GBP Extends Rally as Fed Dovishness Weakens Dollar, Markets Eye 1.3600 Breakout

Traders' Opinions

Summary:

The Pound Sterling extended its rally against the US Dollar on Thursday, climbing to near 1.3520, as dovish remarks from New York Fed President John Williams weighed on the Greenback.

BUY GBPUSD

Close Time

CLOSED

1.35099

Entry Price

1.38000

1.33100

1.33268 +0.00063 +0.05%

21.9

Pips

Profit

1.33100

1.35318

Exit Price

1.35099

Entry Price

1.38000

The British Pound continued its advance against the US Dollar on Thursday, marking its third consecutive day of gains, as a softer Federal Reserve outlook undermined the Greenback and bolstered appetite for risk-sensitive currencies. The GBP/USD pair climbed toward 1.3520 in European trade, buoyed by remarks from New York Federal Reserve Bank President John Williams that reinforced expectations of imminent monetary easing in the United States.

At the time of writing, the US Dollar Index (DXY), which measures the dollar’s performance against a basket of six major peers, slipped to around 97.90, underscoring the growing bearish bias surrounding the world’s reserve currency.

Williams, speaking in an interview with CNBC, acknowledged that the U.S. economy is undergoing a period of adjustment, with slowing growth making the case for potential interest rate cuts. “Risks are more in balance. We are going to just have to see how the data play out,” he said, refraining from committing to a definitive policy shift at the Fed’s upcoming September meeting. His cautious, yet dovish, tone suggested that while officials are reluctant to pre-commit, the door remains firmly open for cuts should incoming data confirm economic weakness.

The remarks came against a backdrop of heightened political and institutional turbulence at the Fed, with Williams declining to address the recent dismissal of Governor Lisa Cook by President Donald Trump. Cook, who was accused by the administration of mortgage-related misconduct, has vowed to challenge the decision in court, adding a layer of uncertainty to the Fed’s already fragile independence at a time when monetary policy is under intense scrutiny.

The dollar’s slide reflects not only the dovish tilt in Fed communications but also mounting concerns that U.S. economic resilience may finally be fading. Investors are increasingly pricing in rate cuts over the coming months, with money markets suggesting a growing likelihood of policy easing before year-end. That expectation has undermined the Greenback’s yield advantage and redirected flows toward currencies perceived as undervalued or supported by relative stability, such as Sterling.

However, while the Fed’s hesitation is weighing on the dollar, the pound’s strength is not without its caveats. The UK economy continues to face structural challenges, from subdued growth prospects to persistent inflationary pressures, which may limit Sterling’s ability to sustain a one-sided rally. For now, though, the divergence in policy trajectories is giving the British currency the upper hand.

Technical Analysis

From a technical perspective, GBP/USD has staged a decisive rebound after defending the 1.3440 support level, which served as a springboard for the latest bullish correction. The pair has successfully broken above short-term resistance lines and escaped the gravitational pull of the 50-day Exponential Moving Average (EMA50), confirming a shift in near-term sentiment.

Momentum indicators, however, suggest the rally may be approaching a point of exhaustion. The Relative Strength Index (RSI) has surged into overbought territory, flashing potential warning signs of a pullback.

The price action aligns closely with the 50% Fibonacci retracement level of the recent downtrend, a zone that often acts as a magnet for bullish flows before a decisive breakout. We are now eyeing two critical upside targets: 1.3600, a psychological threshold that could cap the near-term advance, and 1.3800, which would mark a more significant confirmation of sustained bullish momentum.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3510

STOP LOSS: 1.3310

TAKE PROFIT: 1.3800

Risk Warnings and Disclaimers

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Tank

Economic

Commodity

Forex

Technical Analysis

Summary:

Trump's ongoing assault on the Federal Reserve's independence and the dovish expectations for the Federal Reserve may constrain the downside potential of gold in the future.

