Forex News

• NZD/USD extends losses for the third consecutive day to test support at 0.5860.
• A mild risk-off mood amid Middle East tensions and political uncertainty at home are weighing on the Kiwi Dollar.
• The pair has a cluster of supports ahead of the 0.5800 level.

The New Zealand Dollar (NZD) accelerates its reversal against the US Dollar (USD) on Wednesday, weighed by cautious markets amid growing tensions in the Middle East and political uncertainty at home. NZD/USD bears are testing support at the 0.5860 area, down from last week's highs above 0.5900, against a firmer USD ahead of July’s US inflation data.

New Zealand’s Prime Minister, Christopher Luxon, survived a confidence vote on Wednesday, following a challenge from his defence minister, which adds to evidence of the divergences within the ruling National Party less than three months ahead of New Zealand’s elections

Beyond that, tensions in the Middle East flare up as reports of attacks on two vessels complicate the entangled US-Iran negotiating process even further. The risk-sensitive NZD is coming under pressure although volatility remains subdued, as traders await the release of July’s US Consumer Prices Index (CPI) report, due later on the day.

Technical Analysis: Key support is at the 0.5830 area

NZD/USD trades at 0.5865 after depreciating for three consecutive days, with bears aiming to break the bottom of the last two weeks' trading range, at the 0.5860 area. Momentum indicators in the daily chart remain at positive levels but show a fading impulse. The Relative Strength Index (14) is trending towards the 50 midline, and the Moving Average Convergence Divergence (MACD) line is attempting to cross below the Signal line, which is a bearish sign.

A clear break below the mentioned 0.5860 level would expose a key support area in the confluence of the ascending trendline from late June lows, now around 0.5835, and the 200-day SMA, a popular indicator, which would cross the price at around 0.5830. Further down, the next target is the late July lows, near 0.5760.

On the topside, immediate resistance emerges at the 78.6% Fibonacci retracement of June's selloff, at 0.5916, and beyond that, the May and June top near 0.6000.

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

OCBC’s Sim Moh Siong and Christopher Wong note the Reserve Bank of Australia (RBA) kept rates unchanged at 4.35% but retained a modest tightening bias, with the Board having actively considered a hike. They remain constructive on the Australian Dollar (AUD) over the next one to two quarters, citing attractive carry and potential China stimulus, while expecting more measured gains as growth and inflation moderate.

Carry and China support AUD

"The RBA unanimously voted (9-0) to keep the cash rate unchanged at 4.35%, while retaining a modest tightening bias. AUD's intraday round-trip reflected mixed signals between the policy statement and Governor Bullock's subsequent press conference."

"Markets viewed the statement and updated forecasts as less hawkish than feared, although Bullock noted that, unlike at the June meeting, the Board actively considered the case for a rate hike in August."

"We remain constructive on AUD over the next one to two quarters, supported by its attractive carry profile and the potential for further Chinese policy stimulus. While the RBA is likely at the peak of its tightening cycle, sticky inflation means the risk of another rate hike cannot be ruled out."

"Over the medium term, however, we expect AUD gains to become more measured as growth slows, inflation moves back towards target, and the RBA gradually shifts away from a restrictive policy stance."

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

• AUD/USD continues with its struggle to gain any meaningful traction for the third consecutive day.
• A modest USD strength acts as a headwind, though the RBA’s hawkish stance limits the downside.
• Traders now look to the crucial US CPI report for some impetus amid a constructive technical setup.

The AUD/USD pair prolongs its consolidative price move for the third straight day and trades around mid-0.7000s through the early European session on Wednesday. The Reserve Bank of Australia's (RBA) hawkish outlook continues to act as a tailwind for the Aussie, though a modest US Dollar (USD) keeps a lid on the currency pair.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, preserves its weekly gains as inflation risks stemming from volatile oil prices back the case for at least one rate hike by the Federal Reserve (Fed). This, along with persistent geopolitical uncertainties, supports the Greenback's safe-haven status and contributes to capping the upside for the AUD/USD pair.

From a technical perspective, spot prices have been struggling to extend momentum beyond the 100-day Simple Moving Average (SMA) and break out through the 50% Fibonacci retracement level of the May-June decline. This suggests that the topside progress is slowing but not yet reversing as momentum indicators on the daily chart retain a mildly bullish near-term bias.

