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Euro flat lines near mid-1.1500s vs USD as traders await US CPI amid Iran uncertainty

  • EUR/USD is seen consolidating in a narrow band as USD preserves modest recovery gains.
  • Mideast tensions lift oil prices, fueling inflation fears and Fed hike bets, supporting the USD.
  • Traders also seem hesitant and opt to wait for the release of the latest US inflation figures.

The EUR/USD pair struggles to gain any meaningful traction and holds steady around the 1.1545-1.1550 area during the Asian session on Tuesday. Traders seem hesitant to place aggressive bets and opt to wait for further developments surrounding the Middle East crisis and this week’s release of the latest US inflation figures. Nevertheless, spot prices remain well within striking distance of the highest level since June 17, touched last Friday.

The disappointing US Nonfarm Payrolls (NFP) report forced investors to scale back their expectations for an immediate interest rate hike by the US Federal Reserve (Fed). This, in turn, fails to assist the US Dollar (USD) to capitalize on the previous day’s modest gains and acts as a tailwind for the EUR/USD pair. Investors, however, are still pricing in the possibility that the US central bank will raise borrowing costs by the end of this year amid inflation risks stemming from volatility in oil prices due to the Iran war.

In the latest developments surrounding the Middle East crisis, Iran ruled out any future negotiations with Trump and said that it will wait until the US President’s term ends on January 20, 2029, to resume talks, dampening hopes for a swift reopening of the Strait of Hormuz. Moreover, traffic through the Bab el-Mandeb Strait remains choked due to the Iran-backed Houthis’ naval blockade against Saudi Arabia. This remains supportive of the recent rise in crude oil prices to an over one-week high, fueling inflation fears.

Cleveland Fed President Beth Hammack said on Monday that the current rate is not meaningfully restricting the economy and that there is a need for some number of rate hikes. Hammack stressed that the longer the Fed waits, the longer it misses the 2% inflation goal. Hence, the focus will be on the US Consumer Price Index (CPI) and the Producer Price Index (PPI), due on Wednesday and Thursday, respectively. The data will provide more cues about the Fed’s future policy path and influence the USD and the EUR/USD pair.

According to TD Securities, the recent inflation dynamics are likely to “keep the Fed looking to August inflation data ahead of the September meeting,” reinforcing the central bank’s data-dependent stance. The bank also highlights that “PPI on Thursday will also be a key input into PCE estimates,” underscoring the importance of upcoming producer price figures in shaping the broader inflation picture the Fed will assess.

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Chart of the Day: USD/JPY Recovers After Disappointing Payroll Data

The USD/JPY exchange rate quickly recouped most of the losses triggered by the weak US labour market report and is trading on Monday around 158.20–158.50, virtually where the pair stood prior to the data release. Friday’s payrolls figures showed a fall in employment of 23,000 against an expected increase of 80,000, triggering a sharp sell-off in the dollar and sending USD/JPY down from around 158.30 to approximately 156.70, before buyers quickly returned to the market. The market’s attention is now turning to Wednesday’s release of the US CPI for July, which will determine whether the Federal Reserve still has scope for a rate rise in September.

What the daily chart shows

The attached daily USD/JPY chart (D1 timeframe) shows a clear, well-defined uptrend that has been in place since February, with the price moving consistently along or above one standard deviation below the anchored VWAP since the start of 2026 (as the main support zone for the long-term uptrend). A key element of the chart pattern is the broad resistance zone around 159,000–160,000, marked on the chart as “Resistance area” – the same level which previously, from March to May, acted as a consolidation zone and repeatedly rejected price movements (and currently constitutes the main cluster of the value zone when looking at the volume profile marked since the start of the year), Friday’s long red candle with a long lower shadow was a reaction to the weak payrolls figures – there was a sharp fall from around 163,000–164,000 towards the resistance level, followed by a rebound that saw the week close near 158,500. The current price (158,496) sits right at the lower end of the resistance zone, just below the 159,000 level, suggesting that the market is testing whether the former resistance will now turn into new support.

What’s next for the couple?

