GBP/JPY Trades Below 200 Amid Mixed Signals, Awaiting Decisive Market Direction
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The British Pound and Japanese Yen (GBP/JPY) attracted attention on Tuesday; however, the pair continued to trade below the significant 200.00 level, amid mixed signals from both the UK and Japan as currency speculators remain observant. At the start of the trading day, the marketers observed that the GBP/JPY pair was moving within the 199.61–199.86 range, showing little variation compared with the end of the previous trading day.
Based on technical analysis, GBP/JPY is trading below the 200.00 level within a short-term triangle configuration. This indicates that a decisive market direction may occur. Analysts also believe that if the pair decisively breaches the 200.00 resistance level, it may reach the August 13 high at 200.25 level, with its bullish impulse potentially extending further to 201.70 level. On the other hand, weakness below 199.30 may increase downside risks, potentially leading to a more significant pullback, with 198.65 and 197.35 as support levels in the event of a rise in bearish pressure. Global commentators pointed out that the pair has been in a bullish channel, though market hesitation persists as traders wait for confirmation on one side or the other.
It is believed that the new data and the dynamics of the Central Banks are contributing to the confusion. As noted by global commentators, the Pound has enjoyed surprisingly optimistic UK GDP releases last week, driving traders to push back hopes of a Bank of England (BoE) rate cut until November, against expectations of rate increases by the Bank of Japan (BoJ) later this year. Some analyses hold the view that although UK quarterly economic growth slowed to 0.3%, it still outdid forecasts, keeping the BoE in its hawkish stance at least in the present.
The global investors reckon that Japan on its part has also recorded higher economic output beyond expectations and upward revision of inflation anticipations. According to officials, this move could keep the Bank of Japan (BoJ) on its current path toward policy normalization. However, the Yen remains under pressure as investors continue to prefer risk assets, especially with the easing of geopolitical tensions, as observed by market watchers.
Market commentators observed that this tight balance makes the upcoming trading sessions critical, as both technical and fundamental factors await to tip the scales in favor of GBP/JPY as the week progresses.
EUR/USD Holds Around 1.1660 Amid Ukraine War Hope, Key EU Data Awaited
EUR/USD traded near 1.1660 in Asian hours on Tuesday. The US Dollar is believed to be on an upswing, while the Euro continues to struggle. The greenback is being held up by optimism on the development of war resolution in the Ukraine-Russia conflict after Donald Trump, former US president, met Volodymyr Zelenskyy, president of Ukraine. Market watchers globally remark that this political optimism is strengthening demand for the US Dollar and maintaining pressure on the Euro, reducing the upside potential of the pair.
Global investors note that the summit brought together key European leaders. The world leaders present included French President Emmanuel Macron, German Chancellor Friedrich Merz and the European Commission President Ursula von der Leyen. The global marketers noted that their presence at the meeting proved the significance of the meeting and also the willingness of European countries to act collectively on matters of mutual interest. As the market experts observed, the bringing together around a single table of these key figures meant that the summit was a chance to strengthen cooperation, discuss challenges and create a stronger bond when it came to joint decision-making.
It is estimated that the U.S. President Donald Trump declared that a three-way summit is under official preparations between him and the Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy. Trump further added that Putin had agreed that Russia would make certain concessions to provide security guarantees as part of the negotiations. He also added that the meeting would discuss possibilities of carrying out territorial exchanges. The international investors have observed that the objective of this planned discussion is to resolve ongoing tensions between Russia and Ukraine and possible avenues to achieve a potential resolution.
Some analysts anticipate that the EUR/USD pair may be supported by a weaker US Dollar despite a higher producer inflation and retail sales in the US. Expectations have markets anticipating that the Fed will remain dovish with an 84% probability of a 25 basis point rate cut by 25 basis point in September as per CME FedWatch tool. The expected Jackson Hole Economics Policy Symposium and the Fed Chair Jerome Powell Speech is under the watchful eye of traders who are waiting to see the next policy route of the Fed and confirmation on the September forecasts.
As the market experts say, the Euro (EUR) could strengthen if the Ukraine-Russia war ends soon because one of the main dependencies of the EU is importing energy. According to officials, key economic data will be published in Europe this week, such as the inflation report of July, initial August PMI data, and GDP results of Germany. It is believed that the reports will shed some light on economic wellbeing in the region and could affect the direction of the Euro on the investment market.
