Forex News

• DJIA tops 54,200 intraday, its first break above the three-session ceiling.
• A 370-point range handed back in full, with the index flat beneath 54,000.
• Labour force participation at 61.5%, the lowest since 1976 outside the pandemic.

The Dow Jones Industrial Average broke the three-session coil that had pinned it beneath its record, traded up through 54,200, and has since surrendered the entire move. The index sits just beneath 54,000, flat against yesterday's close, on a session range of close to 370 points that has delivered no net change at all. The 53,800 area has now been tested and held three days running.

The breakout ran into Tehran

Hopes that the Strait of Hormuz would reopen faltered through the session, and the equity market surrendered its gains alongside them. Iranian officials told wires on Tuesday that an agreement with Oman on new shipping routes would not by itself open the waterway, and that Hormuz stays shut for as long as Washington declines to change its behaviour. Crude Oil traded roughly 1% higher above $83.00, with the international grade above $88.00.

What moved was not the timing of a deal but what a deal is now understood to buy. The route negotiation with Oman, described by Qatar's foreign ministry on the same day as advanced, fixes geography rather than access, and Tehran's separate conditions for access run to the naval blockade, sanctions, the withdrawal of American forces, payment for war damage and the release of frozen assets.

Trump spent Monday demanding that Iran compensate victims' families and the Gulf states it has struck, hours after Tehran demanded reparations from Washington as a condition of reopening. Two compensation claims pointed at each other describe a negotiation without a counterparty rather than one that slips a week.

The bond market took the barrel more seriously than the equity market did. The 10-year Treasury yield pushed back above 4.72% after trading near 4.61% on Friday morning, and September rate-increase pricing, a coin flip as recently as yesterday, has been marked higher again. That is the second consecutive session in which the rates market has repriced hard and the index has not moved at all.

Hiring plans against hiring

Small business optimism reached its best level in almost a year, and the component that carried it was the one the tape should trust least. The National Federation of Independent Business (NFIB) index rose 2.4 points in July to 99.8, above its 52-year average and the highest reading since August 2025, with hiring plans the largest single contributor. A net 20% of owners intend to create jobs over the next three months, the strongest since October 2022.

Every measure of hiring that counts rather than asks went the other way. The ADP four-week average printed 8.25K against 11K previously, roughly half the pace it ran in late July, and July payrolls contracted by 23K against an 80K consensus. Intent sits at a four-year high while execution is negative, a gap wide enough that one of the two series has to be wrong.

The reconciliation sits in the participation rate, which has fallen to 61.5% and is now at its lowest outside the pandemic shutdown since 1976. Owners report the highest share of unfillable openings since June 2025 because the workers have left the count, not because demand for them collapsed. June's fall in unemployment to 4.2% came from roughly 720K people exiting the labour force rather than from anybody being hired.

A shrinking labour force lowers the payroll figure the economy needs to stand still, so a 23K contraction makes a weaker case for policy relief than it reads. This is the labour share of output at its lowest since 1947 viewed from the supply side, and it is why September stays live into Wednesday rather than being resolved by one bad Friday.

Three red bands before Friday

July Consumer Price Index (CPI) lands Wednesday at 12:30 GMT with consensus at 0.1% MoM against a 0.4% decline in June, and 3.4% YoY from 3.5%. Core is seen at 0.2% MoM from zero and 2.5% YoY from 2.6%. The monthly budget statement follows at 18:00 GMT, with a 346 billion Dollar deficit expected against 120 billion previously.

Producer Price Index (PPI) follows on Thursday at 12:30 GMT, 0.2% MoM against a 0.3% fall and 4.9% YoY from 5.5%, with the core measure at 0.3% MoM and 4.2% YoY from 4.7%. Initial claims are seen at 202K from 199K, and two regional Federal Reserve presidents speak either side of that release, the first of them a July dissenter for a quarter-point increase.