The balance of risks remains uncertain, but for the time being it may appear to be tilted slightly towards gains as long as tensions surrounding the US–Iran conflict and the Strait of Hormuz persist, which is keeping bond yields higher (10-year US bonds are still around 4.655 per cent). At the same time, the risk of another joint US–Japan intervention is likely to cap gains around the 160 level, whilst a significantly weaker CPI reading could pave the way for a decline to the 155–156 range, where investors have previously been keen to buy on dips. Wednesday’s CPI reading for July (forecast at 3.4% y/y, down from 3.5% previously) will be a key test for the pair’s future direction, as it will determine whether the market will continue to scale back expectations of a Fed rate rise in September and reverse the trend, or whether the current narrative will prevail.

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New Zealand Dollar stalls below 0.5900 as US Dollar regains safe-haven appeal

  • NZD/USD trades around 0.5895 on Monday, virtually unchanged on the day.
  • Middle East tensions support the US Dollar despite signs of weakness in the labor market.
  • The New Zealand central bank’s hawkish stance could limit Kiwi losses ahead of US inflation data.

NZD/USD trades around 0.5895 on Monday at the time of writing, virtually unchanged on the day. The pair consolidates below the 0.5900 level after retreating from its recent monthly high, as the US Dollar (USD) recovers some of the losses registered in the wake of disappointing United States (US) employment data.

The Nonfarm Payrolls (NFP) report released on Friday showed that the US economy unexpectedly lost 23K jobs in July. The previous month’s figure was also revised sharply lower to just 20K job additions from the 57K initially reported. The data points to a cooling labor market and initially weighed on the US Dollar by weakening the case for monetary tightening from the Federal Reserve (Fed).

However, the bearish reaction in the US Dollar fades as geopolitical tensions in the Middle East revive demand for safe-haven assets. Uncertainty surrounding the Strait of Hormuz remains elevated, while fresh attacks by Iran-backed Houthi militants against Saudi energy infrastructure keep concerns over energy supplies alive.

At the same time, higher Oil prices are reviving inflation concerns in the United States (US). Investors fear that energy-driven inflation could force the Fed to keep monetary policy restrictive for longer or even raise interest rates again. Expectations of tighter US monetary policy also help keep US Treasury bond yields elevated, providing additional support to the Greenback.

The international backdrop is also weighing on the New Zealand Dollar (NZD). Data released over the weekend showed that China’s annual Consumer Price Index (CPI) slowed to a six-month low in July, while the Producer Price Index (PPI) eased more sharply than expected. Weaker inflation in China fuels concerns about the world’s second-largest economy and weighs on antipodean currencies, including the Kiwi.

The downside in NZD/USD remains limited, however, by the hawkish stance of the Reserve Bank of New Zealand (RBNZ). The New Zealand central bank maintains a sufficiently restrictive bias to support the New Zealand Dollar and contain bearish pressure on the pair for now.

Investors now turn their attention to US inflation data due this week. The figures could provide fresh clues about the Fed’s interest-rate path as markets weigh a cooling labor market against the risk of renewed energy-driven inflation. Developments in the Middle East are also likely to remain an important driver of the US Dollar and, consequently, NZD/USD.

Chart Analysis NZD/USD

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5895, holding a modest bullish bias as it consolidates above the 100-period simple moving average (SMA) near 0.5879 and the 200-period SMA around 0.5863. The pair is grinding higher toward the horizontal resistance at 0.5909, while the Relative Strength Index (RSI) around 61 suggests firm but not overextended upside momentum, keeping buyers in control as long as price stays above the underlying moving average floor.

On the downside, immediate support is seen at the 100-period SMA around 0.5879, ahead of the 200-period SMA near 0.5863 and the horizontal level at 0.5860, which together define a broader demand band protecting the recent recovery. On the topside, a break above resistance at 0.5909 would open the door for a continuation of the advance, whereas repeated failure there would risk a pullback back toward the clustered supports below.

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USD/CHF Price Forecast: Struggles below 0.8100 as bears eye 50-SMA pivotal support

  • USD/CHF trades with a negative bias for the second straight day, though it lacks bearish conviction.
  • The disappointing US NFP tempered Fed-hike bets, undermining the USD and weighing on the pair.
  • The technical setup seems tilted in favor of bearish traders and backs the case for a further decline.

The USD/CHF pair struggles to attract any meaningful buyers and remains on the back foot below the 0.8100 mark through the first half of the European session on Monday.

Friday’s disappointing US Nonfarm Payrolls (NFP) further tempered bets of an immediate interest rate hike by the US Federal Reserve (Fed), which, in turn, is seen undermining the US Dollar (USD) and capping the USD/CHF pair. Investors, however, are still pricing in the possibility that the US central bank will raise borrowing costs by the end of this year amid inflation risks stemming from energy supply disruptions.

