Forex News

Rabobank's Senior FX Strategist Jane Foley discusses how United Kingdom (UK) Chancellor Healey’s pro-growth rhetoric and commitment to fiscal rules have left questions over funding, with EUR/GBP still range-bound. Foley highlights the Pound’s vulnerability due to high foreign ownership of gilts and market pricing for Bank of England (BoE) rate hikes, expecting EUR/GBP to drift higher towards 0.87 over three months.

Pound seen vulnerable to policy risks

"While EUR/GBP did reach the lows of the day around the time that Healey wrapped up his presentation, the currency pair has stayed within the range drawn last Friday."

"As we have pointed out before, the gilts market has the potential to be particularly sensitive to negative budget related news because of the relatively high amount of foreign ownership. Overseas buyers can be more reactionary to a souring of the news flow, and in the case of the gilts market this can have a detrimental impact on the pound."

"By contrast, worrisome news on the French budget in recent years has seen sellers move into other Eurozone bond markets leaving little impact on the EUR."

"This positioning may leave the pound vulnerable. A hawkish takeaway from the BoE meeting next week is already priced in, meaning that the pound could slip on anything that can be construed as dovish."

"On the back of this factor, coupled with the pound’s potential sensitivity to fiscal matters, we expect EUR/GBP to be biased higher, towards 0.87 on a 3-month view."

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

ING’s Francesco Pesole notes that stronger second-quarter Eurozone growth and resilience to geopolitical and commodity shocks have kept the Euro (EUR) relatively expensive. However, he maintains a short-term downside bias in EUR/USD driven by expectations of a September Fed hike and worsening Eurozone terms of trade, seeing a move towards 1.150 over coming weeks as a realistic scenario ahead of a potentially dovish European Central Bank (ECB) meeting.

Euro resilience but softer path seen

"Second-quarter eurozone growth was revised up from 0.4% to 0.6% QoQ, driven by stronger Irish growth on the back of robust multinational performance."

"More broadly, Europe’s resilience despite geopolitical developments and higher commodity prices remains a key theme of the summer and has likely helped keep the euro relatively expensive."

"Our short-term downside preference in EUR/USD is still mainly driven by our USD view and expectation of a September Fed hike. That said, the latest rise in energy prices adds further support."

"Real-time estimates suggest the eurozone’s commodity terms of trade are now worse than at the previous low in March."

"Ahead of Thursday’s ECB meeting, we see some dovish risks given the market’s aggressive tightening expectations. In that context, a move towards 1.150 over the coming weeks remains realistic in our view."

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

• GBP/JPY rebounds on Tuesday as the Japanese Yen’s recent rally loses momentum.
• Oversold RSI conditions support the recovery, but the cross stays below the 50-day, 100-day and 200-day SMAs.
• The 210 mark provides immediate resistance, while support is seen at 207.10 and 205.

GBP/JPY rebounds on Tuesday as the Japanese Yen (JPY) loses momentum following its sharp rise since the start of the month. At the time of writing, the cross trades around 208.90 after briefly falling to 207.10, its lowest level since December 2025.

Some profit-taking in the Yen, combined with oversold Relative Strength Index (RSI) conditions in GBP/JPY, appears to be helping the cross rebound on Tuesday. Higher Oil prices also add pressure on the Japanese currency. Japan relies heavily on imported energy, particularly from the Middle East.

The Yen’s recent rally has been driven by expectations that the Bank of Japan (BoJ) will speed up its monetary policy tightening, prompting traders to unwind Yen-funded carry trades and bring capital back to Japan.

Better-than-initially-estimated Japanese Gross Domestic Product (GDP) data released earlier in the day reinforced expectations of a BoJ rate increase but provided little support to the Yen. The central bank is widely expected to raise interest rates at its September 17-18 meeting.

