Selling pressure intensified after President Donald Trump removed Fed Governor Lisa Cook over allegations related to mortgages. Analysts view the move as a direct challenge to the central bank’s independence.
According to the Wall Street Journal, Cook pushed back against political pressure, stating she had “no intention of being bullied to step down.”
Market participants worry this action could influence the Fed’s decision-making, potentially accelerating interest rate cuts. While investors are not showing signs of panic, expectations for earlier easing are rising.
Rate Cut Bets Grow Ahead of September Meeting
The CME FedWatch Tool shows an 84% probability of a rate cut at the Fed’s September meeting, up sharply from 62% a month ago.
Fed Chair Jerome Powell’s remarks at Jackson Hole reinforced this outlook, noting risks tied to both inflation and a weakening labor market.
The combination of political interference and a dovish policy shift leaves the dollar vulnerable, with traders preparing for renewed downside pressure.
The US dollar rallied a bit against the Japanese yen on Monday, as we are seeing a “rethink” of the entire drop of the market from Friday.
The market continues to see a massive interest rate differential, despite the fact that the Federal Reserve is now expected to cut rates multiple times going forward.
However, there are some signs that the cut cycle may not be that long, and of course this would mean that you can continue to see interest in collecting swap at the end of each session.
Technical Analysis
This is a pair that is essentially flat at the moment, and this makes a bit of sense, as the Bank of Japan has a lot to think about, but in the end, they also have the concerns about the Japanese Government Bond markets. There have been a couple days where the bond market had no bids, which of course could put the Bank of Japan in a bit of a bind, where they might have to buy bonds. This of course would be the same thing as “quantitative easing.”
The size of the candlestick on Monday is somewhat impressive, as it goes against the grain of the selling pressure from the Friday session. It is worth nothing that the market bounced from the 50 Day EMA indicator, which attracts a lot of attention in and of itself. This market will be watching the 149 yen level, and if we can break above there, then I believe that the market will continue to see buyers jump in, and it is potentially a situation where “FOMO” could set into the market.
However, if we were to break below the 146 yen level, that would possibly bring in more selling pressure. I suspect that it would be accompanied by US dollar weakness around the Forex world overall.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
GBP/USD Rebounds Toward 1.3550 After Powell’s Dovish Shift
The GBP/USD exchange rate staged a sharp rebound after Jerome Powell’s Jackson Hole remarks shifted Fed expectations toward an imminent September cut. The pair jumped from a weekly low of 1.3387 to an intraday high of 1.3548, settling near 1.3499 as U.S. Treasury yields slipped and dollar demand weakened. Fed funds futures now price a 93% probability of a September cut and project more than 50 basis points of easing by year-end. Powell’s acknowledgment of “downside risks to the labor market” outweighed persistent inflation at 2.7% headline and 3.1% core, giving traders reason to pare long-dollar positions.
Divergence Between Fed and Bank of England Policies
The rebound in GBP/USD comes against the backdrop of policy divergence. While the Fed leans toward easing, the Bank of England is expected to keep rates unchanged after UK inflation accelerated. July CPI printed at 3.8%, with the Retail Price Index rising to 4.8%, reinforcing BoE Governor Andrew Bailey’s warnings about “acute challenges” for growth and price stability. This contrast suggests Sterling could remain supported if the Fed cuts rates first while the BoE stays cautious.
Technical Structure and Price Patterns in GBP/USD
On the daily chart, GBP/USD has carved out an inverse head-and-shoulders pattern, a classic bullish reversal signal. The neckline sits near 1.3587; a breakout above this level would clear the path toward 1.3700, while downside support lies at 1.3450 and 1.3400. The pair also trades above its 25-day and 50-day EMAs, confirming that momentum favors the pound despite intermittent profit-taking. Friday’s bullish engulfing candle reinforced the recovery structure, but resistance at 1.3594—the August high—remains the critical barrier for further upside.
Short-Term Risks and Market Drivers
Dollar demand returned briefly in Asia trading, pushing GBP/USD back to 1.3495, though Powell’s dovish tone capped the downside. U.S. New Home Sales fell by 0.6% in July, adding to the case for Fed easing. Upcoming catalysts include the U.S. PCE price index on August 29 and nonfarm payrolls on September 5. A weak print on either could accelerate the dollar’s decline, while sticky inflation risks might revive the Fed’s higher-for-longer stance, reversing gains in Sterling. In the UK, focus turns to the BRC Shop Price Index, which will guide expectations for the next inflation trend.
GBP/USD Outlook
Sterling sits at a pivotal junction, consolidating just below 1.3550 after its best weekly gain in over a month. A decisive close above 1.3594 would unlock upside targets near 1.3787, while a slip under 1.3393 would put 1.3140 back into play. With Powell shifting the Fed toward cuts and the BoE holding firm, the policy divergence is currently Sterling-positive. For now, the market favors further upside in GBP/USD, but execution depends on whether data confirm or challenge the dovish Fed narrative.