SELL XAUUSD

Close Time

CLOSED

3408.00

Entry Price

3375.00

3439.00

4194.38 +4.68 +0.11%

310.0

Pips

Loss

3375.00

3439.02

Exit Price

3408.00

Entry Price

3439.00

Fundamentals

The probability of the Federal Reserve implementing a rate cut in September is approximately 90%, particularly following dovish remarks by New York Fed President John Williams on Wednesday. According to Reuters, Williams indicated that "interest rates may decrease at some point, but policymakers need to assess upcoming economic data to determine if a rate cut is appropriate next month." Following his comments, gold prices experienced a strong rebound on Wednesday, further supported by ongoing dramatic developments between U.S. President Donald Trump and Federal Reserve Board Member Lisa Cook. CNBC sources reported that Lisa Cook may soon file a lawsuit in response to President Trump's attempt to dismiss her. Trump's continued attacks on the Fed's independence and dovish expectations could limit downside risks for gold in the near term.

Furthermore, the ongoing escalation of the global trade conflict may sustain the safe-haven demand for gold. Mexico and Canada plan to increase tariffs on China, while India faces U.S. tariffs of 50% on Russian oil imports. Japan's chief negotiator, Ryosei Akazawa, has canceled his scheduled trip to Washington to discuss tariff issues. Chief Cabinet Secretary Hayashi Yoshimasa stated that technical disagreements have arisen, necessitating continued administrative-level negotiations. According to Kyodo News, no decision has been made regarding rescheduling the talks, although Reuters suggests Ryosei Akazawa may travel to Washington next week. Tokyo has explicitly indicated it will urge the U.S. to amend its reciprocal tariff orders and seek reductions on automotive and auto parts tariffs. The postponement of these negotiations underscores the fragility of trade talks even among close allies. Concerns over Federal Reserve autonomy and the latest U.S. tariff threats could mitigate downward pressure on gold prices, while conversely, they could be bearish for the U.S. dollar.

Technical Analysis

The 4H timeframe indicates that the gold price is oscillating above the EMA12, with an upward bias. If the price maintains support at EMA12, it is likely to surge directly toward 3400 or even 3410. Conversely, failure to hold this level may result in a decline toward the EMA200, approximately around 3352. The RSI value of 63 suggests a bullish market sentiment, but the MACD histogram's diminishing upward momentum and the potential for a death cross of the MACD line and signal line warrant caution against a possible pullback after a rally. In the 1D timeframe, the price is oscillating near the middle Bollinger Band within a triangular pattern approaching its final phase, indicating an imminent directional breakout. A break above 3452 could target 3500 or even 4000, while a fall below 3268 may lead to declines toward 3120 and 3100. The current strategy is to go short initially and then go long at the lows.

Seize Two Strategic Positions to Maximize Profit Potential in the Gold Market!_1

Seize Two Strategic Positions to Maximize Profit Potential in the Gold Market!_2

Trading Recommendations

Trading Direction: Sell

Entry Price: 3408

Target Price: 3375

Stop Loss: 3439

Support: 3375, 3350, 3300

Resistance: 3410, 3439, 3452

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

The seasonal decline in demand restricts the upward movement of oil prices. Although the short-term reductionin inventories provides some support, the extent is limited. Meanwhile, the attacks related to the Russia-Ukraine conflict have increased the risk of short-term supply disruptions, and the pace of OPEC+ production increases constrains medium-term supply. As a result, the market is mainly event-driven and highly volatile.

SELL WTI

Close Time

CLOSED

63.573

Entry Price

59.800

65.100

58.652 +0.097 +0.17%

152.7

Pips

Loss

59.800

65.103

Exit Price

63.573

Entry Price

65.100

Fundamentals

During the day, WTI crude oil continues to trade in a narrow range between $63.00 and $64.00 per barrel. Market sentiment fluctuates as investors weigh the "expectation of seasonal demand decline" against the "sudden risks on the supply side and divergent inventory data".

