The EUR/USD pair remains under pressure from the US dollar following a strong US labor market report that noticeably boosted expectations of a Federal Reserve rate hike in September. In the meantime, the euro is drawing support from anticipation of another ECB rate increase, meaning the pair's subsequent direction will depend on how rapidly markets readjust the monetary policy trajectories of both central banks.
Possible technical scenarios:
As we can see on the daily chart, EUR/USD continues moving down from the dotted resistance level at 1.1682. The price maintains its downward momentum with pullbacks toward support at 1.1494, leaving sufficient room for further downside.
Fundamental drivers of volatility:
The US economy added 162 000 jobs in August against the projected 56 000, while unemployment held at a low 4.1%. These upbeat figures reinforced expectations of Fed policy tightening. The likelihood of a rate hike this month is now priced at nearly 60%, underpinning the dollar and lifting US Treasury yields. If this week’s PPI and CPI prints confirm accelerating inflation, market pricing could lean even further toward an aggressive Fed trajectory, exerting additional downward pressure on EUR/USD.
Meanwhile, the euro finds fundamental backing in the expected 25-basis-point ECB rate hike to 2.50%. This would mark the central bank’s second rate increase this year, following an initial move in June. Crucial for the single currency will be the ECB’s forward guidance: a clear readiness to pursue further tightening could support eurozone bond yields and narrow the dollar’s interest rate advantage.
Further buoying the euro are upgraded medium-term projections for the eurozone economy. Deutsche Bank lifted its regional growth forecasts for 2026 and 2027 to 0.8% and 1.2%, respectively, and pencils in another ECB rate hike in December. Should policymakers reiterate inflation concerns while keeping the door open to additional tightening, markets will have ample reason to price in an extended period of elevated eurozone interest rates, curbing the dollar's edge.
That being said, the primary headwind for EUR/USD remains the potential resurgence of US inflation, driven by surging global energy prices. Higher crude prices stoke inflation expectations across both the US and the eurozone. However, the relative impact will be decisive for the pair: if stubborn inflation forces the Fed to maintain restrictive policy longer than markets anticipate, the yield advantage will remain firmly with the greenback. Under that scenario, even an ECB rate hike may prove insufficient to generate a sustained euro rally.
Over the near term, EUR/USD is expected to remain in the elevated volatility area ahead of the Fed and ECB interest rate decisions alongside the US PPI and CPI releases. High US inflation paired with hawkish Fed rhetoric would weigh heavily on the pair, whereas softer US prints and an ECB signal pointing to further rate hikes could reignite demand for the euro.
Intraday technical picture:
Judging by the look of things on the 4H chart, EUR/USD is carving out a local sideways range between 1.1566 and 1.1640 within the broader 1.1494–1.1682 range, retaining ample room to decline toward the lower boundary. A breakout of the dotted support at 1.1566 followed by consolidation would clear a path toward 1.1494.
The GBP/USD pair gained modest support amid a weakening US dollar, though the pound's upside remains capped by the lack of fresh, decisive catalysts from the UK economy. In the coming weeks, market focus will shift toward the October budget, which could ramp up pressure on sterling amid rising concerns over government spending and fiscal discipline.
Possible technical scenarios:
The daily chart demonstrates that GBP/USD remains on a medium-term downward trajectory within a broad 1.3215–1.3630 range. Despite local pullbacks, the pair still has substantial room to drop toward the 1.3215 level.
Fundamental drivers of volatility:
Sterling found moderate support following the first major economic address delivered by UK Chancellor John Healey. That being said, the takeaway for the pound proved mixed.
Healey emphasized boosting economic growth, devolving powers to regions to attract private investment, cutting regulatory red tape, and managing costs. While the Chancellor reiterated a commitment to fiscal discipline, the lack of substantial new fiscal stimulus gave sterling little incentive for a sustained advance.
The paramount risk hanging over the pound remains the upcoming October budget. Investors are waiting to see how the government plans to finance ramped-up expenditure on housing, social welfare, and defense without deteriorating public finances. As the budget draws nearer, the balance of risks is gradually skewing toward the downside for sterling.
On the US dollar side, pressure remains limited for now, as the greenback softened against most major peers on Monday, allowing GBP/USD to stage a rebound. That said, rising global bond yields could reinvigorate the dollar while driving up UK borrowing costs, creating an added headwind for the pound.
Over the short term, GBP/USD faces a neutral-to-negative fundamental backdrop. The absence of fresh government stimulus limits the pound’s upside potential, and markets will likely price in fiscal risks more heavily as the October budget approaches. A sustained recovery in the pair will require clearer evidence of UK growth momentum and decisive policy guidance from the Bank of England.
