NZD/USD remains depressed for the second straight day as geopolitical risks underpin the USD.
Recovering oil prices revive inflation fears, bolstering Fed hike bets and also supporting the buck.
China’s trade data do little to provide any impetus to the Kiwi as the focus remains on the US NFP.
The NZD/USD pair sticks to a negative bias for the second consecutive day and trades near the lower end of its weekly range, around the 0.5865 region, during the Asian session on Friday. Spot prices move little following the release of China’s trade data as traders opt to wait for the crucial US monthly employment details.
In fact, China’s Trade Balance for June, in US Dollar (USD) terms, showed a surplus of $112.5 billion, higher than the $107.0 billion expected, but lower than the prior release of $125.62 billion. Additional details revealed that exports rose 23% YoY, compared to a 27% increase seen in June, while imports climbed 27.5% vs. 36% recorded previously. The data fails to provide any impetus to antipodean currencies, including the New Zealand Dollar (NZD), as geopolitical uncertainties continue to underpin the safe-haven US Dollar (USD) and weigh on the NZD/USD pair.
In fact, a Saudi official said that some Iraqi militia factions, in coordination with Yemen’s Iran-backed Houthis, are planning to attack the kingdom in the very near future, raising the risk of a wider regional conflict. This comes a day after Houthis claimed responsibility for an attack on a Saudi oil tanker in the Gulf of Aden. Furthermore, reports suggest that Iran is reviewing a plan that would ban US and Israeli vessels from the Strait of Hormuz. This led to the overnight rise in oil prices, fueling inflation fears and bolstering US Federal Reserve (Fed) rate hike bets.
Hawkish Fed expectations, in turn, remain supportive of elevated US Treasury bond yields and turn out to be another factor supporting the Greenback. USD bulls, however, seem hesitant to place aggressive bets and look to the crucial US Nonfarm Payrolls (NFP) report for more cues about the Fed’s future policy path. In the meantime, the Reserve Bank of New Zealand’s (RBNZ) hawkish tilt could support the Kiwi and help limit the downside for the NZD/USD pair, warranting some caution before positioning for any further intraday depreciating move.
NZD/USD daily chart
Technical Analysis
The NZD/USD pair holds above the 100-day Simple Moving Average (SMA) at 0.5823, suggesting that the underlying demand is still in place despite recent consolidation around the 0.5860 area. A daily close below this level, however, would hint at fading upside momentum and expose deeper retracements toward the mid-0.5700s, while holding above it keeps the door open for a continuation of the advance toward the 0.5900 handle over the coming sessions.
EUR/GBP eases to 0.8575 on Thursday after being rejected at the 0.8580 area.
Lower oil prices and positive Eurozone data are keeping the Euro downside attempts limited.
Failure to extend gains beyond the late-July top, at 0.8586, might give bears fresh hopes.
The Euro (EUR) nudges lower against the British Pound (GBP) on Thursday, following a three-day rally. The EUR/GBP remains capped below the late-July top of 0.8586, trading at 0.8575 at the time of writing, yet with downside attempts subdued so far.
Eurozone data was supportive on Thursday, as German Factory Orders beat expectations with a 3.1% increase in June, largely exceeding the 0.3% market forecast, and a downwardly revised 0.3% reading in May.
Regarding the Pound, FX strategists at Rabobank argue that “a re-pricing in policy expectations towards steady policy from the BoE this year combined with the prospect of nervousness ahead of the October budget suggests scope for downside pressure on the pound as the summer draws to a close.”
In this context, Rabobank continues to see value in the cross, stating that “we favour buying EUR/GBP on dips to the 0.8550 area,” and adding that “a break above the recent high in the 0.8588 region could increase upside potential.”
Technical Analysis: Failure to break 0.8586 might encourage bears
The technical picture shows the EUR/GBP pair trading at 0.8576, with momentum indicators highlighting weaker bullish traction. The Relative Strength Index (14) is trending towards the 50 midline, while the Moving Average Convergence Divergence (MACD) indicator hovers around zero, suggesting that bullish momentum is present but tentative.
Bulls need to break the mentioned 0.8586 resistance area level (July 29, 30 highs) to confirm the positive trend and target late June lows at the 0.8605 area. Failure to do so might give fresh hopes for bears to break the August 4 and 5 lows in the 0.8560-0.8565 area and aim for the July 31 low, near 0.8540, which will be the neckline of a double top pattern.