On the UK side, the Bank of England (BoE) is expected to leave interest rates unchanged for a sixth consecutive meeting on September 17. Attention now turns to the BoE Monetary Policy Report hearing later on Tuesday. Governor Andrew Bailey and other Monetary Policy Committee members will testify before lawmakers and traders will look for fresh clues about the interest rate path.

Technical Analysis

On the daily chart, GBP/JPY keeps its bearish near-term bias as it trades below the 50-day, 100-day and 200-day simple moving averages (SMAs). However, the Relative Strength Index (RSI) near 25 indicates oversold conditions and helps explain Tuesday’s corrective rebound. The Moving Average Convergence Divergence (MACD) stays below zero, while the Average Directional Index (ADX) rises toward 28, suggesting the broader downtrend remains strong.

On the upside, the psychological 210 mark acts as immediate resistance. A break above this level could open the door toward the 200-day SMA at 213, followed by the 100-day SMA at 214. Further resistance is seen at 217.50 and 219.50.

On the downside, Tuesday’s low near 207.10 provides immediate support. A break below this level could expose the psychological 205.00 mark. Buyers would need to push GBP/JPY firmly above the 210.00-215.00 region to ease the bearish pressure and support a stronger recovery.

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

BNY’s Geoff Yu highlights that energy risk dominates markets as Brent crude is expected to trade sustainably above $100, with Saudi facility disruptions and constrained Hormuz shipments tightening supply. Yu notes central banks’ reluctance to tighten into a supply shock, while political pressure over living costs grows. Rising Oil prices are seen reinforcing upside risks to global inflation and weighing on risk appetite.

Middle East shocks tighten supply outlook

"Energy risk continues to dominate. The market is now fully braced for Brent crude to trade above $100/barrel on a sustained basis."

"Saudi Arabia has halted operations at several southern energy facilities after attacks triggered fires and caused injuries, escalating risks to regional oil supply. The strikes follow repeated Houthi attacks on Saudi energy infrastructure, including the 400,000 barrel/day Jazan refinery, which had already been offline since July."

"The disruption comes as shipments through the Strait of Hormuz remain constrained by the U.S.-Iranian conflict, increasing the risk of simultaneous supply losses across key Middle East export routes. Oil prices are consequently moving back toward U$100/barrel."

"The broader backdrop is also deteriorating, with Iran signaling a more aggressive military posture and the Houthis threatening to blockade Saudi oil flows, reinforcing upside risks to energy prices and global inflation."

"Unlike during the spring oil price surge, a stronger policy response is now looking increasingly difficult to avoid, with the Fed likely to lead that adjustment."

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

• USD/CAD returns above 1.3800 after bouncing from session lows at 1.3775.
•  Risk aversion stemming from rising tensions in the Middle East is offsetting the impact of higher Oil prices.
• Risk aversion has provided some support to the USD, but markets remain muted, awaiting Friday's US CPI release.

The Canadian Dollar (CAD) is giving back previous daily gains against the US Dollar (USD) on Tuesday, as the risk-off mood amid escalating tensions in the Middle East offsets the positive impact of higher Crude prices on the commodity-sensitive Loonie. The USD/CAD pair has returned above 1.3800 from session lows at 1.3775, although it holds marginal lows on the daily chart.

Market sentiment remains frail on Tuesday as hopes of a negotiated end to the Middle East conflict move further away. Iranian authorities threatened on Monday with attacks on energy infrastructure across the Gulf, including US Oil and Gas interests, if their country is targeted again, and Qatar authorities have called for efforts to reopen the key Strait of Hormuz to avoid an “industrial catastrophe”.

The stalemate in the US-Iran conflict, which has extended for six months, has pushed Brent Oil prices to two-month highs above $97.00 per barrel, keeping the Canadian Dollar from depreciating further, as Crude Oil is Canada's main export.

CAD underperforms as US payrolls surprise and BoC support fades

On the macroeconomic front, TD Securities' analysts observe that the latest labour market data delivered a clear blow to the Canadian Dollar, amid a “genuine upside surprise in US payrolls and downside surprise in Canada,” according to the experts, “to overwhelm the temporary support from the BoC's hawkish tilt.”

