USD/JPY moved lower as traders focused on falling Treasury yields. The yield of 2-year Treasuries declined towards the 4.20% level, while the yield of 10-year Treasuries settled near 4.65%.

If USD/JPY settles below the 157.00 level, it will move towards the support level at 154.50 – 155.00. On the upside, a successful test of the resistance at 157.50 – 158.00 will push USD/JPY towards the next resistance level, which is located in the 159.50 – 160.00 range.

If you’d like to know more about how to trade forex, please visit our educational area.

A dull week ends with the EUR/USD pair surging to a fresh multi-week high, trading around 1.1560 ahead of the close. Optimism about an end to the Middle East conflict dominated the headlines throughout the first half of the week, only to be followed by the usual delays and diluted hopes.

War headlines keep shaping sentiment

United States (US) President Donald Trump kept repeating throughout the week that he believed that the war with Iran would be over “soon.” Market players, however, believe the ongoing pause in the Middle East crisis has more to do with reports suggesting the US Army is running out of highly accurate long-range missiles after its five-month war with Iran.

Also, Iran’s chief negotiator Mohammad Bagher Ghalibaf accused Trump of staging “theater diplomacy,” accusing the US of bullying and breaking promises. Tehran presented a plan on how to manage the Strait of Hormuz, which includes blocking the critical passage to US and Israeli ships. Traffic through the critical passage remains restrained, while skirmishes between different Middle East countries continue.

On a positive note, Oil prices remained within familiar levels, with the barrel of West Texas Intermediate (WTI) crude trading around $77 as the week comes to an end.

United States weak labor market?

Markets also took note of the US labor market health, with soft readings coupled with persistent inflation-related concerns weighing on the US Dollar (USD). ISM published the July Purchasing Managers’ Index, which showed business activity in the country remained in expansionary territory, with the Manufacturing Index printing at 55.6, and the Services PMI climbing to 54.1. The reports, however, also showed that the Price Paid Indexes linked to both sectors came in higher than anticipated and above 70, hinting at persistent inflationary pressures.

Regarding employment figures, JOLTS Job Openings edged modestly lower in June, although hiring remained unchanged. The ADP Employment Change survey showed that the private sector added measly 44K new jobs in July, down from the 95K previous and the expected 70K, while the Challenger Job Cuts report showed that US-based employers announced 33,429 cuts in July, down from the 45,849 registered in June.

Finally, the Nonfarm Payrolls (NFP) report released on Friday showed that the country lost 23K jobs in July while the June reading was downwardly revised to measly 20K from the original estimate of 57K. On a positive note, however, the Unemployment Rate shrank to 4.1%, its lowest in over a year, although the labor force Participation Rate also eased a tad, to 61.4% from the previous 61.5%.

Euro lacking life of its own

Financial markets are all about sentiment and EUR/USD moved accordingly to USD strength/weakness, with the shared currency lacking life of its own.

Data from the Union was far from encouraging: Retail Sales in Germany fell 0.2% in June vs the previous 2.1% advance, while the Eurozone figure for the same month came in at -0.3%, down from the 0.4% advance posted in May. Also, the bloc Producer Price Index (PPI) rose 4.6% in the year to June as expected, down from the previous 5.9%.

The Euro was unable to attract buyers despite European Central Bank (ECB) President Christine Lagarde warning that surging Oil prices could shape the September rate decision, hinting at an interest rate hike at the next meeting. Indeed, data supports the case for another hike, as euro area annual inflation is expected to be 2.9% in July 2026, up from 2.8% in June according to a flash estimate from Eurostat, the statistical office of the European Union.

What’s next in the docket

Inflation takes center stage in the upcoming days, as the US will release the July Consumer Price Index (CPI) on Wednesday. Annual inflation, as measured by the CPI, is foreseen at 3.4%, slightly below the 3.5% posted in June. On the same day, Germany will unveil the final reading of the July Harmonized Index of Consumer Prices (HICP), while the US will publish the July Producer Price Index (PPI) on Thursday, previously at 5.5%. Friday will bring the first revision of the Eurozone Q2 Gross Domestic Product (GDP), US Retail Sales and the preliminary estimate of the July Michigan Consumer Sentiment Index.

And of course, the focus will remain on Middle East developments and how Oil Prices react to headlines.