On the downside, immediate support is seen at 0.8548, followed by additional underlying demand at 0.8529 and 0.8510, with deeper structural levels resting at 0.8419 and 0.8327. On the topside, initial resistance aligns at 0.8587, ahead of 0.8606; a sustained break above these caps would open the way toward 0.8730 and 0.8741, with higher hurdles at 0.8790 and 0.8863 likely to limit any extended advance.
Safe-haven US Dollar gains on Middle East tensions despite Iran-Oman Strait of Hormuz shipping deal.
Mixed US economic data shows weak ADP payrolls but steady ISM Services PMI growth.
Softer New Zealand jobs data limits aggressive rate hike expectations ahead of September RBNZ meeting.
NZD/USD extends its losses for the second successive day, trading around 0.5870 during the European hours on Thursday. The pair depreciates as the US Dollar (USD) gains support from renewed safe-haven demand following an Israeli airstrike in southern Lebanon. The attack, which killed one person and injured 11, marked one of Israel’s deadliest bombings since the June ceasefire began. Israel’s military issued a displacement order roughly 30 minutes prior to the strike, stating it was targeting and destroying Hezbollah infrastructure in response to the group’s violation of the ceasefire terms.
However, the Greenback could encounter headwinds as market participants weigh reports of a new maritime agreement between Iran and Oman. The two nations are finalizing a joint statement on a shipping route through the Strait of Hormuz, raising expectations for an increase in Middle Eastern energy flows. Although Tehran emphasized that the temporary two-to-four-month route does not mark a full reopening of the strategic waterway, the development has somewhat eased supply disruption fears.
US ADP private-sector payrolls rose by just 44,000 in July, a sharp drop from June’s revised 95,000 and well below the market forecast of 70,000. Conversely, the ISM Services PMI showed steady momentum, ticking up slightly to 54.1 in July from 54.0 in June, though it narrowly missed the expected 54.5 mark. Investors are now turning their attention toward upcoming economic drivers, specifically Thursday’s Initial Jobless Claims and Friday’s pivotal Nonfarm Payrolls (NFP) report.
Meanwhile, the New Zealand Dollar (NZD) faces challenges as a softer-than-expected labor market report reinforced expectations that any further interest rate increases would likely be gradual rather than aggressive. Nevertheless, markets continue to price in a quarter-point rate hike in September, following indications from the Reserve Bank of New Zealand’s (RBNZ) latest meeting that further policy tightening may be required to reduce monetary stimulus and bring inflation under control.
NZD and local yields slump as solid jobs data highlight lingering slack
Strategists at Brown Brothers Harriman observe that the New Zealand Dollar and local yields have come under pressure even as headline labour data surprise to the upside. They note that “NZD and NZ yields slump” after “New Zealand’s solid Q2 job and wage growth” revealed underlying slack in the labour market. According to BBH, “employment surged 0.5% q/q vs. 0.1% in Q1, well above consensus and RBNZ projection of 0.1%, while private regular wages were up 0.7% q/q (consensus & RBNZ: 0.6%) vs. 0.5% in Q1,” with these stronger readings masking ongoing labour market slack that continues to weigh on the currency and rates.
Technical Outlook: NZD/USD maintains a constructive bullish tone near 0.5900
In the daily chart, NZD/USD trades at 0.5870, maintaining a constructive bullish tone as spot holds above both the nine-day and 50-day Exponential Moving Averages (EMAs) at 0.5858 and 0.5810. The alignment of the shorter EMA above the longer one reinforces a nascent uptrend, while the 14-day Relative Strength Index (RSI) near 61 suggests firm but not yet overbought bullish momentum.
On the topside, initial resistance emerges at 0.5995, ahead of a stronger barrier at 0.6094, where sellers could attempt to cap further gains. On the downside, immediate support is provided by the nine-day EMA, followed by the 50-day EMA; a deeper setback would expose the horizontal floors at 0.5580 and 0.5486, levels that would need to hold to preserve the current bullish bias.
GBP/USD edges down to near 1.3460 while investors shift their focus to the US NFP data.
The US official employment data will have a significant impact on the Fed’s monetary policy outlook.
The Cable appears to be gathering strength for a decisive breakout of the VCP pattern.
The British Pound (GBP) trades marginally lower at around 1.3460 against the US Dollar (USD) during the European trading session on Thursday. The GBP/USD pair is expected to trade sideways as investors await the United States (US) Nonfarm Payrolls (NFP) data for July, which will be released on Friday.
US payrolls seen posting modest July gain as Deutsche Bank flags participation risks
Economists at Deutsche Bank expect Friday’s July payrolls report to show a further, if modest, improvement in hiring. They look for “employment growth of +65k, modestly above June’s +57k reading”.