Intraday technical picture:
The 4H chart suggests that GBP/USD is trading within a local sideways range between 1.3474 and 1.3557. From its resistance, the price has room to move toward the 1.3474 support, and a breakout of this level would open the door for a drop toward the next target at 1.3276.
The USD/JPY pair remains under pressure following a sharp surge in the Japanese yen, with markets having almost fully priced in an interest rate hike by the Bank of Japan, while the unwinding of speculative JPY short positions is amplifying downward momentum of the currency pair.
Possible technical scenarios:
The USD/JPY pair tumbled before recouping a portion of today's losses, pulling back toward the 154.35 resistance. From here, quotes could either pull back toward the 153.19 support level with downside potential into the 150 yen per dollar area, or stage a local recovery toward 155.03.
Fundamental drivers of volatility:
Expectations for a 25-basis-point rate hike by the Bank of Japan to 1.25% have climbed to 97%, with market players also factoring in a high likelihood of further monetary tightening before year-end. Ten-year Japanese government bond yields surging to roughly 30-year highs have enhanced the appeal of domestic assets, reducing incentives to deploy capital abroad in search of yield.
A massive unwind of the carry trade is offering additional support to the yen. Cross-border yen-denominated borrowing—viewed as a key proxy for these trades—reached around 360 trillion yen, meaning continued short covering could accelerate the yen’s appreciation.
On the dollar side, Federal Reserve policy remains the pivotal driver. Following stellar US employment figures, the market is pricing a roughly 60% probability of a September rate hike, and upcoming US inflation data could significantly alter that outlook. A hotter-than-expected CPI print due Friday would provide fresh support for the greenback and cushion USD/JPY's drop, whereas a soft reading would raise the likelihood of a less hawkish Fed stance and heighten pressure on the pair.
Intervention risks remain an added tailwind for the yen: Tokyo and Washington have reaffirmed coordination on FX policy, while the rapid appreciation of the JPY has brought the 150 level back into sharp focus. This introduces an asymmetric risk profile for USD/JPY, as any dollar recovery could be tempered by traders' reluctance to rebuild sizeable yen short positions while the dual threats of BOJ tightening and direct FX intervention loom.
Intraday technical picture:
Given the unfolding scenario on the 4H chart, we see that USD/JPY has entered a local consolidation phase within the 153.19–154.35 range. Currently, the price has room to move lower within this sideways range. The next directional move will depend on whether support at 153.19 holds.
USD/CAD remains under pressure following broader US dollar weakness, as rising crude oil prices offset weak Canadian labor market data. Over the near term, the pair’s trajectory will be shaped by a combination of energy prices, rate expectations surrounding the Fed and the Bank of Canada, and incoming US inflation readings.
Possible technical scenarios:
On the daily chart, USD/CAD is nearing the support of its sideways range between 1.3744 and 1.3861. Once the 1.3744 level is reached, the technical direction of the price will depend on whether this support holds. If it does, the pair could stage a rebound within the sideways range. That being said, a breakout and consolidation below 1.3744 would target 1.3503 for an extended medium-term decline.
Fundamental drivers of volatility:
The Canadian economy lost 41 700 jobs while the unemployment rate held at 6.4%, severely restricting leeway for policy tightening by the Bank of Canada. Markets are pricing in about a 70% probability that the BoC will hold rates steady at 2.25%, versus roughly a 30% chance of a hike. In contrast, current expectations suggest the Federal Reserve could lift its benchmark rate by 25 basis points to a 3.75%–4.00% target range. This widening policy divergence represents a structural advantage for the US dollar and could limit USD/CAD’s downside.
That said, this dynamic is partially offset by rising oil prices. Escalating tensions between the US and Iran are amplifying supply disruption risks and keeping crude buoyant, which typically spurs demand for the Canadian dollar as a petrocurrency. Consequently, continued strength in oil could exert downward pressure on USD/CAD despite weak domestic economic prints out of Canada.
While strong US employment data initially gave the greenback a lift, that momentum quickly dissipated as traders turned their attention to this week's inflation reports. If PPI and CPI prints beat forecasts, expectations of tighter monetary policy could ramp up, lifting US Treasury yields and supporting USD/CAD. Conversely, cooler inflation figures would sap the dollar’s appeal, allowing the loonie to react more dynamically to oil's rally.
For the Canadian dollar, the tug-of-war between external commodity strength and domestic economic frailty remains pivotal. Persistently high oil prices provide support for the CAD, but a deteriorating job market and low odds of a BoC rate hike cap its upside potential. Furthermore, heightened geopolitical risks can simultaneously support oil and stoke safe-haven demand for the US dollar. Ultimately, USD/CAD's reaction will depend on which driver takes the lead.
