comments from Chief Economist Huw Pill that have “reaffirmed a call for higher rates.” This persistent tightening bias from the BoE is helping to sustain the constructive tone around GBP despite the quieter flow of new economic information.
Technical Analysis: GBP/USD keeps a positive tone above the key 100-day SMA
In the daily chart, GBP/USD maintains a bullish near-term bias as spot holds above the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, keeping the recent uptrend technically supported. Price is edging toward the upper Bollinger band, while the 14-day Relative Strength Index at 64 stays in positive territory but shy of overbought, suggesting firm yet not extreme upside momentum.
On the topside, immediate resistance is located at the Bollinger upper band around 1.3595, where a clear break would open the door to the May 8 high of 1.3637. On the downside, initial support is seen at the Bollinger middle band near 1.3435, followed by the 100-day SMA at 1.3415; a deeper pullback could extend toward the lower Bollinger band around 1.3273, where buyers would be expected to re-emerge.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Subdued volume during Indonesia's Independence Day holiday may lead to thin trading conditions for the USD/IDR pair.
- President Prabowo projected 6% GDP growth next year, boosting investor sentiment for the Indonesian Rupiah.
- The US Dollar weakened following unexpected drops in July Retail Sales and reduced Fed rate hike bets.
USD/IDR extends its losses for the second successive day, trading around 17,820 during the Asian hours on Monday. The pair may face thin trading conditions as trading volumes remain subdued amid Indonesia’s Independence Day holiday.
However, the Indonesian Rupiah (IDR) found support following an optimistic Independence Day address to parliament by President Prabowo. Sentiment was lifted as he projected that GDP growth could reach 6% by next year, driven by ongoing investment realization and steady job creation. To further enhance fiscal credibility, the government plans to retain a portion of state-owned companies’ dividends, using the funds to construct a fiscal buffer and accelerate debt reduction.
Meanwhile, the USD/IDR pair depreciated alongside a broader decline in the US Dollar (USD), triggered by weaker-than-expected US economic data and shifting central bank expectations. According to the US Census Bureau, July Retail Sales dropped 0.6% month-over-month, reversing June's 0.2% increase and missing the market consensus of 0.1% growth. On an annual basis, Retail Sales grew by 5.0% in July, slowing from the 6.8% expansion recorded in the previous month.
In response to a wave of softer economic reports, including CPI, PPI, and Retail Sales, traders have significantly scaled back their expectations for Federal Reserve rate hikes. According to the CME FedWatch tool, markets are now pricing in just a 30.1% probability of a rate hike next month, a sharp decrease from the 52.2% chance estimated a week ago.
Carry backdrop underpinned as Fed hike expectations ease
Strategists at OCBC say the environment remains supportive for carry trades, with “carry still favoured” as “lower Fed rate hike expectations, driven by benign inflation and softer labour market data, together with sticky long-end Treasury yields, have supported a steeper US yield curve.” They note that this combination of subdued policy tightening risks and a steeper curve continues to underpin demand for yield across currencies.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- USD/JPY trades with a negative bias for the second straight day, though it lacks follow-through.
- Japan’s weak GDP print complicates BoJ’s rate-hike path, capping the JPY and limiting losses.
- The technical setup warrants some caution before positioning for any meaningful appreciation.
The USD/JPY pair attracts some sellers at the start of a new week, though it lacks bearish conviction and shows some resilience below the 159.00 mark during the Asian session. Moreover, spot prices remain close to a two-week top, touched last Thursday, warranting some caution amid mixed fundamental cues.
The US Dollar (USD) remains depressed amid receding Federal Reserve (Fed) rate hike expectations, which, in turn, is seen as a key factor acting as a headwind for the USD/JPY pair. However, Japan's soft Q2 GDP print complicates the Bank of Japan's (BoJ) policy normalization path and holds back traders from placing aggressive bullish bets on the Japanese Yen (JPY). This should lend support to the currency pair and warrants some caution before positioning for deeper losses.
From a technical perspective, the recent recovery from the 155.25-155.20 area, or the lowest since early May, stalled near the 50% Fibonacci retracement level of the intervention-led slump from a four-decade peak. Moreover, the Relative Strength Index (14) sits near a neutral 48, while the Moving Average Convergence Divergence (MACD) has slipped into negative territory, hinting that upside momentum is fading as the USD/JPY pair consolidates below these clustered resistance levels.