In the short term, the most direct drag comes from the approaching end of the U.S. summer driving season. Traders are starting to adjust their expectations for the post-holiday demand decline. Although last week's EIA report showed a reduction in inventories compared to expectations, this reduction was not sufficient to completely alleviate concerns about the seasonal demand decline, thus limiting the momentum for the bulls to continue. Overall, the current price seems to be in a consolidation phase under the pull of two forces: "short - term inventory support" and "seasonal demand decline".

On the supply side, local geopolitics and OPEC+ policy directions jointly shape market expectations. Recently, attacks on Russian refineries and export facilities in the Russia-Ukraine conflict have heightened concerns about short-term supply disruptions, posing an upward risk to prices in the short term. On the other hand, OPEC+ has continued to adjust production in recent months to compete for market share and has stated its commitment to maintaining market stability. The overall new production capacity has partially offset the tight supply situation. In other words, if the damage to Russian facilities continues to limit the processing capacity available for export, there are still conditions for oil prices to be pushed higher. If the production expansion of OPEC+ and non-OPEC countries continues, it will impose a neutral or even bearish long-term constraint on oil prices.

Technical Analysis

From the daily chart, the recent trend of WTI has been continuously testing the range between 63.00 and 65.00. The key resistance lies in the range of 64.00-65.00 (the previous high and the dense moving-average area). If there is a breakout with increasing volume and subsequent retracement for confirmation, it is expected to advance towards the range of 66.00-68.00.

On the downside, the key support below is around 60.00. If it breaks below 60.00 and continues to decline, it may test the support level at 58.70.

Trade Recommendations

Trade Direction: Sell

Entry Price: 63.90

Target Price: 59.80

Stop Loss: 65.10

Valid Until: September 11, 2025 23:00:00

Support: 63.14/ 60.00

Resistance Levels: 64.00/65.00

Risk Warnings and Disclaimers

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Tank

Economic

Forex

Technical Analysis

Summary:

The trader assesses an 87% probability of the Federal Reserve implementing a rate cut at the September policy meeting. In the Eurozone, the escalating risk of France holding early elections has constrained the euro's upward potential.

SELL EURUSD

Close Time

CLOSED

1.16400

Entry Price

1.14000

1.18300

1.16411 +0.00047 +0.04%

35.6

Pips

Loss

1.14000

1.16756

Exit Price

1.16400

Entry Price

1.18300

Fundamentals

On Wednesday, Federal Reserve official Williams expressed support for interest rate cuts but did not convey confidence in a reduction at the September policy meeting. He indicated that policymakers need to monitor economic data during the upcoming meeting. "Risks are becoming more balanced; we just need to observe how the data evolves," Williams stated. Meanwhile, traders assign an 87% probability of a rate cut at the September FOMC meeting. In the Eurozone, the risk of an early general election in France is increasing, constraining the euro's upward potential. Earlier this week, French Prime Minister François Bayrou called for a confidence vote on his €44 billion budget plan scheduled for September 8. In response, opposition parties are expected to oppose the confidence vote, potentially leading to an early parliamentary election in France.

Regarding tariffs, the U.S. has imposed tariffs of up to 50% on Indian imports, effective Wednesday, escalating tensions in U.S.-India relations. These measures include a 25% punitive tariff on oil imports from Russia. India plans to provide financial assistance to affected exporters and is committed to trade diversification by expanding into regions such as China, Latin America, and the Middle East, with key commodities like steel, aluminum, and passenger vehicles exempt from tariffs. Federal Reserve Board member Cook announced plans to initiate legal action over President Trump's attempt to dismiss her—prompting renewed debate over the independence of the Federal Reserve. Her attorneys argue that Trump's attempt is unfounded, while the Fed emphasizes that her 14-year term safeguards the long-term interests of the American people. The Federal Reserve stated that, unless a court rules otherwise before the September 16-17 meeting, her term will remain unchanged. Market reactions included stock market volatility and a weakening dollar, supporting the view of a strategic downward trend for the U.S. dollar.

