Currency Hedger No Comments

Australian Dollar weakens as safe-haven demand lifts US Dollar

  • AUD/USD holds losses as US Dollar safe-haven demand rises amid heightened US-Iran tensions and Strait of Hormuz risks.
  • A surprising decline of 23,000 Nonfarm Payrolls in July curbed hopes for an immediate interest rate increase by the Fed.
  • RBA is widely expected to keep its cash rate unchanged at 4.35% on Tuesday.

AUD/USD inches lower after registering modest gains in the previous day, trading around 0.7060 during the Asian hours on Monday. The pair holds losses as the US Dollar (USD) receives support from broad risk aversion.

Geopolitical tensions remain high as the ongoing United States (US)-Iran conflict enters a critical diplomatic phase, with intense military engagements and strategic pressure surrounding the Strait of Hormuz driving market caution. Although Iranian officials noted on Sunday that Oman-mediated negotiations regarding the management of the strait are making progress, safe-haven demand for the Greenback remains firmly intact.

Weaker-than-expected US employment data has dampened expectations for a near-term Federal Reserve (Fed) rate hike. Nonfarm Payrolls (NFP) unexpectedly dropped by 23,000 in July, while sharp downward revisions to the previous two months highlighted weakening labor market conditions. Investors are now focused on upcoming inflation reports for further clues on monetary policy.

Traders look ahead to the Reserve Bank of Australia’s (RBA) monetary policy decision on Tuesday. The central bank is widely expected to keep its cash rate unchanged at 4.35% for a second straight meeting. Traders will closely watch the RBA’s updated forecasts and Governor Michele Bullock’s comments for clues on the future policy path.

Rabo sees November RBA risk keeping modest upside bias in AUD/USD

Strategists at Rabobank note that, in their view, there is still “risk of one more rate hike this year in November,” with markets likely to look to the RBA’s 11 August policy meeting for “more clarity on rate hike risks.” Against this backdrop, the bank says it continues to “forecast a modest upside bias in AUD/USD out to 12 months,” a view it anchors “mostly on the back of a moderately softer tone in the USD and the view that Fed rate hike expectations are overdone.”

Currency Hedger No Comments

EUR/USD Buyers eye a break above the 100-day SMA

  • EUR/USD holds near a seven-week high as weak US payrolls weigh on the US Dollar.
  • Bullish RSI and MACD readings suggest buyers retain the upper hand.
  • The 100-day SMA caps immediate gains, with a break exposing the 200-day SMA.

EUR/USD edges higher on Friday, supported by a softer US Dollar (USD) as traders scale back Federal Reserve (Fed) rate-hike bets following a disappointing US Nonfarm Payrolls (NFP) report. At the time of writing, the pair trades around 1.1562, hovering near a seven-week high.

Price action, however, has been confined to a narrow range for more than a week, with the 100-day Simple Moving Average (SMA) capping immediate upside attempts after the pair staged a rebound from below 1.1400 in late July.

Still, the near-term outlook remains bullish, as the dovish repricing of Fed rate expectations and optimism surrounding peace in the Middle East and the reopening of the Strait of Hormuz could keep the US Dollar on the defensive. The EUR/USD recovery faces its next major test from the US Consumer Price Index (CPI) data due next week.

From a technical perspective, the daily chart shows that the 50-day SMA at 1.1471 offers immediate support, followed by the 1.1400 psychological mark.

The Relative Strength Index (RSI) at 63 points to bullish momentum, while the Moving Average Convergence Divergence (MACD) indicator stays positive, which hints that buyers retain an edge as long as price holds over the short-term average.

On the topside, immediate resistance is located at the 100-day SMA at 1.1568, followed by the 200-day SMA at 1.1629. A sustained break above these levels would expose the horizontal barriers at 1.1700 and 1.1800.