On the labor market’s slack, Deutsche Bank forecasts that “the unemployment rate is forecast to remain at 4.2%, although risks are skewed towards a rounding up to 4.3% if labor force participation rebounds after last month’s sharp decline.” Wage and hours data are expected to be steady, with “average hourly earnings… expected to increase by +0.3% month-on-month, unchanged from June, while average hours worked are forecast to hold at 34.3 hours.”
Investors will pay close attention to the US NFP data as it will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
Ahead of the US NFP data for July, the ADP Employment Change data remained weaker-than-projected. On Wednesday, the ADP reported that the private sector created 44K jobs in July, fewer than estimates of 70K and the prior release of 98K.
Technical Analysis
GBP/USD trades at around 1.3460, keeping a mildly bullish near-term bias as spot holds above the 20-day exponential moving average (EMA) at 1.3404, but struggles to achieve a decisive breakout of the downward-sloping border of the Volatility Contraction Pattern (VCP) at around 1.3471.
The Relative Strength Index (RSI) around 57 shows constructive but not overextended momentum, suggesting scope for further gains as long as price stays supported on dips above the EMA.
On the topside, immediate resistance is located at the former trend line break price at 1.3471, and a decisive move above this barrier would open the way for a continuation of the recent upside. Looking up, the July 15 high at 1.3558 is the key hurdle. On the downside, initial support is seen at the 20-day EMA at 1.3404, followed by the July 28 low at 1.3274.
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) announced on Wednesday that it held the benchmark Repo Rate steady at 5.25% following the conclusion of the August monetary policy meeting.
The decision came in line with the market expectations.
Speeches from RBI Governor Sanjay Malhotra
West asia conflict continues to challenge global economy.Crude oil prices, currencies, financial markets remain volatile.
Global economic environment has become increasingly unstable.
MPC retains policy stance at ‘neutral.’
Headline inflation has edged up above target.
Higher inflation mostly on account on fuel, food with little signs of generalisation of price pressures so far.
Domestic economic activity has exhibited resilience.
There is need for greater clarity on inflation before taking policy action.
Supply side pressures from west asia conflict have eased somewhat.
Inflation not getting broad based, expected to decline after peaking in Q3FY27.
MPC underscored it will maintain close vigil, stay resolute on aligning inflation to target.
Investment activity remains steady.
Indian economy performed better than expected in Q1FY27.
Q3 FY27 CPI inflation seen at 5.9% (previously at 5.9%).
Q4 FY27 real GDP growth seen at 6.8%.
Q4 FY27 CPI inflation seen at 5.5%.
USD/INR reaction to the RBI interest rate decision
The Indian Rupee (INR) catches fresh offers and extends lower in an immediate reaction to the RBI interest rate decision. The USD/INR pair currently trades at 95.05, down 0.04% on the day.
This section below was published on August 5 at 00:30 GMT as a preview of the Reserve Bank of India (RBI) interest rate decision.
The RBI is set to leave policy rates unchanged on Wednesday.
The Reserve Bank of India might retain the data-dependent approach for the monetary policy outlook.
Investors will closely track comments on FCNR deposits, inflation and the economic outlook.
The Reserve Bank of India (RBI) is set to announce its bi-monthly monetary policy decision on Wednesday at 10:00 AM IST (04:30 GMT), another meeting coming at a time when uncertainty remains high over the duration and economic fallout of the ongoing Middle East conflict.
RBI seen on hold as inflation remains within target band
Analysts at Commerzbank expect the Reserve Bank of India to maintain its current policy stance, noting that the RBI is “expected to leave the benchmark repurchase rate unchanged at 5.25% at its next meeting on 5 August.” While they acknowledge that “inflation risks remain tilted to the upside due to higher global commodity prices and a weaker monsoon season,” Commerzbank highlights that the June Consumer Price Index (CPI) print “rose 4.4% yoy, which was within RBI’s 2-6% target range,” reinforcing the case for policy continuity in the near term.
The RBI is also expected to leave the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF) rates unchanged at 5% and 5.5%, respectively.
According to the latest Reuters poll, 68 of the 72 economists expect the RBI to leave its policy rates at their current levels.
So far this year, the RBI has maintained the status quo at all three policy meetings and has kept rates unchanged since cutting the Repo Rate by 25 basis points (bps) to 5.25% in the December 2025 meeting.
What happened in the last meeting?
In the June policy meeting, the Indian central bank raised its inflation forecast, after leaving policy rates steady, for FY26-27 to 5.1% Year-on-Year (YoY) from 4.6% projected earlier, citing that higher input prices such as base metals, plastic and rubber, and rising commercial Liquefied Petroleum Gas (LPG) prices are putting upward pressure on overall prices.