EUR/USD Technical Outlook:

The EUR/USD pair turned bullish, according to technical readings in the daily chart, although it still faces some barriers before confirming a steeper advance. The pair holds above the 20-day Simple Moving Average (SMA), which advances to 1.1453, but remains below the 100-day SMA at 1.1569 and the 200-day SMA at 1.1629, both flat. The 14-period Relative Strength Index (RSI) indicator aims north at 62, while the Momentum indicator also advances above its midline, suggesting ongoing bullish pressure despite the pair struggling to decisively reclaim its heavier moving averages overhead.

In the weekly chart, EUR/USD trades just under the 20-week SMA at 1.1566, which caps the upside and keeps the near-term tone neutral. The pair remains above both the 100-week SMA at 1.1316 and the 200-week SMA at 1.1041, suggesting a broadly constructive medium-term backdrop even as near-term momentum stalls. The Momentum indicator remains below its midline, while the RSI hovers near the 50 line, suggesting a lack of clear directional pressure and favoring consolidation over trend extension for now.

On the topside, initial resistance is located at the 100-day SMA at 1.1569, with a stronger barrier at the 200-day SMA near 1.1629, where sellers could reassert control if tested. On the downside, immediate support is provided by the 20-day SMA at 1.1453, and a daily close back under this short-term average would hint at fading upside momentum and open the door for a deeper pullback within the broader range.

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

– Written by


Frank Davies

STORY LINK British Pound to Dollar Forecast: GBP Steady as Middle East Optimism Cools

The Pound US Dollar (GBP/USD) exchange rate remained trapped in a narrow range on Thursday as investors balanced geopolitical uncertainty against expectations for key US labour market data.

At the time of writing, GBP/USD was trading at around $1.3459, largely unchanged from Thursday’s opening levels.

The US Dollar (USD) held firm on Thursday as investors grew less confident that a ceasefire agreement between the US and Iran would be reached in the immediate future.

Earlier in the week, optimism over progress in negotiations had boosted market sentiment and reduced demand for the safe-haven ‘Greenback’.

However, reports indicating that talks remain deadlocked over shipping access, monitoring arrangements and other key issues prompted traders to scale back expectations of a swift breakthrough.

Iran also reiterated that any reopening of the Strait of Hormuz depends on resolving several unresolved conditions, helping to lift oil prices and restore some defensive demand for the US Dollar.

The Pound (GBP) traded without a clear direction on Thursday as the lack of UK economic releases left investors with little reason to adjust their positions.

Stable trading in the UK gilt market also failed to provide Sterling with meaningful support, while subdued conditions across global financial markets kept volatility low.

With few domestic or international catalysts emerging, the UK currency remained confined to a tight trading range against most of its peers.

Near-Term GBP/USD Forecast: US Payrolls to Drive End-of-Week Trade?

Attention now turns to Friday’s US non-farm payrolls report, which is expected to be the key driver of movement in the Pound to US Dollar (GBP/USD) exchange rate.

Economists expect employment growth to have recovered in July following June’s particularly weak reading.

Should payroll growth once again disappoint and remain below the 100,000 mark, investors may further reduce expectations of a Federal Reserve interest rate hike in September, potentially dragging the US Dollar lower.

Meanwhile, with the UK calendar remaining devoid of notable economic releases, Sterling is likely to continue taking its cues from broader market sentiment and moves in its major counterparts.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts

Crédit Agricole forecasts USD/JPY averaging 162 in Q3 and 163 in Q4, arguing that 164 remains the key intervention threshold despite weaker valuation extremes than in past episodes.

The US Dollar to Yen (USD/JPY) exchange rate has recovered to around 158.3 after last week’s violent intervention-driven fall, but Crédit Agricole does not think the underlying case for a high exchange rate has disappeared.

The bank still forecasts USD/JPY averaging 162 in the third quarter and 163 in Q4, while treating 164 as the effective ceiling authorities are prepared to defend.

“We continue to believe 164 in USD/JPY is the line in the sand for authorities,” Crédit Agricole said. “The recent joint intervention has reaffirmed this view.”

The important wrinkle is that this intervention began from a less stretched starting point than comparable joint operations in 1998 and 2011.

“Relative to the 1998 and 2011 joint interventions, the misvaluations in USD/JPY and EUR/JPY are less extreme currently,” the bank said, “so the present joint intervention has started from a weaker point.”

That matters because past coordinated interventions only bought time.

