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Created on August 25, 2026

The euro initially gapped higher against the Pound on Monday but has since loosened its grip.

EUR/GBP

The euro initially gapped higher against the British pound to kick off the week but has since fallen a bit to continue the overall consolidation that we have seen. It looks like the 50-day EMA has come into the picture to cause a little bit of a headache.

The euro leg seems to be the big story here as German flash manufacturing PMI hit its strongest level since 2022 on defense spending, and the broader read is Eurozone activity is still expanding in August with manufacturing improving. That keeps the ECB hike story alive, but the higher-for-longer UK rates trade is starting to flex its muscles later in the day.

Keep in mind that there are concerns about the sanctions coming from the United States for the Iranians. Will this tighten the oil supply even further? And the European Union is particularly vulnerable to this, not to mention the fact that the liquefied natural gas coming from Qatar could be affected as well.

Consolidation and Breakdown Risk

Quite frankly, the biggest prints coming out of the United Kingdom have already passed mid-month, thinking about CPI and jobs, so there aren’t any Tier 1 UK releases scheduled this week. That in and of itself might help the British pound continue to flex its muscles.

We’ve been in a downtrend. We pulled back to test the 50-day EMA a couple of times. Now the question is, will we break down below this consolidation, which is basically seeing support near the 0.8530 level?

The German IFO numbers come out tomorrow. That will have a major influence on the euro if it shocks the market. But as things stand right now, this looks very much like a market that just simply wants to continue its consolidation, perhaps with a little bit more of a bearish hint to it than anything else. I’ll be watching that 0.8530 level to see if we break down.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Eyes 1.37 as Dollar Risks Mount

The Pound to Dollar (GBP/USD) exchange rate maintained a firm tone on Tuesday, trading around 1.3630-1.3640 and holding close to Friday’s six-month high above 1.3670.

Pound Sterling has struggled to extend its advance, but the Dollar remains under pressure amid persistent concerns over US fiscal policy, trade tensions and the credibility of recent Treasury intervention in the bond market.

GBP/USD reached 1.3675 at the end of last week before correcting modestly, with the pair retaining a generally bullish technical tone.

On a short-term view, UoB sees scope for GBP/USD gains towards 1.3700, but added; “On the downside, if GBP breaks below 1.3585 it would mean that 1.3700 is out of reach.”

Scotiabank maintains a positive outlook on the Pound; “Underlying trend dynamics remain solidly bullish and, after a period of range trading and two tests of 1.3150, a sustained push above 1.3650/60 implies potential for an extension towards the 1.41 zone over the balance of the year.”

Canada Trade War Adds to Dollar Risks

US policy developments remain a dominant influence on currency markets this week.

Trade tensions with Canada have intensified sharply following the collapse of negotiations.

Canada announced retaliatory tariffs on around $20bn of US goods on Tuesday, matching recent US tariffs dollar-for-dollar.

The measures cover hundreds of products and are due to take effect in September.

President Trump has also threatened to impose 50% tariffs on Canadian cars, trucks and automotive parts from January 2027, increasing concerns over disruption to highly integrated North American supply chains.

ING had commented; “With a new chapter in the US-Canada trade war opening up over the weekend, the question will be to what degree the new sanctions on Iran threaten US trade ties with China again.”

The bank added that a significant re-escalation in the tariff conflict would probably be negative for the Dollar.

Iran Sanctions Produce Limited Dollar Support

US Treasury Secretary Scott Bessent also announced an expansion of sanctions against Iran on Monday.

The measures are intended to restrict Iran’s access to the global financial system and target economic activity supporting Tehran.

However, Washington stopped short of immediately applying the most severe measures against China, Iran’s largest energy customer, reducing fears of an abrupt escalation in US-China tensions.

The announcement produced only limited support for the Dollar.

Markets remain cautious over whether sanctions will materially alter Iran’s behaviour or instead increase geopolitical and energy-market risks.

US Fiscal Policy Remains under Scrutiny

Fiscal policy is also attracting increasing attention following last week’s Treasury intervention in the bond market.

The Treasury doubled the size of buybacks of longer-dated government securities after the 30-year yield climbed to its highest level since 2007.

Bessent said on Monday that regularly scheduled Treasury auctions would continue despite the larger buyback programme.

The strategy remains controversial.

Billionaire investor Stanley Druckenmiller criticised the intervention this week, arguing that Treasury bond buying risks undermining the credibility of the world’s largest government debt market.

Concerns have also intensified after total US government debt surpassed $40trn.

