Kiwi Extends Gains as Softer U.S. Inflation Boosts Fed Cut Bets

Economic

Summary:

The New Zealand dollar extended gains on Wednesday, buoyed by robust risk appetite and a softer U.S. dollar after cooler U.S. inflation reinforced bets on a September Fed rate cut. NZD/USD is edging toward the 0.6000 mark, with traders eyeing stronger upside while key support at 0.5950 underpins the bullish trend.

BUY NZDUSD

Close Time

CLOSED

0.59804

Entry Price

0.60600

0.59500

0.57846 +0.00092 +0.16%

30.4

Pips

Loss

0.59500

0.59499

Exit Price

0.59804

Entry Price

0.60600

The New Zealand dollar strengthened further on Wednesday, pushing past a key technical resistance level as global risk appetite improved and the U.S. dollar retreated on expectations of a Federal Reserve rate cut next month.

NZD/USD climbed above the 0.5970 barrier — a level that had capped gains on July 29 and August 8 — and is now approaching the psychologically significant 0.6000 handle. Market sentiment was lifted after Tuesday’s U.S. consumer price index (CPI) report showed inflation pressures remain contained, reinforcing the view that the Fed is poised to ease policy in September to cushion a softening labor market.

According to CME’s FedWatch Tool, traders are now pricing in a 95% probability of a 25-basis-point cut at the next policy meeting, up from 85% before the inflation data and just 50% a month ago. The sharp repricing underscores how quickly the market’s focus has shifted from whether the Fed will cut to how aggressive it might be later in the year.

The July CPI print showed annual headline inflation holding steady at 2.7%, defying economists’ expectations for a slight uptick to 2.8%. Core inflation — which strips out volatile food and energy costs — rose to 3.1%, marginally above the 3.0% consensus and June’s 2.9%. The slight overshoot in core prices did little to dent rate-cut optimism, as the broader inflation trend remains consistent with the Fed’s gradual disinflation narrative.

Attention today is limited to appearances by Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic. Both have recently signaled a preference for a cautious approach to policy tightening, suggesting their remarks are unlikely to give the greenback much support.

Beyond the Fed story, the New Zealand dollar also gained from broader risk-on sentiment after Washington and Beijing agreed to extend their trade truce for another 90 days. The decision alleviates some of the uncertainty surrounding global trade flows and bolsters currencies closely tied to Chinese economic fortunes. As a key exporter to China, New Zealand often sees its currency move in tandem with market perceptions of China’s economic outlook.

For now, the absence of negative domestic news has been enough to keep NZD bulls in control.

Technical Analysis

From a technical perspective, NZD/USD’s recent breakout above 0.5970 reinforces the short-term bullish corrective trend. The pair continues to trade above its 50-period exponential moving average (EMA50), with the supportive trendline intact and the relative strength index (RSI) flashing constructive momentum signals.

Key support is now pegged at 0.5950. As long as this level holds, the bullish structure remains valid, and buyers are likely to target the 0.6040–0.6060 zone — a strong resistance band and potential profit-taking area. A clean break of that zone could open the way toward a more sustained rally.

On the downside, a decisive drop below 0.5950 would undermine the bullish momentum, likely triggering a pullback toward the broader demand zone and reasserting seller control.

TRADE RECOMMENDATION

BUY NZDUSD

ENTRY PRICE: 0.5980

STOP LOSS: 0.5950

TAKE PROFIT: 0.6060

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

The British pound's robust performance has led to a strong showing for the GBPJPY, which is currently trading near the 200.00 level. Investors are awaiting the release of preliminary key data on the UK's second-quarter GDP.

BUY GBPJPY

Close Time

CLOSED

199.927

Entry Price

204.140

197.000

206.914 -0.186 -0.09%

127.6

Pips

Loss

197.000

198.651

Exit Price

199.927

Entry Price

204.140

Fundamentals

During Wednesday's European trading session, the GBPJPY maintained its bullish momentum after breaching the psychological barrier of 200.00. The pair's upward trajectory was fueled by the release of the UK's three-month labor market data for June on Tuesday.

