Yen Weakens Amid Fed Rate Expectations And Bank of Japan Signals

Technical Analysis

Summary:

The USD/JPY pair climbed to 147.67 on Monday as the Japanese yen underwent a correction following Friday’s volatile trading session, with investors closely monitoring macroeconomic developments.

Market focus remains on shifting US Federal Reserve policy expectations after the release of softer labour market data. Although Friday’s report bolstered predictions of a rate cut, Fed officials have maintained a cautious tone, citing persistent inflation risks. Proposed large-scale tariffs from US President Donald Trump have further amplified these concerns.

Against this backdrop, the US dollar has partially regained strength, exerting downward pressure on the yen.

Investors are now awaiting the release of the Bank of Japan (BoJ) meeting minutes, hoping for clues on the timing of a potential rate hike. Last week, the Japanese central bank left interest rates unchanged but raised its inflation forecast and highlighted growing uncertainty due to global trade risks.

Overall, the outlook for the JPY remains subdued. The BoJ has ample room to delay rate hikes, justifying its stance with ongoing caution.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY completed an upward wave to 150.90 before entering a correction phase. A further decline towards 146.52 is anticipated today. Once this level is reached, the pair may initiate a new growth wave, potentially targeting 151.00, with a longer-term prospect of extending the trend to 153.10. This scenario is supported by the MACD indicator, where the signal line remains above zero but is trending sharply downward.

H1 Chart:

On the H1 chart, USD/JPY is forming a corrective structure towards 146.52. A temporary rebound to 148.70 (testing from below) is expected today, followed by a possible resumption of the correction to 146.52. Once this correction concludes, a fresh upward wave towards 151.00 could materialise. The Stochastic oscillator validates this outlook, with its signal line positioned above 50 and pointing upwards.

Conclusion

The yen remains under pressure amid shifting Fed expectations and cautious BoJ signals. Technically, USD/JPY is poised for further correction before potentially resuming its uptrend.

Source: ACTIONFOREX

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Gerik

Economic

Commodity

OPEC+ Hike Pressures Market Balance While Geopolitical Risk Keeps Traders on Edge

Oil prices moved unpredictably on Monday as traders weighed a new supply increase from OPEC+ against rising geopolitical risks tied to Russia and a weakening US economic outlook. Brent crude hovered near the $70 per barrel mark after initially falling by as much as 1 percent. The volatility reflects broader uncertainty about the balance between supply restoration, potential sanctions, and global demand fragility.

OPEC+ confirmed it would add 547,000 barrels per day to the global market in September, fulfilling its previously outlined strategy to reverse the voluntary output cuts implemented in 2023 by eight key members, including Saudi Arabia and Russia. This expansion is widely interpreted as an attempt to reclaim global market share after a period of price-supportive restraint.

Market Repricing Reflects Supply Concerns and Economic Headwinds

The timing of the OPEC+ decision coincides with a softening global macroeconomic picture. A sharp drop in US nonfarm payroll growth paired with downward revisions to previous months has amplified fears that the world’s largest oil-consuming economy is already slowing. These concerns were reflected in Friday’s oil price slide and continued market caution heading into the week.

Goldman Sachs analysts noted that while OPEC+ may maintain a flexible policy stance, the September increase is likely to mark the end of the group’s incremental additions. The bank continues to forecast Brent at $64 per barrel in the fourth quarter of 2025, declining to $56 by 2026. This outlook is based on expectations of rising commercial inventories and weakening forward spreads as supply potentially outpaces demand.

Russian Oil in Focus as Trump Threatens Secondary Sanctions

Beyond supply and demand fundamentals, geopolitical tension remains a critical variable. President Donald Trump has signaled possible punitive actions against nations that continue to import Russian crude, particularly targeting India. Although Indian refiners have not yet received official directives to halt purchases, traders are bracing for enforcement measures that could reshape the trade landscape.

Trump’s threat of secondary sanctions, expected to be clarified by August 8, adds a volatile layer to an already unstable market. Reports indicate that Trump’s special envoy, Steve Witkoff, may travel to Russia midweek, possibly advancing a diplomatic strategy alongside economic pressure. This uncertainty over Russian supply, especially to Asian markets, could result in short-term price spikes even as broader fundamentals appear bearish.