MUFG commented; “We await US Treasury Secretary Scott Bessent’s details on addressing concerns over the fiscal outlook in the US but we along with market participants are very sceptical of anything meaningful coming from an announcement.”

It added; “A failure to cap yields would be viewed as a policy misstep that would undermine investor confidence and hurt the dollar while steps to cap yields would also likely undermine the dollar.”

This potentially leaves the Dollar in a difficult position.

A renewed surge in long-term yields could revive concerns over US debt sustainability, while more aggressive Treasury intervention could encourage investors to reduce exposure to the currency.

GBP/USD Forecast: Jackson Hole Could Decide the Next Break

Fed Chair Kevin Warsh’s Jackson Hole speech later this week is likely to become the next major test for GBP/USD.

The Federal Reserve remains caught between inflation that is still above target and a recent run of softer US employment, retail sales and inflation data.

Warsh will also be speaking against an increasingly sensitive political backdrop following Treasury efforts to contain long-term borrowing costs.

A hawkish speech could push Treasury yields higher and offer the Dollar some support, although another aggressive bond sell-off could revive broader concerns over US fiscal stability.

Conversely, a softer message would reinforce expectations that the Fed will leave rates unchanged in September and could push GBP/USD back towards 1.3675 and 1.3700.

A sustained break above 1.3700 would strengthen the bullish technical picture and bring the 1.3800 area into focus.

Initial support is located around 1.3585-1.3600, with a break below this region likely to undermine the current upward bias.

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USD/JPY Forecast: UOB Sees Yen Trading in 157.90–159.80 Range

United Overseas Bank (UOB) Group’s foreign exchange strategists indicated that the Japanese yen is likely to trade within a range of 157.90 to 159.80 against the US dollar in the near term, as of the latest market commentary.

UOB’s Range Outlook for USD/JPY

According to UOB’s FX analysis, the USD/JPY pair is expected to consolidate within the 157.90–159.80 band, suggesting a lack of directional momentum in the immediate session. The forecast reflects a market where both upside and downside movements are limited by prevailing economic conditions and central bank policies.

The range-bound view comes amid ongoing expectations regarding the Bank of Japan’s monetary policy stance and the Federal Reserve’s interest rate trajectory. Traders are closely watching for any shifts in the interest rate differential between the US and Japan, which remains a key driver for the currency pair.

Factors Influencing the Yen

Several factors are contributing to the yen’s range-bound trading. Japan’s economic data, including inflation and wage growth, are being monitored for their potential impact on the Bank of Japan’s decision to adjust its ultra-loose monetary policy. On the other hand, US economic resilience and Fed officials’ comments on future rate cuts are shaping dollar strength.

Geopolitical events and risk sentiment also play a role, as investors often turn to the yen as a safe-haven currency during times of uncertainty. However, with no major catalysts on the horizon, the pair appears to be in a wait-and-see mode.

Implications for Traders and Investors

For traders, the identified range provides a clear framework for short-term strategies, such as selling near the upper boundary and buying near the lower boundary, while keeping stop-loss orders in place to manage risk. For investors and businesses with yen exposure, the range suggests a period of relative stability, but they should remain vigilant for breakouts driven by unexpected economic data or policy announcements.

Conclusion

In summary, UOB’s forecast for USD/JPY within 157.90–159.80 highlights a market awaiting fresh direction. With the Bank of Japan and Federal Reserve policies in focus, the pair is likely to remain range-bound until clearer signals emerge. Traders should monitor economic releases and central bank communications for potential breakout opportunities.

FAQs

Q1: What is the significance of UOB’s USD/JPY forecast?
UOB’s forecast provides a technical range for traders, indicating where the pair is likely to trade in the near term, helping them make informed trading decisions.

Q2: What factors could break the yen out of this range?
Unexpected changes in US economic data, Federal Reserve policy shifts, or Bank of Japan actions could trigger a breakout from the 157.90–159.80 range.

Q3: How can traders use this range information?
Traders can implement range-bound strategies, such as buying near support at 157.90 and selling near resistance at 159.80, while using stop-loss orders to manage risk.

This post USD/JPY Forecast: UOB Sees Yen Trading in 157.90–159.80 Range first appeared on BitcoinWorld.

Despite the weakness in the pair’s trading yesterday, its repeated stability above the additional support level at 216.35 continues to support the bullish outlook. This morning, the pair has formed some positive waves, approaching the previously suggested first target at 217.35.

The price currently has little choice but to resume its bullish attempts, given that the main momentum indicators continue to provide positive signals. We expect the pair to be drawn soon toward the intraday barrier near 217.85, which represents the key level for determining the upcoming short- and medium-term targets.

