Forex News
- XAG/USD pulls back to the $61.70 area after being rejected ahead of $63.00.
- Low Oil prices and a depressed US Dollar are keeping Silver's downside attempts limited so far.
- Silver's near-term bias remains bullish while above $60.70.
Silver (XAG/USD) consolidates gains in the $61.70 area after being rejected ahead of $63.00. The pair is trimming gains on Thursday, after following a nearly 7% rally over the last two days, but downside attempts remain limited so far, as lower Oil prices and a weak US Dollar keep providing support.
US macroeconomic data released earlier this week has failed to impress, raising fears about a poor Nonfarm Payrolls report on Friday and prompting traders to scale back hopes of a Federal Reserve rare hike in September. US Treasury yields have dropped, with the yield of the benchmark 10-year note shedding about 10 basis points from last week's highs, while the 2-year yield, closely related to monetary policy expectations 18 basis points below July's peak. Lower yields tend to drive investors towards the yieldless precious metals.
Technical Analysis: The immediate trend remains bullish while above $60.70
XAG/USD trades at $61.72, showing a corrective reaction, as the last two days' rally was looking overextended. The 4-hour Relative Strength Index (14) is pulling back from overbought levels but remains in bullish territory, and the Moving Average Convergence Divergence (MACD) indicator is above zero, all in all showing that buyers retain control.
The near-term bias remains bullish while above a previous resistance at the $60.70-$60.95 area, which capped bulls several times in July. Further down, Wednesday's low, at $59.40, might provide some support ahead of the weekly low, near $56.50.
On the upside, bulls are likely to struggle at July's peak, near $63.30. Further up, the next target is the June 22 high, just above $67.00.
(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.
Danske Research Team highlights that global equities have gained about 5% over five sessions, with cyclicals and growth outperforming defensives and value, pointing to a tech-driven move. The VIX has only modestly declined, and late-session underperformance in US tech and Nasdaq plus cautious sentiment in Asia suggest investors are becoming more wary of the tech trade.
Five-day rally led by tech
"Global equities extended gains for a fifth consecutive session, taking the five-day advance to roughly 5%. That is noteworthy in itself."
"Moves of this magnitude typically follow periods of elevated volatility and sharp drawdowns, yet this rally has been accompanied by only a modest decline in implied vol. The VIX has eased only from just above 17 to just below 16 over the past five sessions."
"Performance has been dominated by cyclicals outperforming defensives and growth continuing to outperform value, underlining that this has primarily been a tech driven rally rather than a macro driven one. Yesterday followed the same pattern, although to a lesser extent, with enthusiasm around the tech theme fading through the US session. Consequently, US tech and the Nasdaq underperformed broader markets into the close."
"This morning, sentiment around the tech trade remains somewhat more cautious. Asia is largely catching up with the late Wall Street moves, producing the now familiar divergence with highly tech sensitive South Korea materially weaker while less tech exposed markets trade firmer. European and US futures are higher this morning, although Nasdaq futures are again marginally lagging."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- US Dollar Index strengthens to around 99.75 in Thursday’s early European session.
- The negative tone of the DXY remains intact with bearish RSI momentum.
- The initial support level to watch is 99.45; the first upside barrier emerges at 100.70.
The US Dollar Index (DXY), an index of the value of the US Dollar (USD) measured against a basket of six world currencies, currently trades near 99.75 in the early European trading hours on Thursday. The DXY gains traction as the negotiations between the US and Iran remain highly uncertain, boosting safe-haven flows.
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, said on Wednesday that Iran and Oman are close to finalizing a proposed framework for commercial shipping through the Strait of Hormuz, per CNN. Nonetheless, it still wouldn’t automatically reopen the critical waterway.
Early Wednesday, US President Donald Trump stated that he had very productive talks with Iran. Conflicting rhetoric from the US and Iranian officials about a potential deal fuels market concerns, lifting the US Dollar against its rivals.
Hawkish comments might contribute to the DXY’s upside. Federal Reserve (Fed) Kansas City President Jeff Schmid said on Wednesday that tighter monetary policy may be required to bring inflation back to the central bank's 2% target.