“The effects of the joint interventions in 1998 and 2011 faded after a few months as fundamentals took back control of FX markets,” Crédit Agricole said. “Likewise, if the fundamentals do not shift for the JPY, its current intervention gains could also fade.”

View full size

USD/JPY has fallen sharply from July’s peak near 164, but has already recovered from the intervention lows below 156.

Crédit Agricole sees several reasons for renewed upside pressure: it expects the Bank of Japan’s next rate hike only in mid-2027, sees US economic outperformance attracting capital into the Dollar, and expects oil prices to stay elevated relative to pre-war levels.

Japan’s fiscal position is another worry.

“Investors will remain nervous about Japan’s fiscal sustainability given that PM Sanae Takaichi is not backing down from her fiscal spending plans,” the bank said.

Retail Traders May Be Blunting Intervention

MUFG adds a less obvious reason why official Yen buying may struggle to produce a lasting move.

Japanese retail margin traders were already positioned heavily for intervention before it happened.

“The USD/JPY short position increased in June to a record total,” MUFG said. “The implied short USD/JPY position was USD17.65bn which… is an extreme position and by some distance a record.”

That figure was larger than MUFG’s estimate of the probable total size of the latest intervention.

The implication is awkward for Tokyo. Retail traders who had already sold USD/JPY in anticipation of intervention were in a position to take profits as the pair collapsed.

“We can also assume that following intervention Japanese retail traders were quick to liquidate and were likely active buyers given the historic short position that was in place,” MUFG said.

“So Japan’s retail sector was likely a key buyer of USD/JPY on the decline during intervention, curtailing some of the impact of the MoF’s record yen buying intervention.”

View full size

USD/JPY remains slightly higher in 2026 despite the sharp intervention-led reversal from July’s highs.

That helps explain why Crédit Agricole is reluctant to project a sustained move much lower.

Its research suggests Japan and the US have enough resources to defend 164, particularly if Tokyo makes use of the Fed’s FIMA facility, but the bank is not treating intervention as a substitute for fundamentals.

“We think they have enough to hold the exchange rate below that level,” Crédit Agricole said.

The likely result is an uncomfortable middle ground: authorities trying to stop USD/JPY breaking through 164, while interest-rate, energy and fiscal fundamentals continue pushing the pair back upwards.

The euro is extending its advance against the US dollar, with technical indicators suggesting the pair is poised to push beyond the 1.1600 level in the near term. As of the latest trading session, EUR/USD is trading near 1.1580, up 0.3% on the day, supported by a softer dollar and improving risk sentiment.

Technical Outlook: Breaking Above Key Resistance

The pair has been consolidating above the 50-day moving average, and a clear break above the 1.1600 handle would open the door to further upside toward the 1.1650 region, a level not seen since early September. Momentum indicators, including the Relative Strength Index (RSI), are pointing higher but remain below overbought territory, suggesting room for additional gains.

On the downside, immediate support is seen at 1.1550, followed by the 1.1500 psychological level. A failure to hold above 1.1550 could signal a retest of the 1.1450 area, but the overall bias remains tilted to the upside as long as the pair stays above the 50-day MA.

Market Drivers: Dollar Weakness and ECB Policy

The dollar has been under pressure amid expectations that the Federal Reserve may be nearing the end of its tightening cycle, while the European Central Bank (ECB) maintains a hawkish stance. Recent US economic data, including softer inflation figures, have reinforced the view that the Fed could pause rate hikes, undermining the dollar’s yield advantage.

In contrast, ECB officials have signaled further rate increases to combat persistent inflation in the eurozone. This policy divergence is a key factor supporting EUR/USD, as investors adjust their positions to reflect the shifting interest rate outlook.

Impact on Traders and Investors

For forex traders, a sustained break above 1.1600 could trigger a fresh wave of buying, with potential targets at 1.1650 and 1.1700. Conversely, a failure to break resistance might lead to profit-taking and a pullback toward 1.1500. Investors with exposure to European assets may also benefit from a stronger euro, as it boosts the value of euro-denominated holdings when converted to dollars.

Conclusion

In summary, EUR/USD’s technical setup favors further upside, with the 1.1600 level acting as a critical trigger for the next leg higher. While market sentiment and central bank policy will remain key drivers, the current momentum suggests that a break above 1.1600 is increasingly likely in the coming sessions.