The report indicated that the unemployment rate remained stable at 4.7%, aligning with expectations. Furthermore, average earnings, excluding bonuses, increased by 5%, consistent with both forecasts and prior releases.

Looking ahead, investors will be closely monitoring the UK's preliminary second-quarter GDP and manufacturing data for June, scheduled for release on Thursday. Economists anticipate minimal economic expansion in the UK during the final quarter of the year, with GDP growth projected at 0.1%, down from 0.7% in the first quarter.

Concurrently, the Japanese yen has underperformed, driven by investor skepticism regarding the Bank of Japan's potential for further rate hikes this year. The summary of opinions from the Bank of Japan revealed that officials remain concerned about the economic outlook, particularly in light of potential U.S. tariffs, despite the recent trade agreement between Japan and the U.S.

Closing Price Has Sustained above the 200.00 Level, which Will Confirm a Future Upward Trend_1

Technical Analysis

Following a breach of the 200.00 level, the GBPJPY has extended its recent rally, climbing from 195.00 to approximately 200.28. The asset maintains a bullish bias, underpinned by robust support at its 20-day SMA, currently trading around 198.18.

The Relative Strength Index has advanced to the 65.00 range. Further upward momentum is anticipated if the indicator sustains above this level.

A sustained break above the psychological 200.00 threshold could propel the asset towards the July 23, 2024 high of 203.16 and 204.14.

Conversely, a breach of the May 6 low at 190.33 would expose the March 11 low of 188.80, followed by the February 7 low of 187.00.

Trading Recommendations

Trading Direction: Buy

Entry Price: 198.00

Target Price: 204.14

Stop Loss: 197.00

Valid Until: August 28, 2025 23:55:00

Support: 199.00, 198.56, 198.03

Resistance: 199.98, 200.55, 200.72

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

EUR/USD climbs to 1.1685 in Asian trading as a softer U.S. inflation reading fuels September Fed rate cut expectations, pressuring the dollar despite weak Eurozone sentiment data.

BUY EURUSD

Close Time

CLOSED

1.17000

Entry Price

1.18000

1.16300

1.16540 +0.00114 +0.10%

70.0

Pips

Loss

1.16300

Exit Price

1.17000

Entry Price

1.18000

The euro extended its advance against the U.S. dollar on Wednesday, with EUR/USD pushing to around 1.1685 during Asian trade, as investors positioned for an increasingly likely Federal Reserve interest rate cut in September. The greenback lost ground after a softer-than-expected U.S. inflation reading reinforced the case for policy easing, overshadowing downbeat economic sentiment figures from the Eurozone.

Market attention now turns to a fresh round of Federal Reserve commentary, with Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic slated to speak later in the day. Their remarks could provide more clarity on the central bank’s near-term policy path, particularly after Tuesday’s inflation report bolstered dovish bets.

Data from the U.S. Bureau of Labor Statistics showed headline Consumer Price Index (CPI) growth holding steady at 2.7% year-on-year in July, undershooting economists’ consensus forecast of 2.8%. While core CPI, which strips out food and energy, accelerated to 3.1% from June’s 2.9%, the increase was only marginally above expectations and unlikely to sway market conviction that the Fed is nearing an easing cycle.

The softer inflation data has helped reinforce market pricing for a September cut, with Fed funds futures now reflecting a strong probability of a 25-basis-point reduction. Lower U.S. yields have in turn undermined dollar demand, adding to the euro’s momentum despite lingering concerns over Europe’s own economic outlook.

Political noise in Washington added a further twist to the dollar’s decline. White House spokeswoman Karoline Leavitt said President Donald Trump is weighing legal action against Fed Chair Jerome Powell, ostensibly over the handling of renovations at the central bank’s Washington headquarters. While the comments have little direct bearing on monetary policy, they feed into a broader narrative about Fed independence—something that could unsettle markets if tensions escalate.

