The US dollar initially rallied against the Japanese yen during the early hours here on Tuesday but gave back gains as CPI again came out as anticipated. We are hovering right around the 200-day EMA, which, of course, is an indicator that a lot of people pay attention to anyway. So, I think you would anticipate seeing a bit of noise here regardless. If we do break down from here and break down below the 200 day EMA, then we could go looking at the 50 day EMA underneath. So, with that being said, I think you’ve got a lot of cushion underneath that will continue to push to the upside, although I don’t know how quickly.
AUD/USD Technical Analysis
The Australian dollar fell initially during the day but has turned around as the 50 day EMA has held out support and let’s be honest here, this was all about the CPI number not being hotter than anticipated. So, at this point, the Australian dollar could go looking to the 0.6550 level, an area that’s been important multiple times in the past. And with that, I think you have to assume it’s a bit of a magnet for price.
If we break down below the bottom of the candlestick, then it opens up the possibility of a move down to the 200 day EMA at the 0.6457 level. Anything below there could open up fresh selling, but right now I think we’re just heading right back into the same area that we’ve been stuck in for what seems like a lifetime here.
For a look at all of today’s economic events, check out our economic calendar.
GBPCHF continued to form strong bullish trading as it confirmed breaching the barrier at 1.0825, recording some extra gains by hitting 1.0915 level, which forces it to form an intraday negative rebound, affected by stochastic exit from the overbought level.
The price might be forced to provide sideways trading, to keep waiting for the positive momentum, which allows it to press on 50%Fibonacci correction level at 1.0935, and surpassing it will make it success to record extra gains that might extend at 1.0995 and 1.1025 initially.
The expected trading range for today is between 1.0860 and 1.0935
The Pound to US Dollar (GBP/USD) exchange rate pushed to a two-week high on Tuesday, buoyed by softer-than-expected US inflation data and steady UK employment figures.
At the time of writing, GBP/USD was trading at around $1.3483, up roughly 0.4% from Tuesday’s opening levels.
The US Dollar (USD) came under pressure on Tuesday following the release of the July Consumer Price Index, which came in softer than markets had anticipated.
Headline inflation held steady at 2.7% year-on-year, falling just short of the 2.8% forecast. Meanwhile, core inflation, which excludes food and energy, rose to 3.1%, slightly above expectations.
Despite the elevated core reading, the cooler-than-expected headline figure is reinforcing bets that the Federal Reserve will begin cutting interest rates before year-end.
Indeed, markets are now placing in as much as 75bps of easing by the end of 2025.
The Pound (GBP) gained traction on Tuesday, following the release of the UK’s latest employment report.
Figures from the Office for National Statistics (ONS) showed the unemployment rate holding at 4.7% in June, with wage growth easing slightly from 5% to 4.6%.
Meanwhile, payroll numbers fell by just 8,000, far better than the anticipated 60,000 drop and the smallest decrease since January.
While the data confirmed that the labour market is gradually cooling, the pace of the slowdown does not yet appear sufficient to push the Bank of England (BoE) into accelerating its rate-cutting cycle.
Looking ahead, the Pound to US Dollar (GBP/USD) exchange rate may face a key test later this week when the UK’s second-quarter GDP figures are released.
Economists expect growth to slow sharply, with forecasts pointing to a 0.1% quarterly expansion, down from 0.7% in Q1. Such a result could prompt fresh calls for the BoE to step up policy support and fuel concerns over government finances, including the potential for more tax hikes.
In the meantime, geopolitical tensions may offer some support to the US Dollar, with investors likely to turn more cautious ahead of Friday’s planned meeting between US President Donald Trump and Russian President Vladimir Putin.
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EUR/USD trades in a tight range above 1.1600 after posting marginal losses on Monday.
Investors await July CPI inflation data from the US.
The near-term technical outlook points to a neutral stance.