Technical Analysis

In the 1D timeframe, the MACD indicator for the EURUSD shows a death cross between the MACD line and signal line, indicating waning bullish momentum. The ascending momentum histogram is gradually diminishing, with lower highs observed, while the RSI remains around 50, also exhibiting decreasing peaks. The price has not reached new highs and forms a head and shoulders top pattern, signaling a potential bearish divergence. In the short term, the market is likely to consolidate or decline. Currently, the price is supported by the middle Bollinger Band and the EMA50; holding above these levels could sustain an upward trend. A break below these supports may lead to further declines toward the lower Bollinger Band and the EMA200, approximately at 1.146 and 1.123 respectively. In the 1W timeframe, the price is oscillating upward along the EMA12 with a reduced slope, RSI at around 60, and a double top formation. The MACD shows a high-level death cross, with the MACD line and signal line approaching the zero-axis from below, indicating an ongoing correction. A break below the EMA12 could push the price down toward the middle Bollinger Band or the EMA50, around 1.14 and 1.118. It is recommended to go short at the highs in the short term.

Betrayed by France! Are the European and U.S. Markets Experiencing a Rapid Decline?_1

Betrayed by France! Are the European and U.S. Markets Experiencing a Rapid Decline?_2

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.164

Target Price: 1.14

Stop Loss: 1.183

Support: 1.159, 1.145, 1.14

Resistance: 1.17, 1.183, 1.19

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This divergence suggests waning bullish strength and raises the possibility of a trend reversal.

SELL EURUSD

Close Time

CLOSED

1.16510

Entry Price

1.16100

1.16700

1.16411 +0.00047 +0.04%

19.0

Pips

Loss

1.16100

1.16700

Exit Price

1.16510

Entry Price

1.16700

In the Eurozone, Germany’s GfK Consumer Climate Index for September fell sharply to -23.6, missing expectations of -21.5 and down from the previous reading of -21.7. This marks the third consecutive monthly decline and highlights the fragile state of household confidence in Europe’s largest economy. The report revealed a steep drop in income expectations, with concerns over potential job losses and weaker spending intentions adding to worries about the region’s uneven recovery. The deterioration in sentiment continues to weigh on the euro, reinforcing the challenges faced by policymakers as demand softens.

At the same time, political uncertainty in France is exerting additional pressure on the single currency. Prime Minister François Bayrou has tied his €44 billion budget proposal to a crucial vote of confidence in parliament, scheduled for September 8. The move has raised the risk of a government collapse or even early elections, intensifying questions about political stability in the Eurozone’s second-largest economy.

Looking ahead, Thursday’s calendar will draw close market attention. The release of Eurozone confidence surveys and the ECB Monetary Policy Meeting Accounts may offer fresh insight into the Governing Council’s latest debate over inflation and growth risks. In the U.S., weekly jobless claims will provide an early look into labor market conditions, while Friday’s Core PCE Price Index—the Fed’s preferred inflation gauge—remains the most anticipated data point of the week.

On the U.S. policy front, political interference concerns resurfaced after President Donald Trump announced plans to dismiss Fed Governor Lisa Cook. The move is seen as an effort to influence the Federal Reserve and potentially redirect monetary policy, reigniting debate over the institution’s independence. According to the CME FedWatch tool, money markets now price in an 87.2% probability of a 25-basis-point cut in September.

Meanwhile, Fed officials continue to shape market expectations. Dallas Fed President Lorie Logan stressed the need for clearer communication as the central bank weighs possible adjustments. She cautioned that focusing solely on banks’ short-term demand for reserves risks inflating the balance sheet unsustainably, and instead called for prioritizing longer-term needs through Treasury holdings.

Fed Chair Jerome Powell last Friday struck a more dovish tone, suggesting that rate cuts could come as soon as September given “rising downside risks to the labor market.” He also acknowledged that tariffs may create a temporary inflationary shock, though such effects could fade over time, potentially allowing for a less restrictive stance. Still, Powell emphasized the delicate balance: inflation risks remain skewed to the upside while employment risks are tilted to the downside.