FAQs

Q1: What is the key resistance level for EUR/USD?
The immediate resistance is at 1.1600, and a break above that level could lead to a test of 1.1650 and beyond.

Q2: Why is the euro strengthening against the dollar?
The euro is benefiting from a weaker dollar, driven by expectations that the Fed may pause rate hikes, while the ECB remains hawkish on inflation.

Q3: What are the key support levels to watch?
Initial support is at 1.1550, followed by the 1.1500 psychological level. A drop below 1.1500 could signal a deeper correction.

– Written by


Frank Davies

STORY LINK Pound-to-Dollar Forecast: GBP Climbs on Strait of Hormuz Deal Hopes

The Pound US Dollar (GBP/USD) exchange rate moved higher on Wednesday as a brighter market mood reduced demand for traditional safe-haven currencies.

At the time of writing, GBP/USD was trading at around $1.3478, up approximately 0.2% from Wednesday’s opening levels.

The US Dollar (USD) weakened during Wednesday’s session as investors rotated away from defensive assets amid growing confidence that tensions in the Middle East could continue to ease.

Markets were encouraged by reports that negotiations involving the US, Iran and Oman over reopening the Strait of Hormuz were progressing well, fuelling expectations that an agreement could be reached in the near future.

The ‘Greenback’ also faced headwinds from a run of underwhelming US economic releases.

The latest ADP employment survey revealed private payroll growth slowed to just 44,000 in July, while the ISM services PMI also disappointed, indicating activity in the dominant services sector lost more momentum than expected.

The Pound (GBP) found modest support on Wednesday after revised survey data pointed to a healthier performance from the UK’s services sector.

July’s final S&P Global services PMI was revised higher from the preliminary estimate, signalling a stronger rebound in business activity after weakness earlier in the summer.

The improved figures reinforced expectations that the Bank of England (BoE) could still retain a relatively hawkish stance later this year if domestic economic resilience persists.

Near-Term GBP/USD Forecast: Payrolls Report to Set the Tone for USD?

Looking ahead, trading in the Pound to US Dollar (GBP/USD) exchange rate may remain cautious as investors await Friday’s US non-farm payrolls report.

The employment figures are expected to play a pivotal role in shaping expectations for the Federal Reserve’s next policy move. Another disappointing labour market update would likely weaken confidence in a September rate hike and place further pressure on the US Dollar.

Meanwhile, with the UK economic calendar relatively quiet, Sterling’s direction is likely to remain closely linked to broader market sentiment. Should optimism surrounding the Strait of Hormuz continue to improve, the Pound may remain well supported against the safe-haven US Dollar.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts

Created on August 06, 2026

The US dollar dropped slightly on Wednesday, as we continue to dance around the 200 Day EMA

USD/JPY

The US dollar has pulled back ever so slightly against the Japanese yen and some other currencies as well, as the interest rates initially fell during the trading session. But as we roll into the afternoon in New York, we are starting to see those rates pick up just a touch. That should provide a little bit of strength for the dollar, and we are seeing a return to that strength in this pair as well, just a touch. We are hanging on to a trend line that goes all the way back to the lows at the end of March.

The question now is, will the Federal Reserve, the US Treasury Department, the Bank of Japan, everybody else continue to squash this pair, or will it change things? There are a lot of pundits out there who think mixed thoughts. One particular bank that I’m thinking of right now suggested that 2 billion dollars wasn’t enough to change the trend. I tend to agree with that.

200-Day EMA and Key Technical Support

That being said, we are in an area, the 200-day EMA, that will capture a lot of attention. I suspect this is going to be more of the same. It’s just a shot across the bow trying to slow down the hot money, while the longer-term investors watching a gradual climb aren’t so much the concern. It’s not necessarily the value of the yen that is the biggest problem; it is the rate of decay. It’s all about the second derivative, if you will.

Ultimately, I’m still in a position in this market. I have again added a small position on top of when I got involved back in the middle of September. This pays me at the end of every day, and it pays me triple swap on Wednesdays, so that could be something to watch on the way out the door.

Pay attention to the 158-yen level. If that gets broken to the upside, that could signal more buying as well. As far as selling is concerned, or getting out of a position, if we broke down below the hammer, I might do that and then focus maybe more on the dollar against the Swiss franc. But as things stand right now, I think we’re going to see some sideways action and then an eventual climb. That’s what’s happened the previous 3 times we’ve seen intervention, and of course, history does tend to repeat itself.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

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