8 - 2026 - Currency Hedger

Currency Hedger August 17, 2026 No Comments

GBP gathers strength above 1.3550 as softer US data cools Fed hike bets

GBP/USD gains ground to around 1.3555 in Monday’s early European session.
Softer US Retail Sales data have tempered expectations that the Fed will raise rates in September.
BoE’s Pill said UK growth supports case for higher interest rates.

The GBP/USD pair gains traction to near 1.3555 during the early European trading hours on Monday. The US Dollar (USD) weakens against the British Pound (GBP) as bets for a US Federal Reserve (Fed) rate hike come down. Traders will keep an eye on the UK employment and inflation reports, which are due later this week.

US Retail Sales fell in July for the first time in nine months as the boost from big tax refunds faded, the US Census Bureau reported on Friday. Signs of tame US inflation data added to unexpected job losses last month in bolstering financial market expectations that the Fed would not raise interest rates at its September 15-16 policy meeting.

Markets are now pricing a 31% probability ‌of a Fed rate hike at the upcoming policy meeting, down from 35% immediately after the US Retail Sales report, according to the CME FedWatch Tool.

“This points to a material slowdown in real consumer spending growth in the third quarter,” said Sal Guatieri, a senior economist at BMO Capital Markets. “This, together with a weaker jobs report and subdued core CPI inflation, raises the odds of the FOMC staying patient again in September,” Guatieri added.

Bank of England (BoE) Chief Economist Huw Pill stated ‌that stronger-than-expected UK economic growth readings reinforced the case for higher borrowing costs to bring inflation back to target. Pill said that data showing the UK economy grew 0.4% in the second quarter suggested the country was ‌not heading into a sharp downturn.

Pound support underpinned as BoE tone stays hawkish

According to strategists at Scotiabank, the broader data calendar has offered little fresh direction, but policy messaging remains a key pillar of support for the Pound. They note that while “fundamental releases have been limited,” recent BoE communication has “remained hawkish,” with comments from Chief Economist Huw Pill that have “reaffirmed a call for higher rates.” This persistent tightening bias from the BoE is helping to sustain the constructive tone around GBP despite the quieter flow of new economic information.

Technical Analysis: GBP/USD keeps a positive tone above the key 100-day SMA

In the daily chart, GBP/USD maintains a bullish near-term bias as spot holds above the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, keeping the recent uptrend technically supported. Price is edging toward the upper Bollinger band, while the 14-day Relative Strength Index at 64 stays in positive territory but shy of overbought, suggesting firm yet not extreme upside momentum.

On the topside, immediate resistance is located at the Bollinger upper band around 1.3595, where a clear break would open the door to the May 8 high of 1.3637. On the downside, initial support is seen at the Bollinger middle band near 1.3435, followed by the 100-day SMA at 1.3415; a deeper pullback could extend toward the lower Bollinger band around 1.3273, where buyers would be expected to re-emerge.

Currency Hedger August 17, 2026 No Comments

Indian Rupee steadies as US Dollar declines on reducing Fed rate hike bets

Indian Rupee may face challenges following the RBI’s decision to end its FCNR deposit FX swap early.
USD/INR is projected to trade between 95.00 and 95.50 this week amid expected pre-August 31 FCNR deposit demand.
The US Dollar declines as weaker-than-expected US economic data fade Fed rate hike odds.

The Indian Rupee (INR) trades stronger against the US Dollar (USD) on Monday after two days of losses, with the USD/INR pair trading around 95.50 at the time of writing. However, the Indian Rupee (INR) may struggle in the coming period, potentially driving the pair higher, following the Reserve Bank of India’s (RBI) announcement to shut its FX swap facility for FCNR deposits a month ahead of schedule. Data released alongside the decision highlighted that the central bank’s policy measures, including the deposit swap window, successfully attracted nearly $57 billion.

Market traders expect the USD/INR pair to fluctuate between 95.00 and 95.50 this week. Some anticipate a short-term rush among overseas clients aiming to secure FX deposits before the facility officially closes on August 31, while foreign portfolio flows and routine hedging activity will further direct currency movement.