Richmond Fed President Thomas Barkin echoed caution on Tuesday, describing the outlook as warranting only a “modest adjustment” in rates, reflecting his view of a modestly expanding economy. Against this backdrop, Treasury yields have been subdued: the 10-year yield eased two basis points to 4.246%, while U.S. real yields ticked up to 1.826%. Markets now turn their attention to Thursday’s second estimate of Q2 GDP, where expectations of 3.1% growth could support the dollar if exceeded, or reinforce a dovish outlook if missed. Bearish Momentum May Rebuild if the Pattern Repeats_1

Bearish Momentum May Rebuild if the Pattern Repeats_1

Technical Analysis

EURUSD has largely traded sideways over the past month, with price action oscillating within a defined range. However, the pair recently came under renewed pressure as it approached the 100- and 200-period moving averages, suggesting a possible repeat of earlier bearish momentum. If this pattern holds, another downside move could unfold, with the next target near 1.1600, where key support aligns. On the 1-hour chart, the 100- and 200-period moving averages are positioned at 1.1643 and 1.1651, making these levels critical to watch for potential bearish acceleration.

Momentum indicators also add weight to the downside case. The RSI has climbed to 62, nearing overbought conditions. A move closer to 70 could trigger renewed selling pressure. Additionally, a notable divergence has emerged between price and RSI: while EURUSD has set lower highs, the RSI has posted higher readings. This divergence suggests waning bullish strength and raises the possibility of a trend reversal. If confirmed, the combination of resistance at moving averages and weakening momentum could open the path for a deeper correction.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1651

Target price: 1.1610

Stop loss: 1.1670

Validity: Sep 05, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

If this pattern repeats, a fresh leg lower could develop, targeting the rising trendline that coincides with support near 146.61.

SELL USDJPY

Close Time

CLOSED

147.458

Entry Price

146.650

148.500

155.788 -0.130 -0.08%

49.5

Pips

Profit

146.650

146.963

Exit Price

147.458

Entry Price

148.500

President Donald Trump’s move to dismiss Federal Reserve Governor Lisa Cook has been widely interpreted as an attempt to exert influence over the central bank and potentially steer monetary policy in his favor. The action has raised renewed concerns about the independence of the Federal Reserve, a theme closely watched by investors. Money markets are now pricing in nearly an 87.2% probability of a 25-basis-point rate cut in September, according to the CME FedWatch tool.

In the meantime, Dallas Fed President Lorie Logan has emphasized the need for clearer policy communication as the Fed evaluates possible adjustments to its strategy. She cautioned that addressing only the growing short-term demand for reserves could lead to an unsustainably large balance sheet. Instead, she stressed the importance of focusing on banks’ longer-term reserve requirements, with the Fed maintaining its balance sheet mainly through longer-dated Treasuries.

Last Friday, Fed Chair Jerome Powell signaled that a rate cut could be considered as early as September, citing “rising downside risks to the labor market” and a shift in the balance of risks that may justify a recalibration of policy. While acknowledging that tariffs might have a temporary inflationary impact, Powell suggested such pressures could fade, creating room for a less restrictive stance. Still, he warned that inflation risks remain tilted to the upside, while employment risks lean to the downside—highlighting the delicate trade-off currently confronting the central bank.

On Tuesday, Richmond Fed President Thomas Barkin reinforced a cautious stance, remarking that his outlook points to only a “modest adjustment” in rates, reflecting his view that the economy is moving forward at a moderate pace.

Meanwhile, U.S. Treasury yields have been under pressure. The 10-year yield slipped two basis points to 4.246%, while U.S. real yields—derived from nominal yields adjusted for inflation expectations—edged up 1.5 basis points to 1.826% at the time of writing.

Attention will soon shift to Thursday’s release of the second estimate of U.S. Q2 GDP. Expectations point to a 3.1% annualized growth rate, but any upside surprise could provide short-term support for the U.S. dollar. Conversely, a softer print may reinforce the market’s dovish rate outlook.