The 200-day EMA is in this neighborhood, but it is flat, suggesting that perhaps people just aren’t that interested in putting a lot of risk on. That could be true, but I would also point out that we are in the dead of summer, and that of course means that volume is a little bit lighter anyway.
AUD/USD Technical Analysis
And in the Australian dollar, it looks like we are rallying just a touch, but at this point in time I would also point out that the 50-day EMA seems to be offering a bit of resistance. And then again, we have the 0.6550 level. That’s an area that has been a bit of trouble for quite some time. You’ll notice that there was a previous uptrend line that has proven itself to be somewhat resistant as well. It’s a bit of a messy trend line, but it does give you an idea of the overall attitude of the market.
While the Euro and the pound were both performing very well against the U.S. dollar, the Australian dollar just ripped it, so I don’t like the Aussie dollar in general and I do think that eventually, if the U.S. dollar starts to pick up strength, this one here is going to fall apart. I prefer to fade rallies in this market.
For a look at all of today’s economic events, check out our economic calendar.
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Platinum price took advantage of its repeated positive stability above the breached obstacle level at $1342.00, besides providing positive momentum by the main indicators, achieving the suggested targets by hitting $1383.60, to force it to provide some sideways trading by its fluctuation near $1355.00.
By the above image, we notice the stability of the moving average 55 near $1342.00 level, reinforcing the chances for forming an important extra support level, increasing the efficiency of the bullish track, to expect reaching $1383.00 and surpassing it will form the next main target for the bullish track at $1420.00 level.
The expected trading range for today is between $1340.00 and $1383.00
The GBP/USD forecast remains positive above 1.3500 after the Fed’s dovish tone.
The BOE-Fed divergence points at stronger gains towards fresh yearly highs.
Markets are in a lull before key macro releases like US GDP, Core PCE, and Durable Goods Orders.
The British pound pared its losses sharply on Friday after Fed Chair Powell struck a dovish tone in his Jackson Hole speech. The US dollar lost traction from its weekly top, lending room to the GBP/USD to soar to the 1.3540 area before easing slightly to 1.3490. The move suggests growing expectations of the Fed to pivot to rate cuts as early as September.
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The Fed Chair signaled that the Fed is more cautious about the labor market than inflation, as he highlighted the risk of decreased employment after weak jobs data in July, with only 73k new jobs added and unemployment ticking up to 4.2%. On the other hand, the inflation remains elevated with core CPI at 3.1%. Powell’s remarks triggered a sell-off in the Dollar Index to a 4-week low of 97.60 with US10Y falling to 4.24%.
From the UK, the Bank of England is left with little room to ease policy. UK inflation for July remained sticky with core CPI climbing to 3.8% and retail price index to 4.8%. BOE Governor Bailey at Jackson Hole noted that the UK faces challenges, including reduced labor participation, weak growth, and a demographic shift since the pandemic.
This policy divergence leaves Sterling in a strong position against the greenback as traders expect at least one rate cut by the Fed, while the BOE is seen holding rates steady for longer.
Data Ahead: Core PCE and GDP to Drive USD
The coming week brings several high-impact US releases that could test the GBP/USD rally. Key prints include:
US Preliminary GDP (Thursday): Expected to confirm slowing growth momentum.
Core PCE Price Index (Friday): any downside surprise would strengthen the case for September cuts.
Durable Goods Orders (Monday): A soft print may reinforce growth concerns.
UK markets are closed for the Summer Bank Holiday on Monday, likely muting volatility in early trade.
GBP/USD technical forecast: Inverse Head & Shoulders Points to More Upside
GBP/USD 4-hour chart
The GBP/USD 4-hour chart shows the pair is struggling to find acceptance above the 1.3500 handle. However, the pair has formed an inverse H&S pattern with neckline resistance at 1.3580. A decisive breakout could lead the rally to the 1.3700 mark.
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The RSI remains neutral around 60.0, suggesting more room for the bulls but lacking a catalyst at the moment. On the downside, the immediate support emerges at 1.3460 ahead of 1.3400.
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Friday is seen the US dollar plunged rather significantly against the Japanese yen after the Jackson Hole speech by Jerome Powell.
At this point, it looks as if the Federal Reserve is at least “open to the idea of cutting rates”, which is something that is fairly new.
This has people suspecting that maybe the Federal Reserve will cut rates, and the Fed Funds Futures markets have a 91% chance of a rate cut in September priced in again.
At one point, we dropped about 25%, but now it looks like the market is all but convinced it’s going to happen.
That being said, you have to be careful with these moves, because quite often, the initial “knee-jerk reaction” isn’t necessarily the correct one. After all, despite the fact that we have fallen rather significantly, we are basically just at the bottom of the consolidation area that we have been in for 2 weeks. The question then is whether or not this will change things? I don’t know if it will, I think it’s a little too early to make that determination, especially considering that even if the Federal Reserve were to cut twice this year, as the Fed Funds Futures markets expect, you are still talking about an interest rate differential that is wide enough to drive a truck through.
