Hedge Funds Shift Energy Bets as Oil Outlook Weakens and Renewables Gain Momentum

Asian Markets React to Tariff Deadline

Wall Street Strength Supports Sentiment

Market Risks and Policy Outlook

Source: AP

A Political and Economic Push Ahead of Tariff Deadline

Market Reaction and Trade Realities

China’s Strategic Supply Shift

Source: Reuters

US Treasury Secretary Scott Bessent said the new Federal Reserve (Fed) chair should be someone "who can examine the whole organisation" as the Fed's mission has included so many things outside of monetary policy and has put its independence at risk, Japan's Nikkei newspaper reported.

"It's someone who has to have the confidence of the markets, the ability to analyse complex economic data," Bessent told the Nikkei in an interview, when asked about the qualities the new Fed chair should possess.

"And it's also someone who wants to be, I think, very attuned to forward thinking, as opposed to relying on historical data," Bessent was quoted as saying in the interview, which was conducted in Washington on Aug 7 and published on Monday.

A source has told Reuters that Bessent is leading a search for a successor to Fed chair Jerome Powell, with an expanded list that includes a long-time economic consultant and a past regional Fed president.

When asked about President Donald Trump's calls for the Fed to cut interest rates, Bessent said while Trump makes his opinion known, "at the end of the day, the Fed is independent".

On exchange rates, Bessent said his administration's definition of a strong dollar was not about the price on the screen, which was set by the market, but the relative price against other currencies, according to the Nikkei.

"The strong dollar policy is to have policies that continue to keep the US dollar the reserve currency. And if we have good economic policies, then the dollar will naturally be strong," Bessent was quoted as saying.

Bessent has overseen US discussions with Japan on exchange rates with his counterpart Katsunobu Kato. At their meeting held on the sidelines of a G7 gathering in May, the two agreed that the dollar-yen exchange rate at the time reflected fundamentals.

In its exchange-rate report to Congress in June, the US Treasury Department said the Bank of Japan (BOJ) should keep tightening monetary policy, which would support a "normalisation of the yen's weakness."

"I think that as long as the BOJ focuses on economic fundamentals, inflation and growth, the currency will take care of itself," Bessent said.

"So, I believe that governor [Kazuo] Ueda and the BOJ board is targeting an inflation outcome, not a currency outcome," he was quoted as saying.

The BOJ last year exited a decade-long, massive stimulus and raised short-term interest rates to 0.5% in January on the view Japan was close to durably hitting its 2% inflation target.

But it has stressed the need to tread carefully in raising rates further, with the slow pace of hikes seen by some analysts as a factor that has kept the yen low against other currencies.

While inflation remains above the BOJ's 2% target for more than three years, Ueda has called for the need to scrutinise the impact US tariffs could have on Japan's fragile economy.

Source: Reuters

Stocks and currencies in developing markets are moving higher, bolstered by a weaker dollar as traders focus on data in the US which could further cement bets on interest-rate cuts by the Federal Reserve.The Indonesian rupiah is leading gains in Asian currencies, while the Romanian leu and Czech koruna outperform in broader emerging markets on upcoming talks between US and Russia. An MSCI gauge of emerging-market currencies edged up against the dollar, while an MSCI index of EM stocks rose 0.2%. Traders are also watching for confirmation of a US-China trade truce extension, with the preliminary deal set to expire on Tuesday.

“Most Asian currencies are awaiting fresh cues from the US July CPI report tomorrow,” as well as the decision on the US-China trade truce, said Fiona Lim, senior currency strategist at Maybank in Singapore. “Fed officials have been pivoting dovish, and markets have now almost completely priced in a 25bps rate cut in September. That could be supportive of most Asia ex-Japan currencies,” she added.

Emerging market currencies, especially in Asia, were bolstered by the US and China announcing a 90-day truce on tariffs which had threatened to block trade and cause widespread uncertainty. Traders are looking to a more dovish Fed, coupled with us-China trade developments and the talks between the US and Russia later this week to power the next round of gains in developing-market assets.