Restored Supply vs. Structural Demand Uncertainty

The cumulative effect of OPEC+’s supply restoration nearing full reversal of its 2023 cuts has reinforced speculation that the global oil market may shift into oversupply by year-end. If demand fails to keep pace due to macroeconomic weakness or tightening financial conditions, the result could be a build-up in commercial stockpiles and a weakening of timespreads that typically support bullish positioning.

However, the specter of restricted Russian flows or retaliatory moves from Moscow could quickly reverse sentiment. This asymmetric risk profile is keeping volatility elevated as traders balance structural oversupply risks with episodic geopolitical shocks.

Crude markets remain in a state of flux as OPEC+ supply normalization collides with recessionary fears in the US and unpredictable developments in the Russia-India oil trade. While headline output increases point to rising supply-side pressure, demand-side softness and political instability continue to shape near-term price action. With critical policy signals due this week, including potential US sanctions and additional diplomatic movements, oil traders are likely to remain reactive and risk-sensitive in the sessions ahead.

Source: Reuters

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Winkelmann

The USDCAD rate reversed downwards and consolidated below 1.3800 following the release of weak US Nonfarm Payrolls data on Friday.

USDCAD forecast: key trading points

● Market focus: Nonfarm Payrolls rose by only 73 thousand in July, significantly below expectations

● Current trend: moving downwards

● USDCAD forecast for 4 August 2025: 1.3800 or 1.3700

Fundamental analysis

The Canadian dollar strengthened after the release of US employment data. The July Nonfarm Payrolls report disappointed the market as only 73 thousand jobs were created, and previous months’ data were significantly revised downwards, worsening the outlook for US economic growth.At the same time, the Canadian economy showed some resilience: a 0.1% GDP contraction in May was followed by a 0.1% rebound in June, alongside a 0.7% increase in manufacturing output. This supported the Bank of Canada's decision to hold its key interest rate steady at 2.75%, which contrasts with the Federal Reserve's dovish stance.

USDCAD technical analysis

On the H4 chart, the USDCAD pair is reversing down from the local daily high of 1.3880. The Alligator indicator is attempting to turn downwards, indicating a high probability of a continued downward movement.The short-term USDCAD forecast suggests a further decline if the bears keep the price below 1.3800. However, if the bulls regain control and push the pair back above 1.3800, growth towards the daily high of 1.3880 may follow.

Summary

The USDCAD pair reversed lower and dropped below 1.3800, as the US dollar came under pressure following the release of weak Nonfarm Payrolls data.

Source: RoboForex

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Gerik

Economic

Tokyo Stocks Retreat Amid Rising US Recession Anxiety

Japanese equity markets closed lower on Monday following a steep sell-off in global risk assets triggered by disappointing US jobs data. Both the Topix Index and the Nikkei 225 fell 1.1 percent and 1.2 percent, respectively, after deeper intraday declines of over 2 percent. Investor sentiment was hit by downward revisions to US nonfarm payrolls and expectations of Federal Reserve rate cuts, which sent the yen sharply higher and reignited concerns over global growth.

The reversal comes nearly one year after Japan’s 2024 market shock, in which the Topix posted its worst single-day performance since 1987. While the index had regained roughly 30 percent since that low, Monday’s losses underscore persistent fragility in investor confidence, especially when international macroeconomic signals turn negative.

Sharp Yen Gains and Deteriorating US Outlook Weigh on Exporters and Banks

The yen traded around 147.70 to the dollar as of late afternoon in Tokyo, holding on to a more than 2 percent gain from Friday. This appreciation in the Japanese currency is placing pressure on large-cap exporters, which typically rely on a weaker yen to boost overseas earnings.

The impact was especially pronounced for financials, with the Topix subindex for banks dropping 3.2 percent its sharpest daily loss since April. Investors are adjusting to the dual effect of softer US growth and a potentially delayed rate hike cycle from the Bank of Japan. Overnight index swaps now price only a 36 percent probability of a BOJ hike by October, down from 43 percent just days earlier.

Kazuhiro Sasaki of Phillip Securities Japan noted that the labor data has sparked fears the US may already be in a recession. The possibility of such a downturn has amplified the risk-off sentiment and curtailed expectations of tightening from central banks globally.

Market Focus Turns to Earnings and Export Sensitivity

Investors are closely monitoring earnings reports from major Japanese corporations this week. Sony Group and Toyota Motor are both expected to release their financials, and their performance could shape near-term investor sentiment, especially as both firms are sensitive to currency fluctuations and external demand trends.