Investors will closely monitor the release of the minutes from the RBI’s August policy meeting, during which interest rates were kept unchanged. Looking ahead, most analysts project that the RBI will either initiate a shallow rate-hiking cycle starting in December or maintain its pause across the remainder of 2026.

India inflation uptick supports RBI’s steady policy stance

Analysts at Societe Generale highlight that India’s inflation backdrop remains broadly contained, noting that headline CPI “edged up modestly to 4.45% yoy in July from 4.38% in June,” a move they say “reinforc[es] the latest decision by the RBI to keep policy on hold.”

The USD/INR pair holds losses as the US Dollar (USD) declines amid weaker-than-expected US economic data and shifting central bank expectations. The US Census Bureau reported on Friday that Retail Sales fell by 0.6% month-over-month in July, following a 0.2% rise in June, coming in below the market consensus of 0.1% growth. On an annual basis, Retail Sales rose 5.0% in July compared to 6.8% in the previous month.

Traders have reduced their bets on Federal Reserve rate hikes following a slew of softer US data, including CPI, PPI, and Retail Sales. Markets are now pricing in a 33.1% chance of a rate hike next month, down from 44% last week according to the CME FedWatch tool.

Fed seen keeping hawks in check as disinflation evidence builds

Strategists at Scotiabank argue that last week’s data have likely provided sufficient reassurance on the inflation front to justify a more patient stance from policymakers. They highlight that “there is likely to have been enough evidence of disinflation in last week’s data (along with signs of slowing in the labour market) to allow Fed Chairman Warsh to keep the inflation hawks at bay,” reinforcing expectations that the Fed can resist pressure for an early shift back toward a more aggressive tightening bias.

Technical Analysis: USD/INR remains above moving averages within ascending channel

USD/INR holds losses after two days of gains, trading around 95.50 at the time of writing. The technical analysis of the daily chart indicates that the pair is remaining within the ascending channel, suggesting a prevailing bullish bias.

Additionally, the USD/INR pair holds a slight constructive bias as spot remains above both the nine-period Exponential Moving Average (EMA) at 95.4418 and the 50-period EMA at 95.3913, suggesting near-term dips are being cushioned by dynamic support.

The 14-day Relative Strength Index (RSI) hovers just below the 50 mark at 49.2, hinting at broadly balanced momentum after the recent pullback, while the latest FXS Fed Sentiment Index reading around 134.6 adds a modestly supportive macro backdrop without yet translating into a clear directional breakout on the chart.

Currency Hedger August 15, 2026 No Comments

Japanese Yen held as soft US data meets a weak Yen

USD/JPY is little changed in the low-159s on Friday, holding its ground after a volatile stretch.
US Consumer Sentiment fell sharply in August, missing forecasts and adding to a soft week of US data.
A weaker Yen is offsetting the softer Dollar, keeping the pair pinned near current levels.

USD/JPY is holding near 159.40 at the time of writing, with little change on the day. A weak United States (US) Consumer Sentiment reading nudged the Dollar lower, but the pair has stayed close to where it started.

The University of Michigan’s preliminary Consumer Sentiment Index dropped to 51 in August from 55.2, well below the 54.5 that markets expected. The Expectations component fell to 50.6. It is the latest soft US number in a week that also brought cooler inflation and a weak Retail Sales report.

Taken together, that run of data has taken some steam out of the US Dollar (USD), with the Dollar Index (DXY) lower on the day. On its own, a softer Dollar would usually pull USD/JPY down with it.

The boost from the record joint US–Japan intervention in late July and early August has faded, and with no follow-up from Tokyo, speculators have gone back to selling the Japanese Yen (JPY). That leaves USD/JPY caught between a soft Dollar and a soft Yen, with neither side able to take control.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.38, maintaining a neutral near-term tone as it holds above the 20-period simple moving average (SMA) at 159.33 but remains capped beneath the 100-period SMA at 160.20. The pair is hovering just under the nearby horizontal barrier at 159.39, while the Relative Strength Index (14) around 56 suggests mildly constructive momentum without reaching overbought conditions.

On the topside, immediate resistance is located at 159.39, followed by the higher horizontal level at 159.58, before the more significant 100-period SMA at 160.20 comes into view as a broader cap. On the downside, initial support is clustered around the 20-period SMA at 159.33, ahead of the horizontal floors at 159.20 and 159.10, which together form a shallow demand band protecting the recent consolidation area.