Markets have priced in nearly a 54.7% chance that the Fed will hike rates at the September meeting, according to the CME FedWatch tool.
US ADP miss highlights uneven hiring but firmer wage dynamics
Analysts at Danske Bank note that the latest US labour market data painted a mixed picture, with ADP's National Employment Report for July "came in weaker than expected at 44k (cons: 70k), with hiring uneven across sectors." They highlight that "education and health care added jobs, while leisure and hospitality declined," underscoring the sectoral divergences beneath the headline miss. At the same time, Danske flags that "it was noteworthy that ADP reported an uptick in wage growth among workers changing jobs," which they interpret as evidence that "labour market conditions are tightening and workers' bargaining power is improving despite slow aggregate job growth." In their view, "at the margin, this is a hawkish signal for the Fed."
Schmid flags AI-driven inflation risks, backing tighter Fed stance
Fed’s Schmid delivers a moderately hawkish message, with a FXS Speechtracker score of 7.3/10, slightly above the 7/10 historical average and consistent with a firm policy bias. The emphasis that current Fed policy is “not tight,” that AI-related investment is fueling inflation, and that tighter monetary policy is still required to bring PCE-based inflation back to the 2% target underscores concern that inflation remains “too high” and “worrisome” despite resilient growth and a roughly balanced labor market. Schmid’s caution that recent disinflation and energy cost relief may be temporary, and that supply-driven price pressures must not be overlooked, reinforces a stance that leans toward further or prolonged restraint rather than early easing.
The FXS Fed Sentiment Index fell by 0.96 points but remains elevated at 145.80, signaling that overall Fed communication is still firmly in hawkish territory despite the modest pullback. In this context, Schmid’s above-baseline FXS Speechtracker score aligns with an environment where the FXS Fed Sentiment Index continues to reflect a strong bias toward keeping policy restrictive, even as incremental shifts suggest slightly less hawkishness at the margin.
Technical Analysis: The bearish outlook of the US Dollar Index remains intact
In the daily chart, the near-term tone of Dollar Index Spot is bearish, with price now slipping just above the 100-day simple moving average (SMA), which acts as immediate support, and well below the Bollinger Bands’ 20-day middle SMA that caps the topside. The Relative Strength Index (RSI) at 36.10 sits near oversold territory, hinting that while downside pressure persists, sellers may begin to lose momentum as the index stretches away from its recent mean.
On the downside, initial support is seen at the lower Bollinger Band at 99.45, where a stronger floor could emerge if the index extends its slide. The next contention level is located at the May 29 low of 98.75.
On the topside, the first resistance comes at the Bollinger middle band at 100.70, followed by the upper band at 101.95; a sustained recovery above these levels would be needed to ease the current bearish bias and signal a more constructive medium-term rebound.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
ING strategists Warren Patterson and Ewa Manthey note Oil prices remain under pressure, with ICE Brent trading below $80/bbl as markets focus on a potential US-Iran deal to reopen flows through the Strait of Hormuz. EIA data show modest net crude inventory declines, while strong US distillate exports and global disruptions in the Middle East and Russia keep refined product markets tight.
Brent pressured as products tighten
"ICE Brent continues to trade below $80/bbl as the market pins its hopes on a deal between the US and Iran. It would resume energy flows through the Strait of Hormuz. Iran signalled progress toward this goal, announcing that it has reached an agreement with Oman on new shipping arrangements for the strait, with a joint statement on the deal now being prepared."
"Iran has insisted that the agreement must proceed without interference from unnamed third parties — a formulation that, in practice, almost certainly refers to the US. The real hinge point now becomes the trajectory of US–Iran discussions, because meaningful progress there is essential before disrupted energy flows can realistically resume."
"EIA’s inventory report showed that US commercial crude oil inventories increased by 2.48m barrels over the last week, while the SPR fell by 2.84m barrels. This leaves total crude oil inventories to fall by a marginal 362k barrels. Crude oil imports increased by 515k b/d week-on-week, while exports grew by 218k b/d."