In fact, a firm Relative Strength Index (RSI) around 58 and a positive, though modest, Moving Average Convergence Divergence (MACD) reading hint that underlying momentum still favors a grind higher rather than a deeper pullback. A sustained move beyond the 50% retracement near 0.7071 will reaffirm the outlook and lift the AUD/USD pair to the 61.8% level at 0.7120.

Should bulls extend the advance, the next relevant barriers align at 0.7189 and 0.7276. On the downside, initial support is seen at the 100-day SMA around 0.7054, ahead of a Fibonacci cluster at 0.7023 and 0.6963. Meanwhile, deeper demand is expected at the 200-day SMA near 0.6931 and the structural low around 0.6867 if corrective pressure around the AUD/USD pair intensifies.

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

AUD/USD daily chart

MUFG’s Teppei Ino reviews recent USD/JPY price action following coordinated Japan-US intervention. The pair opened near 157.58, dropped toward 155.20 on official confirmation of joint action, then recovered and traded above 158 by 7 August. Authorities in Japan and the US signaled readiness to intervene again, while comments from Fed Chair Kevin Warsh supported expectations for a possible September rate hike.

USD/JPY stabilizes after sharp swings

"The USD/JPY opened the week at 157.58. The pair fell sharply early in Tokyo trading on 3 August after the MOF released a statement from Finance Minister Satsuki Katayama confirming coordinated intervention by Japanese and US authorities, sinking to a low of 155.20 following subsequent comments from Katayama and Vice Minister of Finance for International Affairs Atsushi Mimura."

"The USD/JPY gradually recovered after the initial decline and approached 158 on 4 August. Gains were capped for a time as both Japan and the US indicated that they remained prepared to intervene again."

"During US trading on 6 August, the pair moved above 158 and then rose to around 158.50 following reports that Fed Chair Kevin Warsh could consider a September rate hike depending on upcoming inflation data, among other factors."

"The pair was trading above 158 at the time of writing on 7 August. The dollar's decline following last week's FOMC meeting and the subsequent coordinated Japan-US intervention paused this week."

"Moves among the major currencies were generally limited to within 1% in either direction."

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

• GBP/USD trades sideways around 1.3500 ahead of the US CPI and the UK Q2 GDP data.
• The US headline and core CPI are expected to arrive lower at 3.4% and 2.5% YoY, respectively.
• Investors expect the UK Q2 GDP growth to have slowed down to 0.4%.

The British Pound (GBP) remains in a limited range at around 1.3500 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair is expected to remain sideways, with investors awaiting the United States (US) Consumer Price Index (CPI) data for July in the North American session and the United Kingdom (UK) Q2 Gross Domestic Product (GDP) data on Thursday.

Investors expect the US CPI data to have a meaningful impact on Federal Reserve (Fed) interest rate expectations, as comments from Chairman Kevin Warsh in the July policy meeting press conference signaled heightened concerns regarding upside inflation risks.

Analysts at Danske Bank highlight that “today's most important data release will be the US July CPI,” with the bank forecasting “headline inflation at 0.2% MoM SA, 3.4% YoY (prior: -0.4% MoM, 3.5% YoY) and core inflation at 0.2% MoM SA, 2.5% YoY (prior: 0.0% MoM, 2.6% YoY).” The projections point to a modest month-on-month rebound in both headline and core price pressures, alongside slightly lower annual rates compared with June.

On Thursday, the UK Q2 GDP data is expected to arrive lower at 0.4% from 0.6% in the first quarter this year. On an annualized basis, the GDP growth is seen at 1.1%, faster than the previous reading of 0.9%.

GBP/USD Technical Analysis

GBP/USD trades at around 1.3500 above the 20-day exponential moving average (EMA) at 1.3437 and has broken through the downward resistance trend line, now offering support around 1.3465, which together suggests a constructive bullish bias while price consolidates near recent highs.

The Relative Strength Index (14) at about 60 keeps upward momentum intact without yet entering overbought territory, hinting that buyers still control the near-term direction as long as spot remains anchored above these supports.