Apart from this, persistent geopolitical uncertainties might hold back traders from placing aggressive bearish bets on the safe-haven USD and contribute to limiting losses for the USD/CHF pair. The market focus now shifts to the release of the US inflation figures, due this week. The crucial data will be looked for fresh cues about the Fed’s future policy path, which, in turn, will play a key role in influencing the USD demand.

From a technical perspective, the USD/CHF pair is holding below the 23.6% Fibonacci retracement level of the May-July rally, albeit bears await a break below the 50-day Simple Moving Average (SMA) before placing fresh bets. Meanwhile, the Relative Strength Index (RSI) hovers just below the 50 line and the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting upside momentum is tentative.

Hence, a break below the 50-day SMA will be seen as a key trigger for USD/CHF bears and pave the way for a decline to a dense Fibo. support band between the 38.2% retracement at 0.8037 and the 61.8% level at 0.7932 ahead of structural floors at 0.7857 and 0.7761. On the topside, initial resistance comes at the 23.6% Fibo. retracement at 0.8103, and a break above this barrier would expose the next upside objective at the cycle high zone around 0.8208.

USD/CHF daily chart

Chart Analysis USD/CHF
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Euro advances against Canadian Dollar as Eurozone Investor Confidence rises in August

  • EUR/CAD holds ground as Eurozone’s Sentix Investor Confidence rises in August for the first time in five months.
  • Higher oil prices could lend support to the commodity-linked Canadian Dollar.
  • Crude oil prices rebound due to uncertainty over reopening the Strait of Hormuz.

EUR/CAD inches higher after three days of losses, trading around 1.6120 during the European hours on Monday. The currency cross is holding its ground, driven primarily by a resilient Euro (EUR) following positive Eurozone economic sentiment.

The Eurozone’s Sentix Investor Confidence data, a key indicator of investor morale, rose to 0.9 in August, marking its first positive reading in five months. Investor sentiment had previously dropped into negative territory in March with the onset of the Middle East conflict, though it showed signs of recovery by reaching -3.1 in July.

The upside potential for the EUR/CAD pair could be restrained by support for the commodity-linked Canadian Dollar (CAD) amid higher oil prices. West Texas Intermediate remains in the positive territory and is trading around $77.20 per barrel at the time of writing.

Crude oil prices rebounded as persistent uncertainty surrounds efforts to reopen the critical Strait of Hormuz. Over the weekend, Iran stated that talks with Oman to establish a safe shipping route through the strategic waterway are nearing an agreement, though Tehran cautioned that any deal would not result in an immediate reopening.

Meanwhile, regional security remains fragile; Iran-backed Houthi militants in Yemen claimed a recent attack on Saudi Arabia’s Jazan refinery, and a tanker operated by the Abu Dhabi National Oil Co. came under attack in the Strait.

Oil volatility keeps Middle East risks in focus for credit markets

HSBC Asset Management observes that a “recent pick-up in oil price volatility has kept the Middle East conflict front of mind for markets,” noting that while crude remains “the most visible channel,” the implications run deeper for corporate borrowers. The bank stresses that for credit investors “a big question” is not just the headline move in energy prices, but “how and where the disruption could lead to supply shortages across industries and supply chains,” particularly in sectors reliant on petrochemicals, fertilisers and industrial gases.

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Euro holds gains near seven-week highs as economic sentiment improves

  • EUR/USD holds gains at 1.1560, consolidating near seven-week highs.
  • Eurozone Sentix Investors Sentiment Index rose to a six-month high in August.
  • The US Dollar remains depressed as Fed tightening hopes ebb.

The Euro (EUR) ticks higher against a softer US Dollar (USD) on Monday, with the EUR/USD pair trading at the 1.1560 area at the time of writing, consolidating gains a few pips below seven-week highs at 1.1773. Fading hopes that the US Federal Reserve (Fed) will hike interest rates in September are hurting the Greenback, while, in Europe, bright investors’ confidence figures have provided additional support to the Euro.

Data released by the Sentix research institute on Monday revealed that investors’ confidence in the Eurozone economy improved sharply in August, reaching positive levels, with a 0.9 reading, for the first time since February. These numbers confirm a steady recovery, from -.3.1 in July and -13.4 in June.