The RBI also lowered its real Gross Domestic Product (GDP) growth forecast for the current year to 6.6% from its prior expectations of 6.9%.
On the monetary policy outlook, RBI Governor Sanjay Malhotra said that it is “prudent to wait for greater clarity to emerge” and the central bank will remain “data-dependent”.
Key things to watch
Investors will pay close attention to commentary from RBI Governor Malhotra regarding inflation and the economic outlook on the back of the ongoing geopolitical crisis.
In the last meeting, RBI Governor Malhotra acknowledged heightened global uncertainty amid geopolitical risks, and said that the extended disruption in global supply chains and higher energy prices have prompted risks both to inflation and growth. However, he assured that the economy is able to “withstand these shocks with minimum pain”.
In an interview with Businessline, released last week, RBI Governor Malhotra made clear that price stability is their key priority, but policymakers don’t see any signs of price pressures entrenching. “Our primary mandate is inflation and price stability. Therefore, we will do whatever is required first, to keep price stability and then, to see to what extent we can support growth,” Malhotra said.
Investors will also focus on commentary about India’s interest rate outlook. Analysts at Axis Bank say, “The MPC is likely to shift language acknowledging risks of firmer inflation and policy action ahead, while maintaining a data-dependent approach.”
Financial markets would also be keen to know the performance of Foreign Currency Non-resident (FCNR) deposits, which were announced in the June meeting, aiming to increase the inflow of foreign funds to support forex reserves. The tool allows commercial banks to raise funds via foreign currency deposits whose full hedging cost is borne by the RBI.
India flows recover as DBS flags stronger debt, equity and FCNR(B) momentum
Analysts at DBS Group Research highlight that “the flows picture is, meanwhile, on the mend,” pointing to a “resumption in portfolio inflows into equity and debt markets as well as positive cues on the swap schemes.” They note that “July saw debt markets attract more than $2bn in inflows, bringing FYTD debt inflows to $7.7bn, while equities recorded $1.5bn worth flows following consecutive months of outflows.”
In addition, DBS cites comments from RBI Governor Malhotra, who said in an interview that “banks had mobilized a cumulative $32bn via the swap windows to-date, already surpassing the scale of inflows raised back in 2013.” Against this backdrop, DBS reiterates that “we expect the scale of the FCNR(B) deposits, in particular, to pick up in second half of the scheme’s validity period, as KYC/compliance requirements are completed,” and cautions that “at the current run-rate, our conservative estimate of $45-50bn of total inflows under the special schemes could be overshot.”
USD/INR technical outlook points to a mild bearish bias
USD/INR retains a mildly bearish near-term bias as it holds below the 20-day Exponential Moving Average (EMA) at 95.72. The short-term trend structure suggests the pair is capped by this dynamic resistance, while the 14-day Relative Strength Index (RSI) at 45 keeps momentum in a neutral-to-bearish zone, hinting at a lack of strong buying conviction after the recent pullback from the 96.00 area.
On the topside, immediate resistance is defined by the 20-day EMA at 95.73, and a daily close above this barrier would be needed to extend the recovery towards 96.00. On the downside, major sup
USD/JPY edges higher as the Japanese Yen gives back part of its intervention-led gains.
The pair has slipped below all major moving averages, turning the near-term bias bearish.
RSI signals oversold conditions, while the 200-day SMA at 158 offers immediate resistance.
USD/JPY trades modestly higher on Tuesday despite a softer US Dollar (USD), as the impact of recent intervention fades and the Japanese Yen (JPY) comes under pressure again. At the time of writing, the pair trades around 157.60, recovering after briefly falling toward 155 on Monday, its lowest level since May 6.
Analysts at Societe Generale argue that a lasting recovery in the Yen will hinge on the domestic growth story rather than policy theatrics, maintaining that “what will trigger a durable yen rally will be a rise in consensus forecasts of Japanese growth, rather than more, bigger intervention, coordinated or otherwise.”
They add that “more, or faster BoJ rate hikes won’t solve the problem either, unless the Japanese growth outlook makes them appear realistic,” cautioning that “if Japanese growth remains weak, higher JGB yields will increasingly be unhelpful for the yen.”
In contrast, strategists at BBH focus on the near-term impact of recent official action, noting that “the coordinated US-Japan intervention – and officials’ warning that they stand ready to act again – significantly raises the cost of fighting a stronger yen and puts a much firmer ceiling on USD/JPY.”
From a technical perspective, the intervention-driven pullback in USD/JPY has weakened the near-term bullish structure, with the pair slipping below key moving averages.