EUR/USD moves sideways slightly above 1.1600 after closing marginally lower on Monday. As investors await July Consumer Price Index (CPI) data from the US, the pair’s near-term technical outlook highlights a neutral stance.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the British Pound.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.29%
-0.06%
0.59%
0.27%
0.50%
0.59%
0.12%
EUR
-0.29%
-0.36%
0.33%
-0.01%
0.20%
0.25%
-0.17%
GBP
0.06%
0.36%
0.62%
0.35%
0.57%
0.61%
0.19%
JPY
-0.59%
-0.33%
-0.62%
-0.28%
-0.05%
0.07%
-0.33%
CAD
-0.27%
0.01%
-0.35%
0.28%
0.23%
0.27%
-0.18%
AUD
-0.50%
-0.20%
-0.57%
0.05%
-0.23%
0.05%
-0.38%
NZD
-0.59%
-0.25%
-0.61%
-0.07%
-0.27%
-0.05%
-0.42%
CHF
-0.12%
0.17%
-0.19%
0.33%
0.18%
0.38%
0.42%
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) held its ground on Monday and caused EUR/USD to edge lower as investors cheered the news of the US and China agreeing to extend the trade truce for another 90 days.
Annual inflation in the US, as measured by the change in the CPI, is expected to rise to 2.8% in July from 2.7% in June. On a monthly basis, the CPI and the core CPI, which excludes volatile food and energy prices, are forecast to increase by 0.2% and 0.3%, respectively.
In case the headline annual CPI comes in above the market consensus, the USD could gather strength against its rivals with the immediate reaction. If this data matches the expectation, investors could react to the monthly core CPI print. A stronger-than-forecast increase in this figure could be supportive for the USD. Conversely, a soft core inflation reading is likely to feed into expectations of three Federal Reserve (Fed) rate cuts this year and hurt the USD, allowing EUR/USD to gain traction.
According to the CME FedWatch Tool, investors are currently pricing in a 43% probability of the Fed lowering the policy rate by a total of 75 bps in the remainder of the year.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart moves sideways near 50 and EUR/USD fluctuates at around the 100-period Simple Moving Average (SMA), while remaining in between the 50-period and the 20-period SMAs, reflecting a neutral stance.
The 100-period SMA could be seen as a pivot level at 1.1625. Once EUR/USD confirms that level as support, 1.1650-1.1665 (Fibonacci 23.6% retracement of the latest uptrend, 200-period SMA) could be seen as the next resistance before 1.1700 (static level, round level) and 1.1760 (static level).
On the downside, 1.1600-1.1590 (static level, round level, 50-period SMA) aligns as the first support before 1.1540 (Fibonacci 38.2% retracement) and 1.1500 (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.
The (ETHUSD) price rose in its last intraday trading, amid its move in sideways range in attempt to gain positive momentum that might help it to recover and complete the strong bullish track, amid its trading alongside a minor bullish bias line on the short-term basis, taking advantage of the dynamic support that is represented by its trading above its EMA50, on the other hand, we notice the emergence of the negative signals on the (RSI), which reduced the last gains of the price.
Therefore, our expectations suggest a rise in the (ETHUSD) price in the upcoming intraday trading, conditioned by its stability above $4,150, targeting the resistance level at $4,500.
The expected trading range is between $4,000 support and $4,500 resistance.
The GBPJPY pair succeeded to breach the barrier at 198.85, to confirm its readiness to resume the bullish attack, reaching 199.35 taking advantage of providing positive momentum by the main indicators.
We expect forming bullish trading, to target new positive stations that might begin at 200.40, to confirm entering the bullish channel’s levels, then attempts to target 78.2%Fiboancci level at 202.000, while the risk of changing the bullish trend requires forming a sharp decline, to settle below 61.8%Fibonacci correction level at 197.45.
The expected trading range for today is between 198.70 and 200.40
GBP/USD trades in positive territory above 1.3450 on Tuesday.
The UK ILO Unemployment Rate stood unchanged at 4.7% in the three months to June.
The annual CPI in the US is expected to edge higher to 2.8% in July.
GBP/USD closed marginally lower on Monday and snapped a six-day winning streak. In the European session on Tuesday, the pair regains its traction and trades above 1.3450 as market focus shifts to US inflation data.