The greatest improvement has been seen at the current economic conditions sub-Index, which rose by 6.8 points, while the economic expectations improved by a more moderate 1.0. The expectations about the German economy rose by 2.5 points to 6.0, also the highest level since February, while the Global Aggregate rose by 1.4 points, to 14.7, suggesting that economic recovery expectations are broad-based.

The Euro is drawing some support from a weaker US Dollar, as the negative surprise posted by the US Nonfarm Payrolls data has dampened hopes of immediate Federal Reserve (Fed) rate hikes further. This is offsetting concerns about the economic consequences of higher Oil prices for now, as the status of the Strait of Hormuz remains highly uncertain with sea traffic through the key waterway practically blocked.

US CPI data will be the highlight of the week

The US calendar is thin on Monday, and the focus is on the US Consumer Price Index (CPI) figures for July, due next Wednesday, for a better assessment of the Fed’s near-term rate path. The market consensus points to a mild slowdown of consumer prices to a 3.4% year-on-year rate, from 3.5% in June. The Core CPI is also expected to have eased, to a 2.5% yearly growth, from 2.6% in the previous month.

Analysts at ING see the EUR/USD “firmly dominated by the USD side of the equation,” with upcoming US inflation data set to play a pivotal role. In their view, “a softer US CPI print would increase the chances of a break above 1.160 already this week,” with the “next important resistance beyond that” identified as “the 200-day moving average at 1.1630.”

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British Pound rallies to over one-week high as fiscal woes and rate gap hammer Yen

  • GBP/JPY gains strong positive traction at the start of a new week amid a broadly weaker JPY.
  • Japan’s fiscal concerns offset the recent intervention and exert heavy pressure on the JPY.
  • The wide UK-Japan rate gap keeps the JPY carry trade active and further supports spot prices.

The GBP/JPY cross catches aggressive bids at the start of a new week and builds on its strong recovery move from the vicinity of mid-209.00s, or the lowest level since early March touched last Monday. The momentum lifts spot prices to an over one-week high, around the 214.00 neighborhood, during the early part of the European session and is sponsored by a broadly weaker Japanese Yen (JPY).

Following a brief surge driven by a joint US-Japan intervention, the JPY resumes its downtrend amid concerns about Japan’s worsening fiscal conditions stemming from Prime Minister Sanae Takaichi’s aggressive economic stimulus and tax cuts. In fact, Japan’s ruling Liberal Democratic Party (LDP) backed a proposal to cut the food consumption tax from 8% to 1% for two years starting in April 2027. Adding to this, the Japanese government proposed roughly ¥600 billion a year in cash transfers targeted at low- and middle-income households as part of a relief package.

Furthermore, the wide interest rate gaps between Japan and other major economies, including the UK, keep the so-called carry trade active and exert additional pressure on the JPY. The Bank of Japan (BoJ) lifted the short-term policy rate in June to 1.00%, or the highest since 1995, while the Bank of England’s (BoE) base rate is at 3.75%. This leaves a gap of around 275 basis points (bps), which, in turn, favors GBP/JPY bulls. Meanwhile, the strong intraday move up seems rather unaffected by a relatively hawkish BoJ Summary of Opinions from the July 30-31 meeting.

Market participants now look to this week’s release of the quarterly UK GDP report, which will play a key role in influencing the British Pound (GBP). The aforementioned fundamental backdrop, however, suggests that the recent corrective decline from the 219.60 region, or a multi-year top touched in July, has run its course and backs the case for a further near-term appreciating move for the GBP/JPY cross.

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Offshore Yuan Retreats After Inflation Data

The offshore yuan weakened to around 6.74 per dollar on Monday, retreating from a more than three-year high reached in the previous session, as softer inflation data underscored persistent weakness in domestic demand. Annual consumer inflation eased to a six-month low of 0.5% in July, reflecting declines in food prices and slower growth in non-food costs. Producer price inflation also moderated to 3.5% from 4.1%, marking its first slowdown since returning to positive territory in March amid an oil-price surge triggered by Middle East tensions. Meanwhile, the Political Bureau of the Communist Party of China Central Committee recently pledged more proactive and effective macroeconomic policies, including the faster deployment of fiscal funds and bond proceeds, while continuing to support large-scale equipment upgrades and consumer goods trade-in programs. It also emphasized the need to boost domestic demand as consumer spending remains subdued despite solid exports and industrial output.