“The Fed will actually cut three times, and not two times this year, with the first cut in September,” John Woods, Lombard Odier Asia CIO and head of investment solutions, said on Bloomberg TV. This is given a possible slowdown in growth in the US, he added, even as a recession is not his base case. “Overall, it’s probably dollar negative actually, and I think that in turn it becomes a little more emerging-markets positive.”

Source: Bloomberg Europe

Expectations of a Fed rate cut by the end of the year remain after weak US labour market data, which limits the dollar’s potential. At the same time, macroeconomic statistics from the eurozone remain weak, with GDP up only 0.1%, and business activity under pressure. However, the decline in US Treasury yields and profit-taking on the USD allow the pair to hold above 1.1650.

The overall picture in EURUSD is still determined by the balance of monetary policy expectations and external trade risks. If the Fed continues to signal its readiness to ease policy, the euro may maintain its recovery.

In this article, we analyse what to expect for the EURUSD pair in the new week of August.

EURUSD forecast for this week: quick overview

The EURUSD pair is hovering near monthly highs amid dollar weakness and moderate recovery in risk appetite. Pressure on the USD came from weak US labour market data as initial jobless claims exceeded expectations, while the total number of continuing claims hit a three-year high.

Additional pressure came from political uncertainty: Donald Trump confirmed changes to the Federal Reserve Board and is considering replacing current chairman Jerome Powell. These signals boosted expectations of a rate cut as early as September.

In the eurozone, economic statistics remain weak, but the euro received short-term support amid the general weakening of the US dollar and persistent divergence in monetary policy expectations.

The EURUSD pair ended the week higher, around 1.1670, hitting a two-week high. The pair consolidated above the key 1.1550 level and remains in a medium-term upward channel. While MACD and the Stochastic Oscillator confirm the positive momentum, they are both in overbought territory, which may indicate a short-term correction.

The drivers of growth remain dollar weakness and expectations of Fed policy easing.

The baseline scenario suggests a movement in the 1.1550-1.1730 range with attempts to test the upper boundary if dollar pressure persists. Steady growth is possible in the case of weak inflation and retail sales data from the US.

The downside scenario will activate if the pair drops below 1.1550; then it may return to 1.1380.

EURUSD fundamental analysis

The EURUSD pair ended the week higher at two-week highs. The euro was supported by weak US macroeconomic data and rising expectations of a Federal Reserve rate cut in September. The dollar index fell below 98 points, posting a weekly decline of 0.5%.

The key factor of the week was the US labour market data. Initial jobless claims totalled 226 thousand, above the forecast of 221 thousand, and continuing claims reached 1.974 million, the highest since 2021. This strengthened expectations of monetary policy easing, with markets pricing in more than a 90% chance of a rate cut this autumn.

Additional impact on the dollar came from the political agenda. President Donald Trump nominated Stephen Miran to the Federal Reserve Board of Governors and is also considering Christopher Waller for the post of Fed chair. This increased expectations of a softer policy line in the future.

The market is still watching the development of US trade policy. Broad tariffs ranging from 10% to 50% on goods from dozens of countries came into effect during the week. Particularly tough measures hit semiconductors and Indian imports. The threat of new duties on China adds tension to global markets and affects dollar dynamics.

The overall sentiment remains moderately positive for the euro amid dollar weakness and rising political uncertainty in the US. The market is focused on upcoming inflation data and new signals from the Fed.

EURUSD technical analysis

On the daily timeframe, the EURUSD pair has continued to trade in an uptrend since March 2025. The chart shows a consolidation phase in June and July, followed by a recovery in early August.

The pair is holding in the upper part of the Bollinger channel, confirming the bullish momentum. However, the Stochastic has entered the overbought zone (above 90), which may indicate a short-term slowdown in growth or a pullback.

The MACD indicator remains near zero, reflecting weak momentum dynamics and a possible transition to sideways movement.

The nearest resistance level is at 1.1830, the late June high. The support level is located at 1.1385, with the key level at 1.1210. A breakout above 1.1700 will open the way to new highs, while a move below 1.1550 will increase correction risks.

EURUSD trading scenarios

The outlook for the EURUSD pair for the new week is neutral to positive.