Retail sales arrive Friday at 0.1% MoM against a 0.2% prior, with Michigan sentiment expected at 54.5 from 55.2 and the one-year and five-year inflation expectations carrying priors of 4.2% and 3.3%. None of it answers the question the barrel is asking, because July prices were collected before Crude Oil ran back above $83.00, so the passthrough cannot show up until September.

Levels to watch

Resistance: The session high just above 54,200 is now a marked failure and the first line any recovery has to clear. Above it, 54,500 is the last shelf before the record just short of 54,750.

Support: The 53,800 area has held on three consecutive sessions and carries the whole structure. Beneath it, 53,500 is the first objective, with the 50-day Exponential Moving Average (EMA) near 52,200 a long way below.

Bias: Bullish while the 53,800 area holds, because a third successful defence of a floor outranks one rejected high, and the daily Stochastic Relative Strength Index (Stoch RSI) near 63 is still climbing. The failed break above 54,200 says the record does not come without a soft print, so Wednesday's release is the trigger rather than the tape. A daily close beneath 53,800 invalidates and opens 53,500.

Dow Jones daily chart

• USD/CHF maintains a mildly bullish bias, holding above the 50-day SMA.
• Momentum remains mixed, with the RSI near neutral and the MACD below zero.
• Buyers need to clear the 21-day SMA to strengthen the near-term recovery.

USD/CHF trades with a positive bias on Tuesday as the US Dollar (USD) consolidates its recent gains ahead of Wednesday’s US Consumer Price Index (CPI) data. Price action has stabilized above the 50-day Simple Moving Average (SMA) following a sharp pullback from above 0.8200 in late July.

At the time of writing, the pair trades around 0.8113, extending gains for a second consecutive day. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, hovers around 99.80, holding above the 100-day SMA at 99.75.

USD/CHF holds a mildly positive technical tone above the 50-day SMA at 0.8067, though the 21-day SMA at 0.8112 keeps gains in check.

The 100-day SMA at 0.7968 supports the broader recovery structure, while the Relative Strength Index (RSI) near 52 points to balanced momentum after cooling from earlier overbought levels.

The Moving Average Convergence Divergence (MACD) remains in negative territory, suggesting that upside momentum has weakened. However, the broader tone stays constructive as long as the pair holds above the 50-day SMA.

A sustained break above the 21-day SMA could open the door to 0.8150, followed by the 0.8200 psychological mark. On the downside, a move below the 50-day SMA would expose the 0.8000 psychological level. Further losses could bring the 100-day SMA at 0.7968 and the horizontal support at 0.7900 into focus.

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

Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Euro (EUR) is steady, extending a tight consolidation around the mid-1.15s after the Dollar’s late-July Fed-driven decline. EUR/USD trades close to a fair value estimate based on 2-year Germany–US yield spreads, with sentiment-driven correlations strengthening and a quiet data and European Central Bank (ECB) calendar pointing to continued range trading.

Euro steady in tight range

"The EUR remains steady as it extends its tight consolidation in the mid-1.15s, with limited overall movement observed in the period following the USD’s broad Fed-driven decline from late July."

"The EUR continues to trade in tandem with a narrow FV estimate based on 2Y Germany-US yield spreads, currently at 1.1563."

"Correlation studies reveal a moderation in fundamentally- (spread) driven movement, while correlations to sentiment (risk reversals) are elevated and strengthening."

"Bullish/neutral – the EUR’s bullish momentum is fading, with the RSI drifting into the upper 50s. The recovery from late July has shown signs of deceleration while still maintaining a marginal bull trend with a sequence of higher highs and higher lows."

"Recent resistance has been observed around 1.1580 and we see additional resistance closer to 1.1600 and the 200 day MA at 1.1630. Support is expected at the 50 day MA at 1.1468. We look to a near-term range bound between 1.1500 and 1.1580. "

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

• NZD/USD trades around 0.5880 as safe-haven demand supports the US Dollar.
• Uncertainty surrounding the Strait of Hormuz keeps Oil prices elevated and revives inflation concerns.
• Markets increase bets on a Federal Reserve rate hike in September ahead of US inflation data.