British Pound PRICE Last 7 days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the Japanese Yen.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.33%
-1.29%
0.88%
0.09%
-0.33%
-0.11%
0.38%
EUR
0.33%
-0.97%
1.24%
0.43%
-0.09%
0.15%
0.71%
GBP
1.29%
0.97%
2.20%
1.42%
0.90%
1.13%
1.58%
JPY
-0.88%
-1.24%
-2.20%
-0.78%
-1.12%
-1.00%
-0.50%
CAD
-0.09%
-0.43%
-1.42%
0.78%
-0.48%
-0.28%
0.16%
AUD
0.33%
0.09%
-0.90%
1.12%
0.48%
0.27%
0.69%
NZD
0.11%
-0.15%
-1.13%
1.00%
0.28%
-0.27%
0.51%
CHF
-0.38%
-0.71%
-1.58%
0.50%
-0.16%
-0.69%
-0.51%
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The United States (US) and China agreed to extend the trade truce for 90 days. The US Dollar (USD) benefited from this development and caused GBP/USD to stretch lower on Monday.
Early Tuesday, the UK’s Office for National Statistics (ONS) reported that the ILO Unemployment Rate held steady at 4.7% in the three months to June. In the period, the annualized wage inflation, as measured by the change in the Average Earnings Excluding Bonus, was unchanged at 5%. With these figures underscoring the Bank of England’s (BoE) cautious stance to policy-easing, Pound Sterling stays resilient against its peers.
On a yearly basis, the Consumer Price Index (CPI) in the US is forecast to rise 2.8% in July, at a slightly stronger pace than the 2.7% increase recorded in June. On a monthly basis, the CPI and the core CPI, which excludes volatile food and energy prices, are forecast to increase by 0.2% and 0.3%, respectively.
The CME FedWatch Tool currently shows that markets are nearly fully pricing in a 25 basis points (bps) Federal Reserve (Fed) rate cut in September, while seeing about a 43% probability of the Fed lowering the policy rate by a total of 75 bps in the remainder of the year.
Hence, a stronger-than-forecast monthly core CPI print could boost the US Dollar (USD) with the immediate reaction. On the other hand, a soft reading in this data could allow markets to continue to lean toward three rate cuts this year and trigger a leg lower in the USD.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays above 60 after declining from above-70 on Monday, suggesting that the bullish bias remains intact following a technical correction.
On the upside, the 200-period Simple Moving Average (SMA) aligns as the first resistance at 1.3480 ahead of 1.3540 (Fibonacci 61.8% retracement of the latest downtrend) and 1.3600 (static level, round level).
Looking south, support levels could be spotted at 1.3440 (20-period SMA), 1.3400-1.3390 (round level, static level, 100-period SMA, Fibonacci 382% retracement) and 1.3350 (50-period SMA).
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
The US dollar has rallied slightly during the trading session on Monday as we are testing a crucial region in the form of the ¥150 level.
The ¥150 level also features the 200 Day EMA, so I would find that as an area of significant resistance.
What I find interesting here as well is that Tuesday could be a crucial day for the US dollar in general, so all be watching one specific announcement.
Tuesday CPI
During the trading session on Tuesday, we will get the Consumer Price Index coming out the United States which will give us a bit of a look at the inflationary situation in the United States. This is obviously something that the Federal Reserve will be paying close attention to and will have a direct influence on monetary policy. At this point, it seems as if the market believes the Federal Reserve will start cutting rates in September, but it CPI comes out hotter than anticipated, that throws a few questions out there for traders to formulate trading plans on.
All things being equal, this is also a market that’s worth paying close attention to the technical analysis, as the 200 Day EMA is going to be difficult to break above without some type of catalyst, and I think the CPI number will be the catalyst. Underneath current consolidation, we have the 50 Day EMA hanging around and offering support, so I think a little bit of choppy behavior with a potential shot higher is the route following.
That being said, between now and the CPI release I suspect that the market will be very choppy and noisy, but once we get the CPI numbers, and if they are hotter than the anticipated 0.3% month over month for Core CPI, then the US dollar will probably be a beneficiary of that announcement. If we come in much weaker than anticipated, then we could very well see the US dollar soften, but I still do not want to buy the Japanese yen for a whole plethora of reasons, not the least of which would be the fact that the Japanese have to worry about their own bond market not attracting inflows.