On the daily chart, the 200-day Simple Moving Average (SMA) at 158 offers immediate resistance. Further up, the 100-day SMA at 160 guards the path toward the 50-day SMA at 161.26 and the 21-day SMA at 161.89, ahead of a more distant structural hurdle at 164.
The Relative Strength Index (RSI) at 27 signals oversold conditions, while the Moving Average Convergence Divergence (MACD) remains below zero, reflecting the recent shift in momentum to the downside.
On the downside, the 155.00 psychological mark offers immediate support. A decisive break below this level could expose the 152.50 area, with the 150.00 psychological mark emerging as the next major downside target.
EUR/JPY declines to near 181.70 in Wednesday’s early European session.
The cross keeps a negative tone, with bearish RSI momentum.
The first upside barrier emerges at 184.90, the initial support level to watch is 181.15.
The EUR/JPY cross trades in negative territory around 181.70 during the early European trading hours on Wednesday. The Japanese Yen (JPY) strengthens against the Euro (EUR) as traders remain on alerts for further intervention from Japanese authorities following the coordinated intervention between the United States (US) and Japan.
Traders will closely monitor the developments surrounding US-Iran talks. Axios reported that the US, Iran, and Oman are closing in on an interim deal to reopen the Strait of Hormuz, with Washington aiming for a Wednesday announcement.
The source added that the agreement under discussion sets up a 60-day temporary arrangement between Oman and Iran in the critical waterway. Fresh optimism over the Middle East could improve risk sentiment and provide some support to the riskier asset, such as the EUR against the JPY.
Yen outlook seen hinging on growth rather than faster BoJ hikes
Societe Generale argues that the policy rate path alone is unlikely to deliver a sustained recovery in the Yen. Analysts there stress that “more, or faster BoJ rate hikes won’t solve the problem either, unless the Japanese growth outlook makes them appear realistic,” underscoring their view that a credible improvement in Japan’s growth prospects is a prerequisite for any meaningful policy tightening to support the currency.
Technical Analysis: Negative outlook of EUR/JPY remains intact
In the daily chart, EUR/JPY keeps a bearish near-term tone as spot holds below the 20-day simple moving average (SMA) from the Bollinger Bands and the 100-day SMA, which now act as a tight resistance cluster overhead. Price is sliding toward the lower Bollinger Band while the Relative Strength Index (14) at 34.77 stays close to oversold territory, hinting that downside pressure persists but may be approaching a fatigue zone.
On the topside, initial resistance is aligned at the Bollinger mid-line/20-day SMA near 184.90, followed by the 100-day SMA at 185.10. A decisive daily close above this level would be needed to ease the current downside bias, with the upper Bollinger Band up at 188.65 as a more distant barrier.
On the downside, the lower Bollinger Band around 181.15 offers the first notable support, and a clear break beneath it would expose the February 12 low of 180.81, en route to the 180.00 psychological level.
Recent currency interventions on the yen and a unified narrative from Japanese and US authorities standing behind the Japanese currency (US Treasury Secretary Bessent today: “The United States will do everything in its power to support the yen”) led to a sharp sell-off in JPY-led pairs (AUDJPY: -3.5%, USDJPY: -3.9%, EURJPY: -2.6% change over the past week). The determination communicated by Tokyo and Washington should limit speculative selling of the yen; however, a sustained recovery in the Japanese currency will likely only be possible following stabilization in the bond market and a clear hawkish turn by the Bank of Japan. With current interest rates (Australia: 4.35%, Japan: 1.00%), the recent AUDJPY sell-off enhances the appeal of the carry trade, even in light of recent, fairly dovish remarks from the RBA. A rebound off the 200-day EMA (black), combined with a global increase in risk appetite (gains in risk assets, falling oil prices, de-escalation in the Middle East), should therefore motivate at least a local upward correction in AUDJPY. This is further supported by the fact that AUDUSD itself remains in an uptrend (trading above the EMA30 and EMA100 on the daily interval), bolstered by the recent decline in US rate hike expectations.
Methodology
This recommendation was prepared based on a technical analysis of the AUDJPY chart and a fundamental analysis of the respective economies (monetary policy in Japan, Australia, and the US). The directional bias was determined using moving averages and market expectations regarding central bank policies. Take Profit and Stop Loss levels were established using Fibonacci retracements and price action:
TP1 is set at the 38.2% Fibonacci level.
TP2 is set at the 23.6% Fibonacci level.
SL is placed between the 100% and 78.6% Fibonacci levels, slightly below the EMA200.
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