NZD/USD trades around 0.5880 on Tuesday at the time of writing, virtually unchanged on the day with a 0.03% decline. The pair remains under pressure as the US Dollar (USD) benefits from safe-haven demand amid geopolitical tensions and renewed expectations of monetary tightening in the United States (US).

Uncertainty surrounding the Strait of Hormuz remains at the center of market attention. Qatar said on Tuesday that negotiations between Iran and Oman over the reopening of the strategic waterway have reached an advanced stage and that it has received positive feedback from both sides. Doha stressed, however, that the talks are at a critical juncture, keeping investors cautious about the prospect of a swift agreement.

Tehran also maintains several conditions for reopening the strait, including the payment of war reparations by Washington, the lifting of sanctions, the release of frozen Iranian assets, an end to military threats and the removal of the US naval blockade. Iran has also ruled out the prospect of renewed direct negotiations with US President Donald Trump before the end of his term in January 2029.

This geopolitical uncertainty supports energy prices and revives concerns about US inflation. West Texas Intermediate (WTI) trades around $82.10 and remains more than 6% higher since the beginning of the week. Higher Oil prices are also helping to keep US Treasury yields elevated.

Against this backdrop, investors are increasing their expectations of further monetary tightening by the Federal Reserve (Fed). According to the CME FedWatch tool, markets now assign around a 50% chance to a 25-basis-point interest rate hike at the September meeting, up from approximately 42% on Friday.

Comments from Cleveland Fed President Beth Hammack are also fueling these expectations. Hammack believes that current monetary policy is not sufficiently restrictive and that several rate hikes could be necessary to bring inflation sustainably back toward the central bank's target.

Investors now await the release of the US Consumer Price Index (CPI) on Wednesday, which could provide fresh clues about the Fed's interest rate path. Until then, developments surrounding negotiations over the Strait of Hormuz and Oil prices are likely to continue influencing the US Dollar and, consequently, NZD/USD.

On the New Zealand side, higher energy prices are also complicating the monetary policy outlook. Markets remain cautious ahead of New Zealand's third-quarter inflation expectations data after price pressures unexpectedly accelerated in the second quarter. The figures could influence expectations surrounding the Reserve Bank of New Zealand's (RBNZ) next policy decision in September.

Domestic political uncertainty is another factor to watch for the New Zealand Dollar (NZD). New Zealand Prime Minister Christopher Luxon has called an urgent caucus meeting for Wednesday as speculation surrounding a potential challenge to his leadership intensifies.

• GBP/USD steadies as traders await US CPI and UK GDP.
• Oil retreats on Pakistan headlines, easing immediate inflation concerns.
• Fed hike odds rise to 52% before inflation data.

The Pound Sterling (GBP) holds firm against the US Dollar (USD) on Tuesday following the release of softer-than-expected US jobs data, while investors await US inflation data on Wednesday and UK GDP releases on Thursday. At the time of writing, the GBP/USD pair trades at 1.3508, nearly unchanged.

GBP/USD steadies as traders await key inflation and growth data, Oil swings reshape Fed hike bets

Energy prices had remained high, but retreated on a Bloomberg headline that read “Pakistan Says US, Iran Close to Deal Despite Trump Rhetoric.” On the headline, the US crude benchmark West Texas Intermediate (WTI) retreated from daily highs near $84.69 to $82.50.

Traders are also waiting for the release of the US Consumer Price Index (CPI), with most participants expecting headline inflation to come in at 3.4% YoY in July, a tenth lower than in June, while core CPI is also forecast to drop by the same margin to 2.5% YoY.

By Thursday, the US economic calendar will unveil the Producer Price Index (PPI) and jobless claims, the first of which follows a disappointing July Nonfarm Payrolls report.

Across the Atlantic, in the UK, traders are bracing for the preliminary reading of the Gross Domestic Product (GDP) for the second quarter of 2026, with the economy expected to grow by 1.1% YoY. On a quarterly basis, a slowdown from 0.6% to 0.4% is projected.