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.
Euro Consolidates Near 1.1650, US Inflation Data Key for Next Dollar Move
The Euro to Dollar (EUR/USD) exchange rate is trading around 1.1650 on Monday from an early high at 1.1675. Ranges are relatively narrow, but underlying tensions remain high, especially with geo-political developments also important with markets monitoring the Ukraine situation and US-China trade dialogue.
UoB commented; “The current price movements are likely part of a range trading phase, most likely between 1.1610 and 1.1670.”
According to ING; “A stronger-than-expected US core CPI this week could push EUR/USD below 1.160, but such a move may attract buyers seeking to capitalise on the Fed’s resumption of its easing cycle. We maintain our expectation that EUR/USD will break above 1.170 in the near term.”
The issue of Federal Reserve policy and independence will remain key market issues and the latest US inflation data will be key components.
Danske Bank commented; “Market focus has shifted from tariffs toward US data and Fed appointments, and tomorrow’s CPI – one of just two remaining before the September FOMC meeting.”
According to MUFG; “The main potential impediment to a rate cut as soon as at the next FOMC meeting in September would be a bigger than expected pick-up in US inflation over the summer. Market participants will be closely scrutinizing the release this week of the latest US CPI and PPI reports for July for further evidence of higher tariffs feeding through to a pick-up in inflation pressures.”
Consensus forecasts are for the headline inflation rate to edge higher to 2.8% from 2.7% with a 0.3% increase in core prices which would lead to a slight increase in the year-on-year rate to 3.0% from 2.9%.
MUFG added; “A significant upside inflation surprise could trigger a reversal of the current US dollar weakening trend.”
Over the weekend, Fed Governor Bowman stated that she would be backing rate cuts at all the remaining three Fed meetings this year.
There are still important reservations surrounding the potential politicising of key economic agencies.
According to sources, the administration is interviewing candidates to lead the Bureau of Labor Statistics (BLS), including E.J. Antoni, chief economist at the Heritage Foundation.
Antoni posted over the weekend; “There are better ways to collect, process, and disseminate data—that is the task for the next BLS commissioner, and only consistent delivery of accurate data in a timely manner will rebuild the trust that has been lost over the last several years.”
On the Euro side, ING is not convinced that the market call for no further ECB rate cuts is realistic.
Nevertheless, it added; “we regard any potential dovish repricing as a temporary setback within a broader trend of euro strength supported by a structurally weaker dollar.”
The latest CoT data, released by the CFTC recorded a small decline in long, non-commercial Euro positions, but the number remains elevated in historic terms, limiting the scope for further buying.
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The British pound has been slightly positive during the trading session on Friday, after we initially fell toward the 50 Day EMA.
The 50 Day EMA is an indicator that a lot of people are watching most of the time, as we continue to see it act as dynamic support and resistance.
It is probably worth noting that we have turned around to show signs of bullish behavior, and if we can break above the current area, we could go as high as 1.3550, an area that’s been important multiple times.
It is also worth noting that 5 or 6 candles ago on the daily chart, we had tested the 200 Day EMA, only to turn around and bounce rather significantly. With that being the case, the market is likely to continue to see quite a bit of buying on the dips, but the question at this point now is going to be whether or not we can find any momentum? After all, we need momentum to finally break out to the upside again, after that initial drop over the last couple of weeks.
Technical Analysis
Now that we are just above the 50 Day EMA, it does suggest that the market could go looking to the 1.3550 level, an area that has been important more than once. With that being the case, I think you’ve got a situation where if we can break above there, then the buyers will probably jump into the market with quite a bit more gusto. On the other hand, if we break down below the 1.33 level, then it could open up the possibility of a move down to the 200 Day EMA, currently residing at the 1.3143 level. Anything below there would obviously be very negative, but I think what it is worth noting is that we have recently made a “lower low”, so now the question is will we make a “lower high?”
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.