Looking ahead, TD Securities "expect(s) CAD to underperform its peers going forward,” even as trade developments inject headline risk. While “tariff headlines may generate volatility into the September 8 deadline,” TD Securities cautions that “a meaningful breakthrough appears unlikely and the broader USMCA outlook remains largely unchanged,” limiting the scope for a sustained CAD rebound.

Regarding the Greenback, strategists at Brown Brothers Harriman highlight that Brent crude's surge after “Iran-backed Houthi militants reportedly targeted Saudi oil facilities on Monday and Tuesday (...) is weighing on stocks and bonds, while giving USD a modest lift.”

Nonetheless, BBH stresses that “Friday’s US August CPI report remains the main near-term market driver that will decide the Fed’s September 16 rate decision.” In their view, “a hot CPI print would all but seal a September hike and underpin a firmer USD,” whereas “a cooler reading would strengthen the case for a hold and leave USD vulnerable to a dovish Fed repricing.”

• The Indian Rupee retreats against the US Dollar as energy prices rally further.
• The exchange of attacks between the US and Iran on oil tankers has lifted Oil prices.
• Financial market experts hold a hawkish view on the Fed’s monetary policy outlook.

The Indian Rupee (INR) retreats from its two-month high against the US Dollar (USD) on Tuesday. The USD/INR pair recovers to near 94.90 from its two-month low of 94.29 posted last week as the impact of higher Oil prices on the pair seems to be outweighing the lower US Dollar, which has come under pressure amid caution ahead of the United States (US) Consumer Price Index (CPI) scheduled for Friday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 98.80.

In the opening session, the MCX Crude Oil contract expiring on September 21 is up 0.6% to near Rs. 8,818, the highest level since May 22.

Asia ex-Japan FX faces energy headwinds despite softer Dollar backdrop

According to OCBC, the renewed rise in oil prices and higher US Treasury yields “risks an unfavourable backdrop for much of Asia ex-Japan (AXJ) given the region’s dependence on energy imports” and could “restrain the extent of FX appreciation even if the broader USD stays contained.” The bank suggests that, while a softer Dollar tone may offer some relief, the terms-of-trade shock from elevated energy costs is likely to cap gains for many Asia ex-Japan currencies.

Financial markets expect oil prices to rise further amid continued clashes between the US and Iran. Strategists at Societe Generale said in a note that Brent has “crossed a multi-month descending trend line and is gradually advancing toward the July peak around $102.” They argue that “a move above $102 may extend the uptrend toward the next projections around $108/$110 and $117.” Such a scenario would put more strain on the Indian currency.

Oil risk premia build as Hormuz traffic remains fragile

Analysts at Commerzbank warn that the latest geopolitical flare-up has materially heightened supply risks, noting that "the latest escalation increases the risk that the recent improvement in oil flows through Hormuz is reversed." They point out that "observable traffic through the Strait remained sparse over the weekend," even as "some tankers continue to transit with tracking systems switched off or with military support," underscoring how fragile and opaque the current flow dynamics have become.

US CPI data to influence Fed’s interest rate expectations

This week, the major highlight will be the US CPI data for August, which is expected to reshape the Federal Reserve’s (Fed) interest rate expectations.

According to TD Securities, this week’s inflation data should be “subdued enough to keep the Fed on hold,” though they stress that “the PCE translation will be key” in shaping the policy outlook. The bank expects that “the Fed [will] remain on hold over our forecast horizon,” arguing that while “inflation should remain high for the rest of the year, and the labor market has stabilized,” these dynamics give the FOMC scope to “shift focus to its inflation mandate.” TD Securities cautions that, if policymakers do adjust rates, “if the Fed were to move this year, we believe that move is more likely to be a hike than a cut.”

Currently, the CME FedWatch tool shows that the odds of the Fed hiking interest rates at the policy meeting next month are 58.4%.