Given the backdrop, GBP/USD price action remains contained as investors wait for economic data. However, money markets continued to update their expectations regarding a Fed rate hike in September, with the odds at 52% of a 25-basis-point rate hike, according to Prime Terminal data.

Analysts cited by Reuters said the Pound has not been affected by the election of Andy Burnham as the UK’s new Prime Minister. They added, “Traders are not anticipating much in the way of moves ahead of Britain's budget scheduled for late October.”

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3504, holding a constructive bias as it remains above the clustered Simple Moving Averages around 1.3367. The pair is testing an upward trendline pivot near 1.3504 while the Moving Average Triple (simple) beneath price hints at an underlying bullish structure, with the Relative Strength Index (14) at 60.4 reinforcing firm but not yet overbought upside momentum.

On the topside, immediate resistance appears at the 1.3508 area, where a downward sloping trend line and a previously supportive rising line converge, forming a tight cap just above spot. On the downside, initial support is seen at the reclaimed descending trend line around 1.3504, followed by the Moving Average Triple cluster near 1.3367, where a deeper pullback would be expected to attract fresh buying interest while the broader bullish tone remains intact above that zone.

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

Rabobank's Senior FX Strategist Jane Foley discusses USD/JPY ahead of the United States (US) July Consumer Price Index (CPI) release, highlighting how softer US inflation could weaken the Dollar and lower the odds of another break above USD/JPY160. Foley outlines their central view that the Federal Reserve (Fed) will hold rates steady this year and a 3‑month USD/JPY forecast of 158, assuming some support for the Japanese Yen (JPY).

Dollar, carry trade and intervention risks

"If US CPI inflation data prints a number for July on the softer side of market expectations, the value of the USD could stumble. It may be too soon to expect the MoF to intervene again, but a softer USD combined with fear of intervention would likely reduce the odds of another break above USD/JPY160. Stronger than expected US CPI inflation data and a rebound in the USD, would be an unwelcome development from the point of view of the Japanese authorities given that it could inject fresh life into the carry trade and heighten the risk of another attempt at USD/JPY160."

"While we would not rule out another move back to 160 near-term, RaboResearch’s 3-month forecast of USD/JPY158 in 3 month assumes, possibly optimistically, that a number of factors can come together to give the JPY some support."

"It is RaboResearch’s central view that the Fed will hold rates steady this year. A re-pricing towards this view would likely soften the USD."

"A move in short-term interest rate differentials in favour of the JPY would help offset the carry trade and lessen the risk of a breach of USD/JPY160."

"As it stands, however, the government will likely have to make more effort to respond to the market’s concerns about fiscal discipline in order to reassure investors and calm the JPY."

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

• USD/CAD remains under pressure, though a firm US Dollar helps limit the downside.
• US CPI takes center stage as traders weigh the possibility of a Fed rate hike in September.
• TD Securities expects the BoC to keep rates unchanged through 2026.

USD/CAD trades under pressure on Tuesday, staying on the back foot for a third straight day. However, the pair lacks follow-through selling as the US Dollar (USD) holds firm ahead of Wednesday’s US Consumer Price Index (CPI) data. At the time of writing, USD/CAD trades around 1.3930, near a two-month low.

Oil prices remain volatile as traders watch for signs that the Strait of Hormuz could reopen under a proposed arrangement between Iran and Oman. Qatar’s Foreign Ministry spokesperson said on Tuesday that talks between the two countries had reached an advanced stage.

The Canadian Dollar (CAD) is highly sensitive to Oil prices due to Canada’s status as a major crude exporter. West Texas Intermediate (WTI) trades around $81.50, down from an intraday high of $83.57 but still up more than 5% so far this week.

Elevated Oil prices continue to threaten the inflation outlook, reinforcing expectations that major central banks may need to keep monetary policy tight.