Currency Hedger August 15, 2026 No Comments

Chinese Yuan: Activity data and PBOC stance guide FX – MUFG

MUFG’s Asia FX Weekly highlights that China’s July activity indicators, following weak Q2 GDP, will be central for the Chinese Yuan and regional FX. The authors stress ongoing weakness in fixed asset investment and property-sector challenges, and question whether domestic demand is stabilizing and whether PBOC will tolerate continued CNY strength. They also note PBOC has been guiding USD/CNY lower via its daily fixing.

China data and fixing steer CNY

“In China, attention will centre on July activity indicators, following a weak Q2 GDP print.”

“Fixed asset investment is likely to remain weak, underscoring ongoing challenges in the property sector.”

“The key question for FX markets is whether domestic demand shows signs of stabilization and whether PBOC is comfortable allowing continued strength in CNY.”

“Any weaker-than-expected Chinese activity data could weigh on regional

Currency Hedger August 15, 2026 No Comments

EUR/USD Price – 100-Day SMA blocked bullish reversal

EUR/USD rebounds from daily lows, challenging 100-day SMA resistance.
Bullish RSI raises reversal risk after reclaiming 1.1500.
Break above 1.1629 exposes 1.1685 and 1.1700 next.

The EUR/USD pair registers gains of over 0.32% on Friday as traders face key resistance at the 100-day Simple Moving Average (SMA) at 1.1567, as bulls eye the 1.1600 psychological figure. At the time of writing, the pair trades at 1.1564 after bouncing off daily lows of 1.1526.

EUR/USD Price Forecast: Technical Outlook

The EUR/USD market structure suggests that the downtrend remains intact. The successive lower highs and lower lows have been respected, but since July 30, when the pair reclaimed the 1.1500 area, the risk of a bullish reversal has increased.

Although the pair topped around 1.1550-60, the Relative Strength Index (RSI) suggests bullish momentum is building. That said, EUR/USD might turn bullish if traders clear key resistance levels.

Upwards, the 200-day SMA at 1.1629 is the next area of interest. Once surpassed, the next cycle high pending is the May 29 high at 1.1685. If those two levels are removed, EUR/USD could be headed toward 1.1700, putting the April 17 high at 1.1849 into play ahead of the 1.1900 area.

On the flip side, if the shared currency drops below 1.1500, a move to the 50-day SMA at 1.1465 is on the cards. The next demand zone would be 1.1400.

EUR/USD Price Chart – Daily

Currency Hedger August 15, 2026 No Comments

South Korean Won: Foreign inflows and exporters support KRW – Commerzbank

Commerzbank notes that the Kospi has rebounded 29.5% from its 30 July low, supported by strong tech earnings and improved sentiment toward semiconductor and memory chipmakers. They note USD/KRW has retreated nearly 8.9% from its July high as exporters’ repatriation and foreign portfolio inflows bolster the Korean Won. Despite a modest 0.3% rise to 1,421 on a stronger Dollar, KRW is the second-strongest Asian currency this year, up 1.5% versus USD and outperforming the regional ex-Japan average of -2.1%. Further volatility moderation in equities may offer near-term KRW support.

USD/KRW retreats from July peak

“The South Korean equity benchmark Kospi rose 3.6% yesterday, following a 3.7% rally on Wednesday. The index has now rebounded by 29.5% from its 30 July low. The recovery was driven by strong tech earnings, which boosted market sentiment toward semiconductor names and lifted South Korean chipmakers.”

“This combination of recovering semiconductor sentiment and easing Kospi volatility has enticed foreign investors to re-enter the market. Since 30 July, foreign investors have net bought USD1.9bn of South Korean equities. A further moderation in volatility could support additional portfolio inflows and provide near-term support for the KRW.”

“USD/KRW rose 0.3% to 1,421 yesterday, driven by a stronger USD. Nonetheless, the pair has fallen by nearly 8.9% from its July high of 1,559, as exporters’ repatriation activity and foreign portfolio inflows continue to support the KRW.”

“Year-to-date, KRW is up 1.5% vs the USD, well above the average for Asian currencies ex-Japan of -2.1%.”