USD/INR Technical Analysis

USD/INR trades at 94.90 at the time of writing, keeping a bearish near-term tone as it holds below the 20-period Exponential Moving Average (EMA) at 95.14. The pair remains pressured by this nearby dynamic resistance. However, a sharp recovery in the Relative Strength Index (RSI) above 41 suggests strong buying demand on lower levels.

On the topside, the 20-period EMA at 95.14 is the first resistance level that bulls would need to reclaim to ease immediate selling pressure and open the way for a further recovery towards 95.50. On the downside, the two-month low at 94.15 is the key support level.

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

Brown Brothers Harriman’s (BBH) Elias Haddad notes AUD/USD is holding above 0.7200 as Australian sentiment softens but inflation keeps the Reserve Bank of Australia (RBA) on alert. He highlights that trimmed mean Consumer Price Index (CPI) and stronger GDP support a 25 bps hike to 4.60% later this month, though the RBA may wait until November. Haddad also emphasizes Australia’s attractive carry and strategic commodity exposure as key Australian Dollar (AUD) supports.

RBA risks and carry support Aussie

"AUD/USD is holding above support at 0.7200. Australia consumer and business sentiment weakened in September and August, respectively, but inflation remains the RBA’s chief concern."

"Assistant Governor (Economic) Sarah Hunter warned that “if there is a sense that inflation’s going to be stronger than we think in the context of our forecast, that the Board may well have to raise interest rates to tackle that.”"

"Australia trimmed mean CPI held at 3.6% y/y in July, above the RBA’s 3.3% year-end forecast. Meanwhile, real GDP growth reached 2.1% y/y in Q2, beating the RBA’s 1.9% forecast. The data supports the case for a 25bps hike to 4.60% on September 29 (70% priced-in). Still, the RBA could wait until November 3, allowing it to assess both the August and Q3 CPI prints on September 30 and October 28, respectively."

"More broadly, Australia’s attractive carry alongside the country’s strategic exposure to commodities linked to energy, AI, and defense remain key AUD tailwinds."

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

• Copper hits an all-time high at $14,697 per ton on Tuesday after rallying 2.75% so far in September.
• Anticipation of additional US tariffs and supply-side constraints are seen as the main reasons for Copper's rally.
• XCU/USD's technical picture shows an overextended rally ahead of the $15,000 psychological level

Copper prices have accelerated their rally this week, reaching an all-time high of 14,697 per ton at the London Metal Exchange (LME) on Tuesday. The commodity has been appreciating continuously over the last three months and has rallied 2.75% so far in September, with market analysts pointing to additional US tariffs and concerns about supply shortages as the main reasons behind the XCU/USD appreciation.

Analysts at Deutsche Bank highlight that the inflation narrative is being reinforced by the latest move in industrial metals, with copper “hit[ting] an all-time high (+0.57%) on the London Metal Exchange yesterday, rising above $14,415 per ton.” They note that this strength “comes amidst ongoing supply concerns, and the prospect of potential US tariffs on copper.”

Supply-side constraints are contributing to push prices higher

In the same vein, Commerzbank strategists observe that copper “surged to an all-time high on the London Metal Exchange, driven by anticipation that the Trump administration will expand US tariffs to imports of refined metals.” Commerzbank further notes that “copper prices continue to hover close to their all-time highs,” with support coming from reports that “Chile's copper production, which has already been struggling for some time, fell 9.4% year-on-year due to adverse weather conditions.”

Strategists also flag that “the trade balance figures are also relevant for base metals markets,” arguing that “continued strength in overall exports, as suggested by the latest sentiment indicators, would provide price support.”

According to TD Securities, “continued inventory draw amid tariff uncertainty and tighter physical conditions in China offer support for copper, while tight concentrate conditions also offer support for zinc,” underscoring how both policy risk and physical market tightness are underpinning the complex.