A successful break above this barrier would open the way for further gains, potentially extending toward 218.65. On the other hand, failure to break through it would increase the chances of activating a bearish corrective path, pushing the price to break below 216.35 and head directly toward 215.55.

The expected trading range for today is between 216.50 and 217.85

Trend forecast: Bullish

USD/CAD gained ground as demand for commodity-related currencies declined despite rising gold markets. The pullback in the oil markets has not provided support as traders remained worried about potential escalation in the Middle East, which could hurt global growth and reduce demand for commodities.

Currently, USD/CAD is trying to settle above the resistance level at 1.3825 – 1.3840. In case this attempt is successful, USD/CAD will get to the test of the 50 MA at 1.3855. A move above the 50 MA will push USD/CAD towards the next resistance level at 1.3900 – 1.3915.

USD/JPY Tests The 50 MA At 159.11

Analysts forecast USD/JPY at 149 by year-end as intervention and faster BoJ tightening reshape the Yen outlook, despite spot holding above 159.

The US Dollar to Japanese Yen (USD/JPY) exchange rate climbed back above 159.20 on Monday, leaving a sizeable gap between current levels and Bank of America’s revised year-end forecast.

USD/JPY traded as high as 159.28 during the session and remained near the top of its daily range, even though the pair is almost 3% below the late-July levels which triggered coordinated US-Japan intervention.

BofA has become materially more constructive on the Yen, cutting its end-2026 USD/JPY forecast to 149 from 152.

“We remain constructive on JPY and revised down USD/JPY forecasts this month,” strategist Shusuke Yamada said, with the bank now forecasting 153 in Q3, 149 in Q4 and Q1 2027, followed by 148 in Q2.

The change is closely tied to what BofA sees as a new policy regime.

Japan’s Ministry of Finance, the US Treasury, the Takaichi administration and the Bank of Japan are now all involved in the Yen story, although BofA cautions that their objectives are “unlikely to be identical”.

The bank nevertheless believes the combination of direct intervention and faster monetary tightening has altered the balance of risks.

BofA’s rates team now expects the BoJ to increase rates in September and December 2026, followed by further hikes in March and July 2027, lifting its terminal-rate assumption from 1.75% to 2.00%.

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USD/JPY recovered from an early dip below 158.60 and finished the session near 159.20, another reminder that increasingly hawkish BoJ expectations have yet to produce a clean Yen trend.

Near-Term USD/JPY Outlook: Staying Above 155 Could Force More BoJ Action

There is a particularly interesting feedback loop in BofA’s forecast.

“Our base case assumes USD/JPY falls to 149 by end-2026 and 145 by end-2027, allowing the BoJ to reach 2% in July 2027,” the bank said.

If the Yen refuses to strengthen, however, the policy response could become considerably more aggressive.

“If the yen instead remains around 155 or above, we think the BoJ may need to raise rates to 2.5%,” BofA said, implying another substantial repricing of Japanese front-end yields.

That makes current levels around 159 awkward.

The market is effectively sitting in the zone which, under BofA’s framework, could eventually force the Bank of Japan to tighten more than the bank’s own base case assumes.

The alternative risk is that policymakers lose their nerve.

BofA warns that if intervention was intended merely to slow Yen depreciation, rather than signal a broader change in policy, “USD/JPY may rise again beyond 160”.

We explored that same problem in our latest USD/JPY weekly forecast: September tightening is increasingly expected, but the Yen has demanded evidence that one rate increase will be followed by more.

The rare joint US-Japan operation earlier this month showed Washington and Tokyo were prepared to act together when the Yen’s decline threatened broader financial stability.

BofA’s 149 forecast goes a step further by assuming policy follows the intervention rather than relying on repeated market operations.

The gap from 159.20 to 149 is substantial, but that is precisely why BofA’s forecast stands out.

It is not simply a call for a softer Dollar; it is a wager that Japan’s reaction function has changed.

The pair has been forced into some sideways trading since Friday as it repeatedly holds below the 186.05 barrier. During this morning’s trading, the price declined toward 185.00 to stabilize around 185.55, maintaining its commitment to the main bullish scenario.

We will currently rely on 184.80 as the first additional support level and emphasize the importance of the price gathering positive momentum, which would enable it to surpass the 186.00 barrier. Holding above this level would allow the pair to achieve further gains, potentially starting at 186.55 and extending toward 187.25, breaking below the additional support would reactivate the bearish corrective path, reaching towards 184.35 and 183.75.

The expected trading range for today is between 185.00 and 186.55

Trend forecast: Bullish