While large exporters face headwinds, domestic-oriented small caps may stand to benefit from yen strength, according to Jamie Halse of Senjin Capital. The reallocation toward such firms, however, will depend on the perceived duration of global demand softness.

Nintendo Bucks the Trend with Strong Switch 2 Momentum

Amid the broader sell-off, Nintendo Co. shares rose 5.1 percent after reporting stronger-than-expected sales of its new Switch 2 console. Jefferies analysts noted that the company’s hardware momentum, coupled with a robust game pipeline and monetizable IP portfolio, puts it in a favorable position for outperformance even in a volatile macro environment.

Nintendo’s rally served as a rare bright spot in a market otherwise dominated by caution and selloffs. Its performance highlights the divergence between consumer-facing tech companies with strong product cycles and macro-sensitive industrials or financials under pressure from external shocks.

The sharp drop in Japanese equities following weak US labor data reinforces how interconnected global markets remain, especially for economies heavily reliant on exports. With the yen rallying and US economic signals deteriorating, Japan’s banks and large manufacturers are facing renewed pressure. While monetary policy in both Tokyo and Washington is now expected to shift toward easing, investors are bracing for heightened volatility and a prolonged period of cautious positioning in the weeks ahead.

Source: Bloomberg

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Gerik

Economic

Modest Inflation Acceleration Buys SNB Time as Tariff Risks Loom

Swiss inflation accelerated unexpectedly in July, offering policymakers at the Swiss National Bank (SNB) a temporary buffer as they weigh the potential return to negative interest rates. Consumer prices rose by 0.2 percent year-on-year, outpacing expectations for another 0.1 percent increase and reversing the prevailing disinflationary trend that has persisted for months.

While the core inflation measure excluding fresh food, energy, and seasonal items rose by 0.8 percent, underlying pressures remain subdued. According to the Swiss statistics agency, hotel and car rental prices increased, while declines were observed in flights, package holidays, clothing, and footwear. The data reflects weak domestic demand and the continued influence of a strong Swiss franc, which has kept imported goods relatively cheap and external price contributions negative.

Currency Strength and Deflationary Pressures Still Dominate Outlook

The inflation surprise does little to alter the broader narrative of Switzerland’s ultra-low inflation environment. The franc’s appreciation has created persistent deflationary pressure through cheaper imports, contributing to the SNB’s decision to cut its policy rate to zero in June.

However, the recent inflation reading slightly weakens the case for immediate further easing. Market analysts had been bracing for a potential rate cut into negative territory at the SNB's upcoming September policy meeting, but this data, coupled with central bank caution over aggressive currency weakening, may delay that move.

Trade Shock from US Tariffs Adds Complicating Factor

More consequential for the SNB may be the looming trade shock from new US tariffs. Beginning August 7, Swiss exports to the US will face a 39 percent tariff a dramatic shift that Bloomberg Economics estimates could subtract approximately 1 percent from Swiss GDP over the medium term. This external risk adds significant downside to the economic outlook and could ultimately tilt the SNB toward further easing later in the year.

The SNB faces a dual constraint: shielding its export-driven economy from trade disruptions while maintaining enough monetary accommodation to avoid currency-driven deflation. With inflation still far below the eurozone average of 2 percent and a mere 0.1 percent gain under the EU's harmonized index, the policy gap between Switzerland and its neighbors remains wide.

SNB’s Cautious Stance Persists Amid Uncertain Trajectory

Despite the July inflation bump, Bloomberg’s baseline forecast still sees the SNB opting for negative rates before year-end likely contingent on how the franc responds to worsening trade dynamics and diverging central bank policies abroad. While the prospect of a September cut has diminished slightly, monetary easing remains on the table as broader pressures mount.

Economist Jean Dalbard notes that “the SNB is unlikely to take comfort in this reading” and will remain attentive to currency fluctuations. Should the franc strengthen further in response to global risk aversion or Swiss safe-haven flows, the SNB may be compelled to act regardless of short-term inflation gains.

Switzerland’s inflation surprise offers brief reprieve but does not resolve deeper challenges facing the SNB. With external shocks building and inflation still subdued by historical standards, policymakers remain caught between fiscal uncertainty and monetary constraint. Unless trade disruptions recede or euro area inflation trends shift significantly, a return to negative interest rates remains a likely scenario in the months ahead.