Technical Analysis: Momentum indicators show an overstretched rally

XCU/USD trades at $14,687 at the time of writing, extending a bullish near-term bias with momentum indicators showing overbought levels in most timeframes. The Relative Strength Index (RSI) on the daily chart stands just above 72, and the Moving Average Convergence Divergence (MACD) stays positive and rising, hinting at still-strong but potentially stretched upside momentum.

On the upside, bulls might meet some resistance at the 127.2% Fibonacci extension of the March-May rally, at $14,860, and the psychological $15,000 level. A bearish reaction, on the other hand, is likely to be tested at the ascending trendline from March lows, now around $14,100, ahead of the August 19 low at $13,861, and the July 23 and 29 lows near the $13,600 region.

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

ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner argue that the recent Japanese Yen rally against the Dollar has been driven by optimistic expectations on Bank of Japan tightening and GPIF flows, amplified by thin US holiday liquidity. They see further downside risks for USD/JPY towards 152.0 and 150.0, and warn that current volatility makes it too risky to fight the move, even as broader USD sentiment could improve.

Yen-led move keeps Dollar pressured

"Yen moves have continued to dominate the start of the week. Thin liquidity due to the US holiday likely amplified yesterday’s USD/JPY sell-off, pushing the pair through the key 155.0 level before extending to 153.0 overnight. This still looks primarily like a JPY story rather than evidence of a broader shift in sentiment towards the dollar."

"Despite short-term fundamentals suggesting the move is overdone, it remains risky to stand in its way, particularly given the scope for further carry trade unwinding. The next meaningful support only comes in at 152.0, where the yen rally stalled in January and February. A break below that could quickly open the way towards 150.0."

"Whether such a move would prove sustainable if the Fed hikes next week remains an open question, but current volatility argues against trying to catch the falling knife."

"The yen rally continues to spill over into broader dollar weakness, even as the wider USD narrative remains unresolved. Strong payrolls and elevated energy prices (Brent close to $100/bl) remain supportive, yet markets are still only pricing around 15bp of tightening for September and risk sentiment has held up well."

"US equity futures point to a softer reopening today, which could lend the dollar some support against an otherwise empty calendar. We continue to think the bullish case for the dollar will prove stronger in the near term, although Friday’s US CPI release remains a clear risk event."

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

• The Euro drops to near 1.1610 against the US Dollar as the latter rebounds.
• Investors await the key ECB policy meeting and the US CPI data for August.
• The ECB is anticipated to hike policy rates on Thursday.

The Euro (EUR) is down 0.1% at around 1.1610 against the US Dollar (USD) during the European trading session on Tuesday. The major currency pair trades lower as the US Dollar turns positive after a weak start.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher at around 99.00.

Financial markets expect the US Dollar to remain rangebound as a slight improvement in Federal Reserve’s (Fed) interest rate hike expectations, following strong United States (US) Nonfarm Payrolls (NFP) data for August, has limited its downside, while positive commentary from Fed members on inflation has restricted the upside.

Going forward, the release of the US Consumer Price Index (CPI) data for August on Friday is expected to bring a decisive move in the US Dollar.

Meanwhile, the Euro is also expected to remain in a limited range as investors await the European Central Bank’s (ECB) interest rate decision on Thursday.

According to ABN Amro, “the path for the ECB is clear, and a rate hike at Thursday’s Governing Council meeting is fully priced by financial markets”.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1612, holding a neutral near-term bias as it remains close to the 20-period exponential moving average (EMA) at 1.1601. This close alignment between price and the short-term EMA suggests the pair is consolidating its recent gains rather than reversing, while the Relative Strength Index (RSI) at 54 keeps momentum in neutral-to-positive territory, hinting that buyers still retain a slight edge.

On the downside, initial support is seen at the 20-period EMA near 1.1600, where dip-buying interest could emerge if the pair pulls back. The major currency pair could slide to the psychological level of 1.1500 if it fails to hold the 20-day EMA. Looking up, the August high at 1.1710 is the key hurdle for the pair.

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