Traders now await Wednesday’s US Consumer Price Index (CPI) data for more clarity on the Federal Reserve’s (Fed) interest rate path. The CME FedWatch tool shows a 50% chance of a rate hike at the September meeting.

Turning to the Canadian side, the economic calendar is relatively light this week, leaving price action largely at the mercy of Oil price swings and broader market developments ahead of Canada’s inflation data next week.

According to TD Securities, “we look for the Bank of Canada to stay on hold at 2.25% through 2026 before a return to neutral (2.75%) next year, with 25bp hikes in January and March 2027.” The bank notes that “oil prices have largely normalized after pushing above $100bbl in response to the US-Iran conflict,” but cautions that this episode “has still introduced a meaningful shock to the inflation outlook with headline CPI sitting near the top of its 1-3% target range.”

Even so, TD Securities anticipates a cautious policy stance, writing that “we look for the BoC to remain patient as it waits for more clarity on the geopolitical outlook and spillovers to domestic CPI as the combination of well-anchored expectations, narrower inflation breadth, and muted core inflation momentum leave the Bank well positioned to look through stronger headline CPI.”

Societe Generale’s Kenneth Broux highlights ongoing pressure on the Australian Dollar after the RBA removed one projected rate hike, keeping the cash rate at 4.35% and projecting the policy rate around 4.40% through 2028. The updated SMP and lower inflation forecasts dampen AUD/USD volatility, with technical focus on support near 0.6980 and resistance at 0.7120 and 0.7200/0.7275.

RBA stance caps upside for AUD

"More frustration for the AUD overnight and possibly in the weeks to come after the RBA removed one rate increase from its projections."

"Instead of peaking at 4.7% through June 2028, the policy rate is now estimated to stay on hold this year a 4.4% and through 2028 in the updated SMP, but with a topside bias of 10bp in 2027."

"The policy freeze until mid-2028 causes implied AUD/USD vol to slip top a 1-month low and tactically it cedes optimism for the currency to the dollar and the Yen (bond vigilantes, carry)."

"Technically, next objectives could be located at 0.7120 and June highs of 0.7200/0.7275."

"The 10y ACGB yield remains elevated near 5.0%, tracking the broader rise in developed market yields, resistance is situated at 5.10%."

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

• EUR/GBP stumbles near the 0.8540 level with no data to support the cross.
• US forces attack a Panama-flagged ship as it tries to cross the blockade.
• Next main data will be released on Wednesday for the Euro, with German HICP, and on Thursday for the GBP with the UK GDP.

EUR/GBP is trading on the lower end of its weekly range near the 0.8540 price zone on Tuesday. With no Eurozone or British data until early Wednesday, the cross is trading solely on sentiment, led by Iran's ongoing blockade of the Strait of Hormuz and the United States' (US) counterblockade of Iranian ports.

Adding to the negative sentiment, US forces attacked a Panama-flagged ship that was trying to cross through the Strait.

The Sterling is trading with a firmer tone, maintaining the cross in the red for a second consecutive day.

On Wednesday, the main catalyst for the EUR/GBP will be the German Harmonized Index of Consumer Prices (HICP). On Thursday, the preliminary United Kingdom (UK) Gross Domestic Product (GDP) will be released, giving another indication of the direction of the cross.

Short-term technical analysis:

On the 4-hour chart, EUR/GBP trades at 0.8545, holding a mildly bearish near-term bias as it remains capped beneath both the 100-period Simple Moving Average (SMA) at 0.8551 and the 20-period SMA at 0.8559. Short-term momentum is soft, with the Relative Strength Index (RSI) hovering near 37, hinting at lingering downside pressure even as the cross inches away from oversold territory.

On the topside, initial resistance aligns at 0.8547, followed by a tighter barrier at 0.8551 where a horizontal level coincides with the 100-period SMA, before the 20-period SMA at 0.8559 marks a stronger cap to any recovery attempts. On the downside, immediate support is seen at 0.8544, with a deeper floor at 0.8541. A clear break below this lower band would open the way for further weakness in the short term.

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