Across the Atlantic, however, the euro’s bullish traction was capped by disappointing data from the ZEW Survey of Economic Sentiment. The August survey showed sentiment in the Eurozone tumbling to 25.1 from July’s 36.1, while Germany’s reading slid to 34.7 from 52.7—a far sharper drop than analysts had anticipated. The deterioration reflects investor concerns over sluggish growth momentum and persistent structural challenges in the bloc’s largest economy.

Technical Analysis

From a technical perspective, EUR/USD has been trading firmly within a short-term rising channel, buoyed by support from its 50-day exponential moving average and reinforced by bullish momentum signals from the Relative Strength Index (RSI). The RSI, while hovering in overbought territory, continues to signal underlying strength, with price action holding comfortably above 1.1600 support. Immediate resistance is eyed near 1.1800—a level that, if breached, could open the way for further gains toward the April highs.

For now, the market’s focus will remain on Fed speakers for confirmation that a September cut is on the table. If dovish rhetoric aligns with current market pricing, the dollar could extend its retreat, giving the euro more breathing room. However, traders will also keep an eye on incoming Eurozone data, as a worsening economic backdrop could limit upside potential.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.1700

STOP LOSS: 1.1630

TAKE PROFIT: 1.1800

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

Gold prices exhibited volatile trading today, influenced by U.S. inflation data and ongoing tariff developments. Although gold bulls broke through the consolidation range on Thursday, further significant gains are not anticipated.

SELL XAUUSD

Close Time

CLOSED

3358.87

Entry Price

3300.00

3380.00

4208.23 +10.32 +0.25%

194.7

Pips

Profit

3300.00

3339.40

Exit Price

3358.87

Entry Price

3380.00

Fundamentals

Data released on Tuesday revealed that the U.S. CPI figures for July closely aligned with expectations, encompassing both the headline inflation rate (month-over-month +0.19%, June +0.29%, forecast +0.2%) and the core inflation rate (month-over-month +0.32%, June +0.23%, forecast +0.3%). Notably, the modest uptick in core inflation was primarily driven by the services sector. This is often interpreted as a sign of rising inflationary stickiness, thus signaling a hawkish sentiment.

However, core goods and food inflation remained stable at moderate levels, alleviating market concerns regarding the rapid pass-through of tariff-related costs. The prevailing question is whether businesses will continue to absorb escalating costs or pass them on to consumers. While we do anticipate a further deceleration in core goods inflation, the data supports the rationale for a September rate cut by the Federal Reserve.

The implications for gold are intriguing, with the market initially experiencing an upward movement, followed by a daily low and a test of the critical US$3,331 support level. Given that the inflation data bolsters the case for a September rate cut by the Federal Reserve, a subsequent rally in gold prices is anticipated.

Bulls Have Broken through the Consolidation Range, but Technical Indicators Suggest a Limited Upside_1

Technical Analysis

During the European session on Wednesday, gold prices breached the consolidation range of US$3,342-US$3358, indicating potential for further gains. However, this rally is driven by new long positions, and the market's upward movement is expected to be limited, as technical indicators still suggest a bearish trend.

A break below yesterday's low of US$3,331 is anticipated to lead to a decline towards US$3,321, with the subsequent support level at US$3,315, which would conclude this downward movement. If the prices continue to fall, the focus will shift to the new short-selling target of US$3,300.

On the upside, immediate resistance is at US$3,369, followed by US$3,380, a level whose breach would signal the definitive end of the bearish market.

Trading Recommendations

Trading Direction: Sell

Entry Price: 3365

Target Price: 3300

Stop Loss: 3380

Valid Until: August 28, 2025 23:55:00

Support: 3354, 3342, 3331

Resistance: 3369, 3375, 3380

Risk Warnings and Disclaimers

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Alan

Forex

Summary:

The British pound faces downside risks stemming from domestic growth and employment, which limit its upside potential. Meanwhile, the New Zealand dollar is supported by expectations of a rebound in domestic inflation.