Across the Pacific, the Japanese yen drew support from comments by Bank of Japan Governor Kazuo Ueda. He noted that wage increases are broadening beyond large corporations and are likely to accelerate further amid tight labor conditions. His remarks have strengthened expectations that the BoJ could raise interest rates in the coming months. Traders will now look to Thursday’s Tokyo Consumer Price Index data, which could validate Ueda’s concerns about persistent inflation. A stronger reading may heighten pressure on the BoJ to tighten policy further, offering additional support for the yen.

Adding to the backdrop, Japan’s Economy Minister and chief trade negotiator Ryosei Akazawa stated ahead of his U.S. visit that he intends to request an executive order from Washington to lower reciprocal tariffs on automobiles—a move that could have trade and currency implications. Downside Momentum Builds as Fed Uncertainty Weighs_1

Downside Momentum Builds as Fed Uncertainty Weighs_1

Technical Analysis

USDJPY recently faced downward pressure after approaching the 148.04 level—a zone that has repeatedly triggered selling momentum in recent sessions. Should this pattern repeat, a fresh leg lower could develop, targeting the rising trendline that coincides with support near 146.61. The price reaction at this level will be critical: a rebound could mark another attempt to defend the broader uptrend, while a clean break below may open the door for a deeper correction.

Adding weight to the bearish case, the 100- and 200-period moving averages on the 4-hour chart sit at 147.55 and 147.78 respectively. With USDJPY recently closing below these moving averages, downside momentum may continue to strengthen toward the next support zone. On the flip side, if the pair manages to reclaim the 148.00 threshold, buyers could eye the 148.81 resistance as the next upside target.

Trading Recommendations

Trading direction: Sell

Entry price: 147.45

Target price: 146.65

Stop loss: 148.50

Validity: Sep 05, 2025 15:00:00

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

WTI crude oil trades cautiously near $63 amid anticipation of U.S. inventory data and geopolitical tensions, while technical signals point to a potential short-term rebound if key support levels hold.

BUY WTI

Close Time

CLOSED

63.500

Entry Price

67.000

61.600

58.652 +0.097 +0.17%

33.0

Pips

Profit

61.600

63.830

Exit Price

63.500

Entry Price

67.000

West Texas Intermediate (WTI) crude futures on the New York Mercantile Exchange (NYMEX) hovered cautiously near Tuesday’s low of $63.00 per barrel during Wednesday’s European trading session, reflecting a market in wait-and-see mode ahead of fresh U.S. inventory data and escalating geopolitical tensions that could weigh on global oil demand.

Market participants are closely monitoring the weekly U.S. Energy Information Administration (EIA) report for the week ending August 22, with expectations pointing to a modest decline in crude stockpiles. Analysts surveyed by industry sources anticipate a 2 million barrel reduction, a slowdown from the 6.01 million barrel draw reported last week. While inventories are expected to continue their decline, the pace of reduction has moderated, indicating that underlying demand may be softening.

Adding to market unease, U.S. President Donald Trump announced on Tuesday a sharp increase in tariffs on imports from India, imposing a 50% levy on Indian purchases of Russian crude. The tariff measure, set to take effect at 12:01 a.m. EDT (09:31 p.m. IST) Wednesday, has raised questions over the trajectory of global oil demand. India, one of the world’s largest oil importers, could see demand for energy soften if the tariffs disrupt supply chains or make Russian crude less competitive. Note that while Indian refiners have diversified their sources in recent years, a sudden cost shock from U.S. tariffs could temporarily curtail buying, adding bearish pressure on crude prices.

Technical Analysis

On the technical front, WTI crude continues to trade within a cautiously bullish framework. Prices have been forming higher highs and higher lows on intraday charts, reflecting an underlying uptrend, but momentum remains fragile. The $64.00 level is emerging as a crucial pivot; a sustained move above this zone could open the door to a short-term target of $65.24.

Conversely, a breach below $63.338 on the four-hour chart could signal a breakdown of the bullish structure, potentially triggering a renewed slide toward lower support levels and invalidating the current uptrend.