Currency Hedger No Comments

Mexican Peso hits five-month high on weak US jobs data

  • Mexican Peso rallies as weak NFP crushes Fed hike expectations.
  • Mexican inflation falls to six-year low after Banxico hold.
  • USD/MXN rebounds from a low of 17.09 but remains under bearish pressure.

The Mexican Peso (MXN) capitalizes on a weaker US jobs report and soars versus the US Dollar (USD) on Friday as risk appetite improves and the Greenback gets battered on speculation that the Federal Reserve (Fed) might not raise rates in 2026. At the time of writing, the USD/MXN pair trades at 17.18 after refreshing five-month lows at 17.09.

USD/MXN tumbles as Mexico’s inflation approaches target

The Mexican economic docket showed that inflation eased to a six-year low, from 3.37% to 3.12% YoY in July, according to INEGI, the National Statistics Agency. Core inflation, which strips volatile items, was 3.95% YoY, slightly exceeding forecasts of 3.94%. The report came a day after the Bank of Mexico (Banxico) left rates unchanged at 6.50%, while hinting that the main reference rate would remain steady for the foreseeable future.

Should inflation continue its downward trajectory, it could end 2026 below Banxico’s 3.5% forecast for headline and underlying inflation in 2026. The central bank projects that inflation will converge to its 3% goal in the last quarter of 2027.

Earlier, US Nonfarm Payrolls for July showed a 23K job loss, missing the forecast of an 80K gain. May and June revisions cut 103,000 jobs, lower than before. The data support the Fed’s pause on rate hikes, but the Unemployment Rate fell from 4.2% to 4.1%.

The report weakened the Greenback. The US Dollar Index (DXY), which measures the US Dollar’s strength against six other currencies, has fallen by 0.42% to 99.54.

Next week, the Mexican economic calendar will feature June Industrial Output. Across the southern border, investors are eyeing the release of inflation on the consumer and producer side, followed by jobless claims data and the University of Michigan (UoM) Consumer Sentiment.

USD/MXN Price Forecast: Technical outlook

Chart Analysis USD/MXN
USD/MXN daily chart

In the daily chart, USD/MXN trades at 17.1364, extending its retreat and holding below the clustered simple moving averages (SMA) trio now aligned near 17.4061, which reinforces a bearish near-term bias. The pair has also slipped back under the more recent downward resistance trend line, whose break point at 17.4584 acts as an additional topside cap, while the Relative Strength Index (14) at 32.4 hovers just above oversold territory, hinting that selling pressure is stretched but not yet exhausted.

On the topside, initial resistance is seen at the Triple SMA around 17.4061, followed by the downward-sloping trendline reference at 17.4584, where further rallies would likely stall unless momentum improves decisively. On the downside, the current area around 17.1364 is the immediate battleground, with a deeper slide opening the way toward the earlier structural break zone near 15.6962, while the RSI’s proximity to oversold levels suggests that any move lower could eventually invite a corrective bounce rather than a sustained reversal for now.

Currency Hedger No Comments

GBP/USD Bulls need 1.3560 to unlock 1.3600

  • GBP/USD holds sideways, but upside bias survives above 1.3406.
  • Break above 1.3558 opens the path toward 1.3600.
  • Failure below 1.3500 risks a pullback toward key SMA support.

The Pound Sterling (GBP) edges higher by some 0.29% against the US Dollar (USD) on Friday, yet it remains trading sideways, unable to decisively crack 1.3500 after reaching a three-week peak of 1.3509, and has retreated to the 1.3490 area.

GBP/USD Price Forecast: Technical outlook

The technical picture shows that GBP/USD is consolidating, yet it is slightly tilted to the upside after clearing the 200-day Simple Moving Average (SMA) at 1.3406. Market structure suggests the uptrend might resume once buyers reclaim the July 15 swing high at 1.3558, opening the door to a test of 1.3600.

In that scenario, the next area of interest for GBP/USD would be the May 11 swing high at 1.3653, followed by 1.3700.