SELL GBPNZD

Close Time

CLOSED

2.26456

Entry Price

2.22800

2.27800

2.30581 -0.00198 -0.09%

134.4

Pips

Loss

2.22800

2.27800

Exit Price

2.26456

Entry Price

2.27800

Fundamentals

In the UK, the latest quarterly reports and labor market data indicate sluggish economic growth and a loosening labor market. The Bank of England noted in its latest Monetary Policy Report that quarterly GDP growth has been weak, employment growth has been around zero, with signs of a "gradual loosening," all of which undermine the fundamental strength of the pound. Additionally, news of slowing wage growth and a decline in employment in the UK labor market has made the market more sensitive to potential dovish signals from the Bank of England.

On the other hand, in New Zealand, inflation and monetary policy trends have recently shown a "slow growth but still within the target range" pattern. The Reserve Bank of New Zealand decided last month to keep the Official Cash Rate at 3.25% and signaled that inflation may rise to the upper end of the target range in the short term, leaving room for monetary policy maneuvering. Meanwhile, the Q2 CPI rose moderately but remained below some expectations. Market views on when the RBNZ might adjust interest rates are gradually evolving, which may provide relative support for the New Zealand dollar.

Overall, the British pound is constrained by downside risks in domestic growth and employment, limiting its upside potential. In contrast, the New Zealand dollar is supported by expectations of a domestic inflation rebound.

Technical Analysis

Range-Bound Market Conditions Continue_1

The recent trend of GBP/NZD shows a clear range-bound pattern in the daily chart. There have been multiple consecutive attempts to break above the upper range resistance level of 2.2750, all of which have failed. In addition, yesterday's upward test of this resistance level was also unsuccessful, increasing short-term upward pressure and signaling a gradual weakening of bullish momentum.

At present, if today's closing candlestick is bearish, GBP/NZD may continue to retreat toward the lower range support level of 2.2200 in the short term. A strategy of selling at highs is recommended.

Trading Recommendations

Trading direction: Sell

Entry price: 2.2650

Target price: 2.2280

Stop loss: 2.2780

Valid Until: August 27, 2025, 23:00:00

Support: 2.2560/2.2293

Resistance: 2.2704/2.2750

Risk Warnings and Disclaimers

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Tank

Economic

Forex

Summary:

The data supports the Bank of England's view that the labor market and wage growth are weakening, but the Bank of England is unlikely to cut interest rates further after slashing it by a quarter of a point to 4% last week.

BUY GBPUSD

EXP

EXPIRED

1.35000

Entry Price

1.36000

1.34500

1.33397 +0.00085 +0.06%

Pips

EXPIRED

1.34500

1.35632

Exit Price

1.35000

Entry Price

1.36000

Fundamentals

The Office for National Statistics in the UK reported on Tuesday that the unemployment rate experienced a slight increase over the three months ending in June, while the official unemployment rate remained steady at 4.7%, reaching its highest level in four years. The data corroborates the Bank of England's view that both the labor market and wage growth are weakening; however, following last week's quarter-percentage-point rate cut to 4%, it is unlikely that the Bank will cut interest rates further.

The U.S. Dollar Index retreated to around 98, primarily influenced by moderate US CPI data. The broad CPI increased by 0.2% month-over-month and remained steady at 2.7% year-over-year, below expectations. Despite core CPI rising to its highest since February, market consensus suggests the probability of a Federal Reserve rate cut in September has risen again, approaching 95%, leading to a weakening of the dollar against the euro and yen. Geopolitical factors, such as the extension of U.S.-China tariff truce and easing tensions ahead of the Trump-Putin summit, have alleviated some pressure. Nonetheless, concerns over global economic slowdown continue to weigh on the dollar. Overall, since August 1, the dollar has shifted into a weaker trend, with further declines possible unless upcoming economic data strongly support a reversal.