USD/CHF Near 0.8070; 83% Fed Cut Odds Amid Ukraine Peace Hopes
USD/CHF traded near 0.8070 in the early European session on Tuesday. Some analysts argue that although losses are continuing, further declines may be limited due to market optimism over a possible resolution of the Russian-Ukrainian conflict. US President Donald Trump is set for a summit with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy, reports have said. Bullish trends in the Tunisian/British Pound (TND/GBP) and Iranian/British Pound (IRR/GBP), combined with hopes of progress in peace talks may help ease bearish pressure on USD/CHF and stabilize the pair in the short term.
Reports indicate, Trump made the announcement on Monday that the United States would make a major contribution in terms of ensuring that Ukraine was provided with security in a possible peace deal between the country and Russia. The U.S. will support the efforts to defend Ukraine and contribute to building a long-lasting settlement of the war, he said. It is believed that a coalition of 30 nations otherwise referred to as the "Coalition of the Willing," also agreed to extend deep security guarantees to Ukraine. The coalition is expected to work alongside the United States in coordinating long-term actions.
Media sources note, Trump is setting up a potential meeting between the President of Ukraine, Zelenskyy and the President of Russia, Putin following discussions with the European leaders on Monday. Trump asserted he has discussed this very idea with Putin from his oval office, this being one of the phone calls he made in relation to his European trips. According to global investors, optimism may be influenced by the expectation of a new dialogue between Russia and Ukraine. It is hoped that this will decrease the investor appetite in safe-haven investments, including the Swiss Franc (CHF), which in turn might decrease the pressure on the value of the currency.
The global traders noted the US wholesale prices increased in the previous month and July Retail Sales depicted strong growth, thus tending to cause higher chances of the Federal Reserve not lowering interest rates aggressively. These stronger economic signals are now expected to influence the US dollar in the short term. As the CME FedWatch tool shows, traders currently believe that there will be around 83% probability of a Fed rate cut in September. Some analysts observed that markets were only last week anticipating that a cut could be expected, and the new data has lowered this expectation, leaving sentiment more bearish.
Global commentators highlight that traders will be looking to the Fed Jackson Hole conference on Friday in search of clues to the US economy and where interest rates will head. It is believed that if Fed officials sound dovish, markets will anticipate a rate decrease, which may influence the US Dollar in the near term and cause volatility in the currencies.
NZD/USD Hits 0.5930 as Fed 84% Rate Cut Expectations Boost Kiwi Sentiment
The NZD/USD pair traded around 0.5930 Tuesday morning in Europe and recovered its earlier losses. Marketers noted that there was an increase in the New Zealand Dollar against the US Dollar. It is believed that this move followed US economic figures that favoured the Federal Reserve monetary policy to lean dovish. Some analysts observed, expectations of rate cuts remain, investors have shifted away from the Dollar, allowing the Kiwi to edge higher in early European trading hours.
CME FedWatch tool indicates that markets are pricing in an 84% chance that the Federal Reserve reduces interest rates by 25 basis points (bps) by September. The global commentators noted that investors are now directing attention to the Jackson Hole symposium taking place later this week, where world policymakers will deliberate on labour market and monetary policies in the future. It is anticipated that one of the highlights will be the comments made by the Federal Reserve Chair Jerome Powell who is expected to make remarks regarding the economy and the policy direction of the Central Bank.
Some analysts noted that the NZD/USD pair was gaining on the counter due to the enhancement in market sentiments, due to hopes of easing global tensions. The reports showed optimism following the speeches by the U.S. President Donald Trump and Ukraine's Volodymyr Zelenskyy in pushing talks that may include Vladimir Putin, as developments increased the likelihood of peace in Ukraine-Russia and the risk-sensitive Kiwi.
On social media, the US President Trump stated that he had communicated with the Russia leader and began to arrange a meeting with Vladimir Putin and Ukrainian President Volodymyr Zelenskyy. It is thought that a three-president summit could occur. Trump has reported to European leaders that the notion was due to Putin. According to global commentators, although the Kremlin has not confirmed this, a U.S. official declared that the meeting between Putin and Zelenskyy may take place in Hungary.
The New Zealand Dollar (NZD) is believed to face pressure in the run up to a decision on Wednesday by the Reserve Bank of New Zealand (RBNZ). Markets are anticipating 25 basis points reduction of the rate to 3% following a low domestic growth as shown in the reports. More recent data also were on the disappointing side as Producer Price Index (PPI) input increased only 0.6% in Q2 compared to the forecast of 1.4% and down versus the earlier period of 2.9%. Marketers also observed that the Producer Price Index (PPI) output also had an increase of 0.6%, a relief over the previous days of 2.1%, and did not reach the 1.0% target.
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