On the flip side, if GBP/USD remains below 1.3500, look for a pullback towards August’s 3 low of the day at 1.3417. A breach of the latter will expose the convergence of the 100- and 200-day SMAs at 1.3406/05, followed by the 50-day SMA at 1.3365.

GBP/USD Price Chart – Daily

GBP/USD daily chart
Currency Hedger No Comments

Indian Rupee drops slightly ahead of US NFP data release

  • The Indian Rupee trades slightly lower at around 95.27 against the US Dollar as the US NFP takes center stage.
  • Weak US ADP Employment Change data has set a negative tone for the US NFP.
  • Oil prices bounce back amid fears of escalation in internal Middle East war.

The Indian Rupee (INR) falls slightly against the US Dollar (USD) on Friday in the countdown to the United States (US) Nonfarm Payrolls (NFP) data for July at 06:00 PM IST or 12:30 GMT. The USD/INR pair rises to near 95.27, with investors awaiting the US NFP to get cues regarding the current status of the labor market.

Ahead of the US NFP, weak ADP Employment Change data for July has established a cautious backdrop for the official employment data.

ADP slowdown reinforces expectations for softer US payrolls

According to TD Securities, July ADP employment data “surprised to the downside, moderating to 44k (TD: 50k, cons: 65k).” While the bank stresses that it does “not put much weight on ADP when it comes to m/m moves in NFP,” it notes that “the trend in the data is in line with what we are expecting.” TD highlights that “both the monthly and weekly ADP data have moderated this summer after a strong start to the year,” and suggests that “a similar trend is likely to occur with NFP job gains.”

According to NFP estimates, the US economy created 80K fresh jobs, higher than 57K in June. The Unemployment Rate is seen as steady at 4.2%. Average Hourly Earnings, a key measure of wage growth, is expected to have grown at a steady pace of 0.3% and 3.5% on a monthly and yearly basis, respectively.

The wage growth measure, which provides cues about the inflation outlook, could prove to be a major driver for the US Dollar’s next move, compared to the job data, as policymakers signaled in July’s Fed monetary policy statement that they are increasingly concerned about inflation remaining well above the 2% target. Also, Chairman Kevin Warsh said that the central bank “won’t hesitate to act” if needed to tame elevated price pressures.

Currently, the CME FedWatch tool shows a 54.5% chance that the Fed will raise interest rates in the September policy meeting.

Oil prices recover on internal Middle East conflicts risk

Oil prices have regained ground after a significant plunge in the last two weeks. Rising friction between Iran-aligned Houthis and Saudi Arabia has increased risks of internal war in the Middle East at a time when Iran and the US have just reached a temporary ceasefire, and has promoted fears of a prolonged energy supply disruption.

According to a report from The Guardian, Saudi Arabia is stepping up its attacks on Houthis in retaliation for striking Yemeni government troops and Najran province.

At press time, the MCX Crude Oil contract expiring on August 19 trades 1.13% higher at around Rs. 7,460.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

Technical Analysis: USD/INR aims to return to 20-day EMA

USD/INR trades at around 95.27, retaining a mildly bearish near-term bias as spot holds below the 20-day exponential moving average (EMA) at 95.57.

The pair’s failure to reclaim this dynamic resistance hints at continued downside risk, while the Relative Strength Index (RSI) at 44.6 sits in neutral territory, suggesting selling pressure is present but not yet stretched into oversold conditions.

On the topside, the 20-day EMA at 95.57 is the first barrier that bulls would need to clear to ease the current downward tone and open the way for a more sustained recovery. Looking down, the Wednesday low at 94.83 is the key support level, followed by the June low at 94.15.

Currency Hedger No Comments

USD/CAD Price: Bullish Flag pattern underway

  • The USD/CAD pair ticks higher to near 1.4023 ahead of US-Canada employment data.
  • The Fed is expected to hike interest rates at the September meeting.
  • A bullish flag pattern is in the making, suggesting that the overall trend is still bullish.