Currency Hedger August 15, 2026 No Comments

Chinese Yuan: Steady appreciation backed by PBoC stance – Societe Generale

Societe Generale analysts highlight CNY’s firm trend, with the currency advancing to 6.7424, its strongest level since February 2023, on Dollar weakness and lower US yields. The PBoC reiterates an accommodative stance and targeted support while avoiding explicit rate or RRR cut signals, as 10-year CGB yields fall below 1.70%.

Policy support underpins currency strength

“CNY maintains steady appreciation path: The CNY advanced to 6.7424 today, its strongest level since February 2023, supported by broad-based dollar weakness and lower US yields.”

“In its latest quarterly monetary policy implementation report, the PBoC reiterated its commitment to maintaining an appropriately accommodative policy stance and deploying targeted support measures when needed, while stopping short of explicitly signalling policy rate or RRR cuts.”

“Chinese bonds continue to demonstrate notable resilience, with the 10y CGB yield falling below 1.70% for the first time in a year after the PBoC’s first mid-month overnight reverse repo (liquidity injection).”

“Separately, the Ministry of Finance successfully sold 50y special sovereign bonds at an average yield of 2.2831%.”

Currency Hedger August 15, 2026 No Comments

Mexican Peso refreshes multi-month highs, Banxico minutes eyed

USD/MXN rebounds from 16.97 as buyers defend 17.00.
Weak Retail Sales and sentiment deepen US Dollar pressure.
Banxico minutes and Mexico Retail Sales drive next catalysts.

USD/MXN refreshed 24-month lows below 17.00 on Friday, but it has recovered some ground, with buyers stepping in and reclaiming the 17.00 level. Data from the United States (US) weighed on the Greenback, as consumer sentiment and Retail Sales deteriorated. The pair trades at 17.02, after bouncing off daily lows of 16.97.

USD/MXN holds near two-year lows as traders price out Fed hikes

US data proved benign on the inflation front, with consumer and producer prices edging lower. The Nonfarm Payrolls reading on August 7 and jobless claims on Thursday paint a picture of ‘some’ softening, but give Federal Reserve officials no reason to say labor market risks are tilted to the upside.

On Friday, Retail Sales disappointed investors, contracting 0.6% MoM, below forecasts of a 0.1% expansion, and June’s 0.2%. The University of Michigan Consumer Sentiment preliminary reading in August showed some deterioration in sentiment among American households, as the Index dipped from 55.2 to 51, while inflation expectations remained little changed.

The backdrop prompted an aggressive pricing out for a Fed rate hike in 2026. For the September meeting, the odds are 32% for a hike and 68% for keeping interest rates steady.

In Mexico, Economy Secretary Marcelo Ebrard stated that Mexico is asking the US to eliminate or reduce tariffs on the automobile industry. He argued that vehicles made in Japan, South Korea, Germany, or Morocco pay a 15% tariff, while those in Mexico face a 25% tariff.

“So, give me a discount, because I buy more parts of the United States from you than the other countries, I just mentioned”, Ebrard said.

Next week, Mexico’s economic schedule will be busy, with investors eyeing the release of the Bank of Mexico’s (Banxico) last meeting minutes and Retail Sales data. In the US, the docket will feature housing data, the ADP Employment Change 4-week average, jobless claims and Flash PMIs.

USD/MXN Price Forecast: Technical outlook

Chart Analysis USD/MXN — USD/MXN daily chart

In the daily chart, USD/MXN trades near 17.0294, extending its slide beneath the clustered simple moving averages in the Moving Average Triple around 17.3775. Price action remains capped by the more recent descending resistance trend line, which comes in near 17.4197, while the Relative Strength Index (14) sits around 27 and drifts into oversold territory, hinting that bearish pressure is stretched but still dominant as long as the pair holds below these overhead barriers.

On the downside, the next notable structural floor aligns with the earlier downtrend break level around 15.6176, which acts as a distant but important support reference should the decline deepen. On the topside, a recovery would first need to reclaim the Moving Average Triple resistance near 17.3775, followed by a clearer break above the descending resistance trend line at 17.4197 to ease the bearish bias and open the way for a more sustained corrective rebound.