Technical Analysis

In the 4H timeframe, the GBPUSD price is trending along the upper Bollinger Band, with the Bollinger bands expanding upward and SMAs diverging positively. The MACD has generated a bullish crossover above the zero axis, with the MACD line and signal line diverging from the zero axis, indicating no short-term bearish divergence. However, the RSI at 75 suggests overbought conditions, which could lead to a minor correction, but as long as the price remains above the middle Bollinger Band, the overall bullish trend remains intact. In the 1D timeframe, after finding support at the EMA200, the price has surged strongly, with two large bullish candles confirming the price's stabilization above the middle band and moving toward the upper band. Resistance levels are at previous highs and the upper Bollinger Band, specifically 1.358 and 1.363. If the price can break and hold above 1.363, it is likely to rise toward 1.38 or even 1.40. The daily MACD shows a bullish crossover near the zero line, and with the RSI at 59, not overbought, the upward momentum is expected to continue. It is recommended to go long at the lows.

Is the GBP Appreciation Just Beginning? Attention Should Be Paid to This key Level!_1

Is the GBP Appreciation Just Beginning? Attention Should Be Paid to This key Level!_2

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.35

Target Price: 1.36

Stop Loss: 1.345

Support: 1.345, 1.34, 1.337

Resistance: 1.36, 1.362, 1.378

Risk Warnings and Disclaimers

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Tank

Economic

Political

Summary:

Shigeru Ishiba denies any resignation plans, but his declining approval ratings have sparked external concerns regarding his political trajectory. Leadership changes could significantly impact the outlook for fiscal and monetary policy.

SELL USDJPY

Close Time

CLOSED

147.800

Entry Price

146.600

148.600

155.112 -0.233 -0.15%

78.5

Pips

Profit

146.600

147.015

Exit Price

147.800

Entry Price

148.600

Fundamentals

The escalating political uncertainty in Japan risks prolonging policy gridlock, thereby impacting the drafting of next year's budget and the timing of the Bank of Japan's next interest rate hike, casting a shadow over the fragile economic outlook. Prime Minister Shigeru Ishiba faces increasing calls for resignation within the ruling Liberal Democratic Party and is widely held responsible for the party's poor performance in the July Senate elections and last year's House of Representatives elections. Although Ishiba denies plans to resign, his declining approval ratings have sparked doubts about his political future, and leadership changes could influence fiscal and monetary policy trajectories.

The US dollar continued its decline during Asian trading hours today, extending the effects of Tuesday's soft Consumer Price Index (CPI) data. US Treasury Secretary Janet Yellen further urged the Federal Reserve to consider a 50 basis point rate cut in September to “offset” the delays caused by earlier easing measures. Despite the firm tone, federal funds futures indicate that markets have yet to fully accept Yellen’s proposal. Currently, there is a 94% probability of a 25 basis point rate reduction in September, with the remaining likelihood of no change. The possibility of a 50 basis point cut in September has not garnered significant attention among traders. The odds of a rate cut in October stand at 60%, though the consensus remains that only two rate cuts are expected throughout 2025.

Technical Analysis

In the 4H timeframe, the USDJPY price is currently experiencing resistance at the upper Bollinger Band and has retraced, now oscillating around the middle Bollinger Band. The MACD has generated a bearish crossover, while the RSI stands at 46, indicating the market is not oversold. If the price fails to hold above the middle Bollinger Band, it may decline toward the EMA200 and previous support levels at approximately 147.1 and 146.6. In the 1W timeframe, Bollinger Bands are narrowing, with price oscillating between the upper and lower bands. The MACD has formed a bullish crossover, with the MACD line and signal line approaching the zero axis, and the RSI is at 51, indicating a neutral stance. Overall, the weekly trend is consolidative, with potential for a trend reversal. Key support to monitor is whether the price can sustain above the middle Bollinger Band; a successful hold could lead to an upward breakout beyond 151, while failure to do so may see a decline toward 142. It is recommended to go short at the highs in the short term.