Over the near term, the balance of risks leans toward a modest decline in USD/CAD, provided oil prices remain elevated, and US inflation does not spike significantly. Conversely, stronger-than-expected US PPI and CPI data or a pullback in crude could swiftly restore dollar demand and trigger an upside reversal in the pair.
Intraday technical picture:
Given what we see on the 4H chart, USD/CAD still has room to move lower within the 1.3744–1.3861 sideways range.
Gold remains under pressure following a strong US jobs report, which heightened expectations of a September Fed rate hike and underpinned the US dollar. Meanwhile, rising oil prices and geopolitical tensions are keeping inflation risks elevated, making upcoming US inflation figures the primary catalyst for the precious metal's next move.
Possible technical scenarios:
Gold continues trading near the 4,375.25 support level. A breakout of this level and consolidation below it could extend the decline toward 4,309.95. That said, if support at 4,375.25 holds, we may witness another recovery attempt within the 4,375.25–4,635.63 sideways range.
Fundamental drivers of volatility:
Accelerating US employment growth in August, with unemployment steady at 4.1%, reinforced the case for Fed policy tightening. The probability of a rate hike at the September 16 meeting is now estimated at roughly 60%, up from 50% before the release, pushing bond yields higher and dampening the appeal of non-yielding gold.
Gold may face additional headwinds from shifts in real US Treasury yield expectations. If resilient economic data prompts markets to price in higher-for-longer Fed interest rates, rising real yields will increase the opportunity cost of holding gold and stifle capital inflows into the metal.
On the other hand, signs of cooling inflation, with CPI due on Friday, or deteriorating economic conditions could quickly revive rate-cut expectations, offering more durable support to gold even in the face of a relatively resilient dollar.
Inflation risks are intensifying alongside a sharp spike in crude oil prices spurred by escalating Middle East tensions. Potential disruptions to shipping through the Strait of Hormuz could keep energy prices elevated and fuel broader inflation concerns. This acts as a double-edged sword, elevating demand for gold as a safe-haven hedge, but simultaneously increasing the likelihood of a more aggressive Fed policy response.
Over the near term, gold is likely to remain under pressure as long as markets price in a Fed rate increase. Key triggers will be this week’s US PPI and CPI prints. Softer inflation could revive rate-easing expectations and support the metal, while stronger data will amplify selling pressure on gold.
Intraday technical picture:
The 4H chart demonstrates that XAU/USD is once again approaching the 4,375.25 support level. If this level gets broken out, the next downside targets sit at 4,304.11 and 4,209.95.
Brent crude oil prices continue to climb amid a sharp escalation in the US-Iran conflict, which is stoking supply disruption fears across the Middle East. Following an almost 8% rally over the preceding week, quotes touched $98.06 per barrel—marking their highest level since July 24—as the market increasingly bakes in the risk of sustained shipping and supply bottlenecks.
Possible technical scenarios:
The daily chart shows that Brent is attempting to consolidate above the 95.18 level. If the price successfully overcomes the dotted resistance at 97.84, this would clear the path for the move toward the next medium-term target at 113.99.
Fundamental drivers of volatility:
The primary catalyst driving oil prices higher remains the threat of renewed Iranian strikes against regional energy infrastructure and commercial shipping. Tanker attacks and mounting friction around the Strait of Hormuz have already curtailed vessel traffic: over the past 10 days, an average of only around 10 ships per day traversed the strait, marking the lowest flow since May.
Brent is drawing additional support from tightening US fuel inventories. Gasoline and distillate stockpiles sit substantially below year-ago levels and their five-year seasonal averages, pointing to a tighter market balance and increasing price sensitivity to prospective supply shocks.
Meanwhile, OPEC+ has left its existing output policy unchanged for October, opting not to inject additional supply to offset potential shortfalls. Goldman Sachs notes that oil could surge toward $120 per barrel if maritime attacks intensify; consequently, further escalation around the Strait of Hormuz remains the core risk premium factor for Brent.
Over the short term, the fundamental backdrop for Brent remains distinctly bullish: regional supply curtailments, declining maritime traffic, and threats to energy facilities continue to underpin a solid geopolitical risk premium. The key trigger for an extended rally will be further constraints on transit through the Strait of Hormuz, whereas an easing of tensions and normalization of supply flows could quickly deflate the deficit premium.
Intraday technical picture:
As evidenced by the 4H chart, an exit from the tight 95.18–97.84 range will be critical for Brent price to sustain its subsequent climb. If this doesn’t pan out, we’ll have to question the strength of support at 95.18.
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