"Refined products saw further tightening over the week, with gasoline and distillate inventories falling by 1.64m barrels and 3.47m barrels, respectively. Strong exports are causing further tightening in the US distillates market. Exports rose 98k b/d WoW to a record 1.88m b/d."
"Globally, middle distillate markets are seeing significant tightness amid supply disruptions in the Middle East and Russia’s export ban on diesel."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY clings to recovery move near 157.80, which came after a significant plunge last week.
- The US and Japan might intervene again to prop up the Japanese Yen.
- Investors await the US NFP data for July.
The USD/JPY pair holds onto a three-day recovery move near 157.80 during the European trading session on Thursday. The pair recovers as the Japanese Yen (JPY) faced profit-booking after a juggernaut jump last week, following the United States (US)-Japan joint intervention to counter excessive volatility and disorderly movements in the Japanese yen in recent months.
Financial markets expect the Japanese currency won't be able to sustain US-Japan joint intervention-driven strength unless it gets boost from structural changes in the domestic economy.
Yen positioning stabilizes as BoJ follow-through seen key to renewed inflows
Analysts at BNY Mellon argue that recent “coordinated intervention has bought time but hasn’t materially increased foreign JPY holdings.” They note that “investors remain net long JPY, but exposure is well below H1 2026 levels and won’t rebuild without credible domestic follow-through: Bank of Japan (BOJ) tightening, fiscal consolidation and structural reform.” In their view, the current allocation picture is uneven across asset classes, with “Japanese equities remain largely passive and under-supported, while Japanese government bonds (JGBs) are attracting the clearest marginal demand.”
Meanwhile, hopes of US-Japan intervention again are high, as Japan Finance Minister (FM) Satsuki Katayama confirmed earlier this week that Japan “won't hesitate to carry out more forex intervention with the US”.
On the US Dollar (USD) front, investors shift their focus to the US Nonfarm Payrolls (NFP) data for July, which will be released on Friday.
USD/JPY Technical Analysis
USD/JPY trades at around157.83, keeping a bearish near-term tone as spot remains below the 20-day exponential moving average (EMA) at 160.55. The pair has retreated from recent highs, and the EMA overhead suggests prices are still capped despite the latest bounce attempt, pointing to a market that is correcting rather than trending higher.
On the topside, initial resistance is located at the 20-day EMA at 160.55, which acts as the primary barrier that bulls would need to reclaim to alleviate downside pressure. On the downside, the key support level for the pair is the two-month low of 155.23; below this, the pair would find next support near the February 23 low at around 154.00
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that EUR/USD extended modest gains to close at 1.1551, with mild upward momentum still intact. Intraday, the pair may test 1.1565, though a move to 1.1600 is seen as unlikely without stronger momentum. On a 1–3 week horizon, a sustained rise requires a daily close above 1.1565 while holding above 1.1495 support.
Euro's grind higher faces key hurdles
"24-HOUR VIEW: Following Tuesday’s price action, we noted yesterday that “there has been a slight uptick in upward momentum, and EUR may edge higher.” However, we pointed out that “given the mild upward momentum, any advance is unlikely to reach the major resistance at 1.1565.” We were not wrong, as EUR edged to a high of 1.1559 before settling at 1.1551 (+0.19%). The mild upward pressure remains intact. Today, there is a chance for EUR to break above 1.1565, but it remains to be seen whether it can maintain a foothold above this level. Based on the prevailing momentum, the major resistance at 1.1600 is highly unlikely to come into view. On the downside, a breach of 1.1530 (minor support is at 1.1540) would mean that the current mild upward pressure has faded."
"1-3 WEEKS VIEW: On Monday (03 Aug, spot at 1.1530), we indicated that “there is a chance for EUR to test the significant resistance at 1.1565.” We added that “should EUR close above this level, it could rise toward 1.1600.” While EUR edged to a high of 1.1559 yesterday, there has been no significant increase in upward momentum. In other words, EUR still must close above 1.1565 before further sustained rises can be expected. The odds of EUR closing above 1.1565 will remain intact as long as it holds above the ‘strong support’ at 1.1495 (level was at 1.1470 yesterday)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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