That said, some follow-through selling below the 38.2% Fibo. retracement support at 158.58 is needed to back the case for deeper losses to the Fibonacci floor at 157.30 and the broader structural low around 155.24, where buyers would be expected to show more conviction.
On the topside, immediate resistance is located at the 50% Fibo. retracement at 159.61, followed by the 100-period Exponential Moving Average (EMA) on the 4-hour chart at 159.77. Sustained strength above these would open the way toward the 61.8% retracement at 160.64 and then the recent cycle high near 163.98.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY 4-hour chart
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.13% | -0.16% | -0.09% | -0.33% | -0.36% | -0.24% | |
| EUR | 0.14% | -0.01% | -0.02% | 0.04% | -0.17% | -0.23% | -0.10% | |
| GBP | 0.13% | 0.00% | -0.02% | 0.04% | -0.15% | -0.23% | -0.09% | |
| JPY | 0.16% | 0.02% | 0.02% | 0.07% | -0.18% | -0.21% | -0.06% | |
| CAD | 0.09% | -0.04% | -0.04% | -0.07% | -0.24% | -0.28% | -0.14% | |
| AUD | 0.33% | 0.17% | 0.15% | 0.18% | 0.24% | -0.05% | 0.05% | |
| NZD | 0.36% | 0.23% | 0.23% | 0.21% | 0.28% | 0.05% | 0.13% | |
| CHF | 0.24% | 0.10% | 0.09% | 0.06% | 0.14% | -0.05% | -0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- EUR/USD scales higher for the third day as receding Fed hike bets keep the USD depressed.
- Geopolitical risks and inflation fears stemming from volatile oil prices could limit USD losses.
- Traders now look forward to FOMC Minutes on Wednesday for some meaningful impetus.
The EUR/USD pair builds on last week's bounce from the vicinity of the 1.1500 psychological mark and attracts follow-through buyers for the third straight day. The momentum lifts spot prices to a two-month high during the Asian session, with bulls now awaiting a move beyond the 1.1600 round figure before placing fresh bets amid a broadly weaker US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, languishes near the lower end of the monthly range as Friday's weak US data further tempered bets for an immediate rate hike by the Federal Reserve (Fed). In fact, the US Census Bureau reported that Retail Sales fell 0.6% in July, marking the biggest monthly fall since May last year and pointing to a slowdown in consumer spending. This comes on top of signs of moderating price pressures, which gives the US central bank headroom to keep interest rates steady.
Strategists at Scotiabank highlight that the “steepening US 2/30s yield curve, which has reached 108bps, reflects simmering investor concern about the Fed policy outlook alongside weak US fiscal dynamics.” They argue that this “steepening yield curve represents a further headwind for the USD generally,” reinforcing their view that “near-term risks are geared towards the DXY slipping back to the mid-98 area.”
The shared currency, on the other hand, draws support from growing acceptance that the European Central Bank (ECB) will deliver one final 25-basis-point (bps) rate hike at its September meeting as inflation remains above the 2% target. Meanwhile, the US-Iran standoff keeps the geopolitical risk premium in play. Apart from this, inflation fears stemming from volatile oil prices might hold back traders from placing aggressive bearish bets on the USD. This, in turn, might cap any further near-term appreciating move for the EUR/USD pair.
The market focus now shifts to the release of FOMC Minutes, due on Wednesday, which will be looked upon for more cues about the Fed's future policy path. The outlook will play a key role in influencing the USD price dynamics and producing short-term trading opportunities around the EUR/USD pair. In the meantime, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside. Hence, any corrective pullback is more likely to be bought into and remain limited.
EUR/USD daily chart
Technical Analysis
The EUR/USD pair holds just above the 50% Fibonacci retracement of the April-June downfall but the broader tone remains capped beneath the 200-day Simple Moving Average (SMA) at 1.1630. This is followed by the 61.8% Fibo. retracement at 1.1645. A daily close above this cluster should open the way toward 1.1732 and 1.1843. On the downside, initial support is aligned with the 50% retracement at 1.1584 and a break below there would expose the 38.2% level at 1.1522, ahead of deeper support at 1.1447 and 1.1324.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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