On the downside, initial support is seen at the former trend-line break level near 1.3465, followed by the 20-day EMA at 1.3437, where a deeper pullback would be expected to attract dip-buying interest. Below the 20-day EMA, the pair would be exposed to the July 28 low at 1.3273. Looking up, the pair could advance towards 1.3600 if it rebounds above the August 10 high at 1.3530.

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

Here is what you need to know on Wednesday, August 12:

Major currency pairs trade in familiar ranges early Wednesday as investors refrain from taking large positions ahead of the highly-anticipated July Consumer Price Index (CPI) data from the United States (US).

The cautious market mood helped the US Dollar (USD) stay resilient against its major rivals on Tuesday. In the early European session on Wednesday, the USD Index trades marginally higher on the day but stays below 100.00, while US stock index futures stay virtually unchanged after Wall Street's main indexes closed in the red on Tuesday. Markets expect the annual CPI inflation to soften to 3.4% in July from 3.5% in June, and see the monthly core CPI rising by 0.2%.

USD seen rangebound as Fed hike bar stays high and Oil supply hopes remain constrained

Analysts at OCBC argue that the bar for a meaningful shift in Federal Reserve (Fed) policy outlook remains elevated, noting that "core CPI would need to print at 0.3% MoM or higher in July, above the 0.2% consensus forecast, to materially lift expectations of a September rate hike." In their view, a "rangebound USD, combined with a constructive risk backdrop, should continue to support carry trades despite ongoing volatility in oil markets." On commodities, they point out that "oil prices eased on hopes that the Strait of Hormuz could reopen, but Iran's firm conditions for Washington suggest any near-term boost to energy supply is likely to be limited," tempering optimism over a rapid improvement in the energy outlook.

US President Donald Trump said that the situation with Iran was "going fine" and that the US forces are in "total control" of the Strait of Hormuz. CNN, however, disputed Trump's claim by noting that only eight vessels crossed the waterway on Tuesday, compared to an average of 120 before the war. In the meantime, the US Energy Information Administration (EIA) revised its crude Oil price projections, noting that they now expect the barrel of West Texas Intermediate (WTI) to average $80.88 in 2026, compared to $76.26 in the previous forecast.

Oil rebound tempers inflation relief as Hormuz deal remains elusive

Analysts at Commerzbank observe that the situation around the Strait of Hormuz remains unresolved, with “conflicting signals” indicating that while negotiations are progressing, “a deal capable of restoring normal shipping through the Strait of Hormuz does not yet appear imminent.” They add that “lower energy prices in July should help ease headline inflation,” but caution that “the subsequent rebound in oil prices means energy could again place upward pressure on inflation in the coming months.”

EUR/USD continues to move sideways below 1.1550 after closing virtually unchanged on Tuesday. Germany's Destatis confirmed earlier in the session that the annual CPI inflation in July was 2.8%.

GBP/USD holds steady at around 1.3500 after failing to make a decisive move in either direction on Tuesday.

AUD/USD registered small daily gains on Tuesday following the Reserve Bank of Australia's (RBA) policy announcements. The pair stays in a consolidation phase at around 0.7050 in the European morning on Wednesday.

Gold (XAU/USD) reversed its direction after reaching its highest level in two months above $4,430 on Tuesday and ended the day with small losses. XAU/USD regains its traction in the European session on Wednesday and rises toward $4,400.

Commerzbank analysts highlight cautious positioning in the Dollar ahead of July US CPI, with the Dollar Index steady near 99.83 and EUR/USD around 1.1540. Fed funds futures price roughly a 48% chance of a September hike, while hawkish comments from Chicago and Atlanta Fed officials underscore inflation concerns even as recent US data show mixed signals on growth and employment.

US inflation data to steer Dollar

"On the economic front, the focus shifts to today’s US CPI report for July, which could be important for the September FOMC decision. Consensus expects headline CPI to rise around 0.1% mom, with the yoy rate easing to around 3.4% from 3.5% in June. Core CPI is expected to rise around 0.2% mom and the annual rate at 2.5% yoy vs 2.6% in June."

"Chicago Fed President Austan Goolsbee said “the biggest problem facing our economy right now is inflation”. He added that “the labour market is stable without being good. As long as the consumer remains healthy, I think the economy is going to remain healthy.” His comments reinforced the Fed's continued focus on inflation despite last Friday's unexpectedly weak payrolls report."