Technical Analysis
I’m watching the ¥149 level very closely, because if we were to break above there, then it would be very poor for the Japanese yen. Conversely, if we break down below the ¥146 level, then I think the US dollar could drop to the ¥145 level. Anything underneath there opens up the possibility of the ¥142 level being targeted.
Do not get me wrong, the candlestick is very ugly and could lead to something quite drastic. However, a couple of weeks ago we had a massive bearish engulfing candlestick that was followed up by nothing but sideways action. This is a very choppy and erotic currency pair, so make sure that you are careful with your position size.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
EUR/USD trades at around 1.1700 in the European session on Monday.
Fed Chair Powell’s dovish remarks triggered a USD selloff on Friday.
The pair’s near-term technical outlook suggests that the bullish bias remains intact.
EUR/USD gained 1% on Friday and touched its highest level since late July near 1.1750. The pair corrects lower to start the new week and trades at around 1.1700.
Euro Price Last 7 Days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the strongest against the New Zealand Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.10%
0.35%
0.07%
0.10%
0.23%
0.94%
-0.39%
EUR
-0.10%
0.25%
-0.02%
-0.01%
0.14%
0.81%
-0.49%
GBP
-0.35%
-0.25%
-0.36%
-0.25%
-0.10%
0.56%
-0.78%
JPY
-0.07%
0.02%
0.36%
0.03%
0.16%
0.88%
-0.48%
CAD
-0.10%
0.01%
0.25%
-0.03%
0.11%
0.85%
-0.52%
AUD
-0.23%
-0.14%
0.10%
-0.16%
-0.11%
0.66%
-0.67%
NZD
-0.94%
-0.81%
-0.56%
-0.88%
-0.85%
-0.66%
-1.36%
CHF
0.39%
0.49%
0.78%
0.48%
0.52%
0.67%
1.36%
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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The US Dollar (USD) came under heavy selling pressure heading into the weekend and fuelled EUR/USD’s rally.
While delivering a speech on “Economic Outlook and Framework Review” at the annual Jackson Hole Economic Symposium on Friday, Federal Reserve (Fed) Chair Jerome Powell announced that they will adopt a new policy framework of flexible inflation targeting and eliminate ‘makeup’ strategy for inflation.
Commenting on the economic outlook, Powell acknowledged that downside risks to the labor market were rising and added that inflation effects of tariffs could be short-lived. The USD Index turned south and fell nearly 1% on Friday, reflecting the broad-based USD weakness.
On Monday, the data from Germany showed that the German IFO Business Climate Index rose to 89 in August from 88.6 in July, beating the market forecast of 88.6. On a negative note, the Current Economic Assessment Index edged lower to 86.4 from 86.5. Finally, the Expectations Index climbed to 91.6 from 90.7 in this period. These mixed figures don’t seem to be having a noticeable impact on the Euro’s valuation.
In the second half of the day, July New Home Sales will be the only data featured in the US economic calendar. In the meantime, US stock index futures lose between 0.1% and 0.2% in the early European session.
In case markets remain risk-averse in the second half of the day, EUR/USD could find it difficult to regain its traction. On the other hand, an improving risk mood is likely to weigh on the USD and open the door for another leg higher in the pair.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 60 and EUR/USD trades comfortably above the 20-period, 50-period, 100-period and the 200-period Simple Moving Averages (SMAs), highlighting a bullish stance in the near term.
On the upside, 1.1720 (static level) aligns as the immediate resistance level before 1.1760 (static level) and 1.1790-1.1800 (static level, round level). Looking south, support levels could be spotted at 1.1670 (50-period SMA), 1.1640 (100-period SMA, 200-period SMA) and 1.1600 (static level, round level).
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
We initially did try to rally in this pair during the trading session on Friday but gave back the gains as we see a lot of confusion right now.
The speech by Jerome Powell Jackson Hole suggested that the Federal Reserve was willing to perhaps cut interest rates in the future.
So that had a major influence on a lot of different things that have gone on.
However, this is a little bit different in the situation because this should be moving higher with risk appetite increasing. Granted, the latest move to the upside has slammed into the 200 yen level again, which looks like it’s a brick wall. Underneath current levels, we have the 50 day EMA near the 198.40 yen level, which is rising and has for the most part acted like a bit of a trend line since the middle of May.
Could Buyers Return?
The question now is whether or not buyers will come back in and try to pick up value. The interest rate differential most certainly favors the British pound against the Japanese yen. But I find this move a little bit concerning due to the fact that it’s not moving how you would anticipate. Granted, the Japanese yen got a boost against the US dollar after that Jerome Powell speech, maybe this is a temporary thing. Obviously, if we can break above the 200 day EMA, then I think we could really go much higher, probably 204 yen, possibly even 208 yen.
If we drop from here and break down below the 50 day EMA, we could be looking at a move down to the 195 yen level. Perhaps traders are worried about the global economy slowing down. Maybe that’s what they got out of the Powell speech. If that’s the case, then a fall from this level would make quite a bit of sense as it is remarkable resistance as well. And of course, you could see a flood to safety assets. This is a pair that’s worth watching.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