Pressure on the US dollar increased after weak jobless claims data and rising expectations of a Federal Reserve rate cut as early as September. The appointment of Stephen Miran to the Board of Governors and discussions of Christopher Waller as a possible Fed chair intensified political uncertainty.

Against this backdrop, the euro strengthened despite sluggish eurozone economic indicators. The positive sentiment for EUR/USD remains, but in overbought market conditions, a local correction is possible.

Buying is justified if the pair holds above 1.1620-1.1650. This will be confirmed by consolidation near weekly highs and stabilisation in the US labour market.

Targets are 1.1730 and, with favourable fundamentals, 1.1830.

Stop-loss is below 1.1580: a breakout below this area would strengthen sellers’ pressure.

Short-term selling is possible if the pair returns below 1.1580 amid profit-taking and weak European data. The MACD and Stochastic indicators signal overbought conditions.

Targets are 1.1500 and 1.1385 if the downward momentum strengthens.

Stop-loss is above 1.1675: a move beyond this level would confirm the continuation of the uptrend.

Summary

Positive sentiment in the EURUSD pair is supported by signs of a cooling US economy and rising expectations of a Fed rate cut towards the end of the year. An additional boost came from profit-taking on the dollar and easing fears over trade policy. In Europe, the picture remains mixed, but the euro is stable: weak GDP growth is offset by stabilising inflation expectations and moderate optimism over trade talks.

Overall sentiment is cautiously positive. The market awaits new drivers: key events include US inflation reports and comments from Fed officials. If tensions on the trade front do not escalate, the euro may continue to rise.

Source: RoboForex

The Week Ahead

Global markets finished off last week on a high, with indices across the world again touching fresh record levels, and investors will be hoping for more of the same in the days ahead. However, it is a busier week on the macroeconomic calendar, with some key data and central bank updates ahead of us.

Australian and Chinese markets will be in focus across the week in the Asian sessions, and there may be some moves on the open on Monday after Chinese CPI data came out slightly higher over the weekend, while the PPI numbers were lower than expected. There are key US inflation numbers out through the week as well, which could prove pivotal for September rate expectations, and we are set to hear from several members of the FOMC.Adding the high propensity of geopolitical updates, including a meeting between Presidents Trump and Putin, it could be a lively trading week ahead of us.

Here is our usual day-by-day breakdown of the major risk events this week:

Highlights:

Monday – It is a quiet start to the week on Monday, with little on the event calendar to move the dial. Japanese markets are on holiday again, which may see a decrease in liquidity in the Asian session, but the main focus will be on Chinese markets, with new loans data due out during the session. There is nothing of note on the calendar in either the London or New York sessions, and traders are expecting a relatively quiet day.

Tuesday – It is a busier day on Tuesday, with key updates due across all three sessions. Australian markets will be in focus in the first session of the day, with the Reserve Bank of Australia set to announce its latest interest rate decision. The London session will see the initial focus on UK markets, with key employment data due out before attention jumps across the channel for the German ZEW Economic Sentiment numbers. Probably the biggest data release of the week then hits early in the New York session, with the US CPI data due out. We will also hear from the Fed’s Thomas Barkin later in the day.

Wednesday – The Asian session will again see the initial focus on Australian markets, with the Quarterly Wage Price Index numbers due out. There is little scheduled during the latter two sessions, although we do have the weekly US Oil Inventory numbers out in the New York session, and Fed members Goolsbee and Bostic are due to speak.

Thursday – It’s another busy day on Thursday. Once again, Australian markets will be in focus in the Asian session, with employment data due out. The European session sees the focus on UK markets again, with GDP numbers out early in the piece, and we have more inflation data due out of the US in the New York session — this time, the PPI numbers are set to drop alongside the weekly unemployment claims data.

Friday – The data continues to come in on the final trading day of the week, with a big data drop due out of China in the Asian session, with traders expected to focus on the Industrial Production and Retail Sales numbers in particular. There is nothing scheduled in the European day; however, holidays in both France and Italy may affect liquidity. Key US numbers are due out again in the New York session, with retail sales data out alongside the Empire State Manufacturing Index. Preliminary University of Michigan Consumer Sentiment and Inflation Expectations numbers are also due out later in the day.

Source: IC Markets