"Atlanta Fed interim President Cheryl Venable also struck a hawkish tone. She said inflation is still too high, with any meaningful easing tied directly to the resolution of the Middle East conflict. She noted that a clear end to the war would free up oil shipments and ease energy prices, while prolonged conflict would do the opposite."

"The Fed funds futures are pricing in 48% probability of a 25p hike in September or 12bp. They are pricing in a total hike of 29bp by year-end."

"The Dollar Index was broadly unchanged at 99.83 and EUR/USD was little changed at around 1.1540."

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

• EUR/GBP edges up to 0.8540 following the German HICP release, but maintains a bearish short-term trend.
• German inflation accelerated to a 2.8% yearly rate in July amid a sharp increase in energy prices.
• The Euro remains on its back foot as tensions in the Middle East push Oil prices higher.

The Euro (EUR) has picked up from session lows against the British Pound (GBP) on Wednesday as hot German inflation figures have partially offset a mild risk-off sentiment, amid flaring tensions in the Middle East. The EUR/GBP pair ticked up to levels above 0.8540, but keeps the immediate bearish momentum intact, on retreat from last week's highs above 0.8580.

Data released on Wednesday by the German Statistics Office confirmed preliminary figures showing that the Harmonised Index of Consumer Prices (HICP) accelerated to a 2.8% year-over-year rate in July, from 2.4% in June, as energy inflation jumped to 7.3% in the 12 months to July, from 2.7% in June.

Apart from that, the Pound is faring better than the Euro, amid the growing tensions in the Middle East, where Iran-backed Houthi militants attacked an Egyptian vessel in the Red Sea, killing some of its crew members. Previously, the US Army had opened fire against a Panama-flagged cargo ship attempting to break the blockade of Iranian ports. 

These skirmishes cast further shadow on the fate of the US-Iran peace negotiations, and push oil prices higher. The barrel of Brent Oil appreciated to levels beyond $88.00 on Wednesday, about 13% up from last week’s highs, fuelling inflationary pressures across the board and adding pressure on the Eurozone’s Oil-importing economies.

UK rate expectations seen vulnerable without GDP upside surprise

The UK calendar is void on Wednesday, and investors will remain focused on the second quarter's preliminary Gross Domestic Product (GDP) release, due on Thursday, for further guidance about the Bank of England's near-term monetary policy.

Strategists at Brown Brothers Harriman note that consensus looks for “real GDP to rise 0.4% q/q vs. 0.6% in Q1,” while the BoE is even more cautious, projecting “a softer print of 0.3% q/q as lower household real income growth and tighter financial conditions weigh on domestic demand activity.”

Beyond that, the BoE “forecasts consumption growth to ease to 0.3% q/q in Q2 vs. 0.6% in Q1.” Brown Brothers Harriman warn that “absent a GDP beat, UK rate pricing looks vulnerable to a dovish repricing against the Pound”

UOB’s Quek Ser Leang and Lee Sue Ann report EUR/USD holding near 1.1540 after a quiet session, with momentum indicators mostly flat. Intraday, they expect consolidation between 1.1530 and 1.1560, but a break above 1.1560 could trigger a quick move to 1.1580. Over the next 1–3 weeks, further gains require a close above 1.1580 to open 1.1600 and beyond.

Euro holds but needs a breakout

"24-HOUR VIEW: When EUR was at 1.1545 in the early Asian session yesterday, we noted that “momentum indicators are mostly flat,” and we expected EUR “to trade in a range between 1.1530 and 1.1560.” EUR subsequently traded within a tight range of 1.1530/1.1549, closing largely unchanged at 1.1540 (-0.02%). The price action provides no fresh clues, and we continue to expect EUR to trade between 1.1530 and 1.1560. That said, should EUR break above 1.1560, it could trigger a quick rise toward 1.1580."

"1-3 WEEKS VIEW: We continue to hold the same view as yesterday (11 Aug, spot at 1.1545). As highlighted, “the hurdle for further gains has risen,” and EUR “must close above 1.1580 before a move to 1.1600 and beyond can be expected." On the downside, if EUR breaks below 1.1515 (no change in ‘strong support’ level), it would indicate that EUR is not rising further"

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