Source: Reuters

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Olivia Brooks

Cryptocurrency

Key Points:

●BTC price drops to $114,418.76 despite strong long-term holder confidence and increasing accumulation.

●Net demand remains positive with over 160K BTC accumulated in 30 days, according to CryptoQuant.

●Binance data shows 60.65% of open positions remain long, signaling bullish sentiment among retail traders.

Bitcoin is trading at $114,418.76 after falling 3.84% in the past seven days, reflecting growing short-term pressure.

However, the market continues to show resilience as long-term holders maintain high unrealized profits, based on CryptoQuant’s cohort data.

The net unrealized profit/loss (NUPL) for long-term holders remains elevated, supporting an ongoing bullish macro trend.

BTC Net Unrealized Profit/Loss by Chort : Source : CryptoQuant

Apparent demand has remained positive, with over 160,000 BTC added in the past 30 days, based on CryptoQuant metrics.

This consistent accumulation has aligned with Bitcoin’s price recovery since late May, showing demand strength amid volatility.

The demand from accumulator addresses has reached its highest point in months, nearing 320,000 BTC on a 30-day rolling sum.

Liquidity Drops and Sentiment Leans Bullish

Sell-side liquidity has continued to decline sharply, with total BTC held across exchanges and GBTC falling under 150,000.

This contraction in liquid supply reduces available Bitcoin for selling, which often helps support long-term price appreciation.

Bitcoin sell-side liquidity inventory : Source : CryptoQuant

CryptoQuant data confirms sell-side liquidity is at its lowest since 2018, reinforcing a long-term supply crunch scenario.

Binance Futures data shows 60.65% of accounts are long, with a long/short ratio of 1.54, suggesting bullish trader bias.

This trend continues despite a 3.57% drop in Bitcoin’s price since August 1, highlighting strong conviction among leveraged traders.

Bitfinex also reports a 20% increase in long positions during this decline, supporting ongoing accumulation behavior.

Meanwhile, short-term holders are realizing slight profit declines, as seen in the recent dip in STH-NUPL values.

This aligns with increased volatility and minor corrections driven by fast-moving positions, while long-term trends remain intact.

Despite short-term uncertainty, structural indicators continue to suggest long-term strength backed by demand and declining liquidity.

Source: CryptoSlate

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Glendon

Economic

The European Union is expecting US President Donald Trump to announce executive actions this week to formalize the bloc’s lower tariffs for cars and grant exemptions from levies for some industrial goods such as aviation parts, according to people familiar with the matter.

The two sides are also anticipated to publish a joint statement outlining the political commitments agreed by Trump and European Commission President Ursula von der Leyen last month, said the people, who spoke on condition of anonymity to discuss private deliberations. The legal form the actions would take is up to the US, the people added.

Under the terms agreed with Washington, the 27-nation bloc faces a 15% US tariff on most of its exports. That rate would also apply to cars rather than the current 25% level, as well as to any future sectoral measures targeting pharmaceuticals and semiconductors, officials on both sides have previously said.

An executive order released by the White House last week confirmed that the universal levy would apply to the EU as a ceiling, while most other trading partners will see their baseline rate added on to existing so-called most-favored-nation tariffs.

However, the order only covered so-called reciprocal rates and didn’t spell out any exemptions, nor how Trump’s sectoral measures would apply to trading partners. In addition to a universal levy, the US president has imposed 25% tariffs on cars and car parts and double that rate on steel and aluminum. He has also threatened to target pharmaceuticals and semiconductors in the near future.

Officials expect only a limited number of goods, including some generic medicines and aviation, to be granted a lower rate than the 15% baseline this week. The two sides will continue to negotiate exemptions for other goods such as wine and spirits as well as other items that could benefit from zero-for-zero tariff arrangements, Bloomberg previously reported.

The EU is also pushing for an agreement that would allow a certain volume of steel and aluminum to be exported to the US at a lower rate than the 50% levy currently imposed on the metals. Those negotiations are taking place alongside discussions aimed at protecting supply chains from overcapacity.

Any sign of the US not holding up its side of agreed political commitments would see renewed calls from EU member states to respond, some of the people said. The bloc has prepared countermeasures covering nearly €100 billion ($116 billion) worth of goods that could be deployed automatically if needed.