The Canadian Dollar (CAD) trades marginally lower against the US Dollar (USD) on Friday, with the USD/CAD pair edging up to near 1.4023 in the European trading session. The Loonie pair is expected to trade sideways as investors await the labor market data for July from both the United States (US) and Canada.

Investors will pay close attention to both datasets to get fresh cues regarding the Federal Reserve (Fed) and the Bank of Canada’s (BoC) monetary policy outlook.

US jobs report in focus as Danske Bank sees solid labor backdrop

Analysts at Danske Bank highlight that “the most important data release will be the US July Jobs Report,” where they “forecast nonfarm payrolls at +70k, the unemployment rate unchanged at 4.2%, and average hourly earnings at +0.3% m/m s.a.” The bank notes that “most leading data still point towards solid labour market conditions, although weak labour supply growth also weighs on the employment growth outlook,” adding that “the unemployment rate remains the Fed’s primary focus.”

The CME FedWatch tool shows a 54.5% chance that the Fed will raise interest rates in the September policy meeting.

Meanwhile, the Canadian labor market report is expected to show that the economy created 15K fresh jobs, slightly lower than 18.2K in June. The Unemployment Rate is seen as steady at 6.5%.

USD/CAD Technical Analysis

USD/CAD trades at 1.4023, retaining a bearish near-term bias as price holds below the 20-period Exponential Moving Average (EMA) at 1.4062. However, the formation of a Bullish Flag chart pattern suggests that the overall trend is still bullish.

The Relative Strength Index (RSI) at 43.1 sits just under neutral, hinting at subdued downside momentum rather than outright oversold conditions.

On the topside, immediate resistance is clustered between the 20-period EMA at 1.4062 and the channel top at 1.4076; a decisive break above that zone would open the way for an upside move towards 1.4200. On the downside, the lower boundary of the Bullish Flag channel at around 1.3902 will be the key support level.

Currency Hedger No Comments

Euro flatlines amid mixed German data with all eyes on US Nonfarm Payrolls

  • EUR/USD trades flat around the 1.1520 area after pulling back from highs near 1.1560
  • German Industrial Production increased in June, but the trade surplus narrowed beyond expectations.
  • The US Dollar ticks up on hopes of Fed tightening and doubts about an upcoming peace deal in Iran

The Euro (EUR) is trading flat around 1.1520 against the US Dollar (USD) on Friday, following a mild pullback from three-week highs at 1.1560 and on track for a minor weekly decline. The US Dollar is showing a moderately stronger tone although investors remain wary of placing large directional bets, awaiting the release of July’s Nonfarm Payrolls (NFP) report, due later on the day.

Data released by the German Federal Office of Statistics on Friday revealed that Industrial Production rose 0.2% in June, down from May’s 0.7% increase, but above the 0.1% market consensus. At the same time, German Trade Balance data showed that June’s surplus narrowed to EUR 15.4 billion from an upwardly revised EUR 19.4 billion surplus in May, well beyond the EUR 17.4 billion surplus expected by the market.

Hopes of a peace deal in Iran fade

The safe-haven US Dollar is drawing support from growing doubts about a peace deal in Iran and the reopening of the Strait of Hormuz. Iranian Fars news agency reported on Thursday that Tehran would be considering a plan to ban Israeli and US vessels from the Strait, an idea which collides with the US will to keep the waterway free of tolls or restrictions of any sort,

Apart from that, the Financial Times, citing sources close to the US Federal Reserve, reported that Chairman Kevin Warsh is ready to hike interest rates as soon as September, if inflation remains persistently high, which provided additional support to the Greenback

This news heightens investors’ interest in Friday’s Nonfarm Payrolls report. Analysts at TD Securities, however, see the risks skewed to the downside. The bank argues that “both the monthly and weekly ADP data have moderated this summer after a strong start to the year,” and they anticipate that “a similar trend is likely to occur with NFP job gains.”