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• The US dollar’s main rivals have capitalised on its weakness.
• USDJPY recorded its sharpest fall in two years.

The US dollar recorded its worst two-day performance since January amid a market reassessment of the Fed’s ability to bring inflation back to target, hawkish rhetoric from the Bank of England, and currency intervention by Japan. Investors continue to digest the outcome of the July FOMC meeting and are concluding that Kevin Warsh is hardly a hawk. He seeks to shift the burden of curbing inflation onto financial markets, a move that risks prolonging the pause and weakening the greenback.

The likelihood of the Fed tightening monetary policy in September continues to fall, and a decline in US Treasury yields is dragging the dollar down. Qatar estimates Strait of Hormuz traffic at 6.5 million barrels per day, a gradual increase, while Pakistan claims there is ongoing dialogue between the US and Iran. The stabilisation of oil prices and the rise in stock market indices are putting pressure on the greenback as a safe-haven asset.

However, the main blow to the US dollar came from its rivals. For the first time since the fourth quarter of 2025, the eurozone economy grew faster than US GDP in April–June. This increased the likelihood of an ECB rate rise and supported the euro. The Bank of England kept borrowing costs unchanged. However, Andrew Bailey stated that the BoE would be forced to tighten monetary policy if the conflict in the Middle East continues.

The Japanese government capitalised on investors’ doubts about Warsh’s hawkish stance and intervened in the foreign exchange market. The decline in USDJPY was the sharpest in two years. At the same time, Tokyo hinted that it had received more than moral support from Washington. The coordinated intervention showed speculators how dangerous it is to bet against the authorities.

The sharp appreciation of the yen allowed the Bank of Japan to avoid rushing into action. It kept the overnight rate at 1% and raised its GDP forecast for 2026 from 0.5% to 0.6%. Inflation is expected to stand at 2.5%, rather than the previously forecast 2.8%. The absence of any hints of an acceleration in the cycle of monetary tightening allowed the USDJPY bulls to lick their wounds. Meanwhile, US Treasury Secretary Scott Bessent called on the BoJ to further tighten monetary policy.

The FxPro Analyst Team

USD/JPY recovered to 160.60 on Friday following a sharp drop the previous day. Investors believe the Bank of Japan intervened to support the yen, although there has been no official confirmation.

The Bank of Japan also held its policy meeting today, keeping the rate unchanged at 1.0%. Borrowing costs remain at their highest level since September 1995, after a 25-basis-point hike in June.

The decision was in line with market expectations and was passed by a vote of eight to one. Board member Hajime Takata dissented, advocating for a further rate increase and highlighting the risk of accelerating inflation due to heightened demand pressures linked to the Middle East conflict.

In its quarterly outlook, the BOJ lowered its core inflation forecast for fiscal year 2026 to 2.5% from 2.8%, attributing the revision to a gradual weakening of the impact from previously elevated oil prices.

At the same time, the BOJ slightly raised its GDP growth forecast for fiscal year 2026 to 0.6% from 0.5%, supported by robust domestic demand and government measures aimed at reducing household energy spending over the summer.

For fiscal year 2027, the core inflation forecast was raised to 2.4% from 2.3%, while GDP growth expectations were trimmed to 0.8% from 0.9%.

Technical Analysis

On the H4 USD/JPY chart, the market is forming a consolidation range around the 159.65 level, currently extending between 159.65 and 160.83. A move lower towards 159.66 is expected today, followed by a move higher to 161.44. The MACD indicator supports this scenario, with its signal line below zero and pointing downwards.

On the H1 chart, USD/JPY has completed a downward move to 158.53, followed by a rise to 160.86. A move lower towards at least 159.66 is expected next, followed by a move higher to 161.44. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating short-term downside pressure.

Conclusion

USD/JPY saw significant volatility following a suspected intervention by Japanese authorities, although no official confirmation has been provided. The Bank of Japan kept rates unchanged at 1.0%, as widely expected, with one dissenting vote calling for further tightening. The central bank revised its inflation and growth forecasts, lowering its core inflation outlook for 2026 while slightly raising GDP expectations for the same period. The mixed signals from the BOJ, combined with lingering geopolitical risks and speculation over further intervention, have left markets uncertain. Technically, USD/JPY may see a short-term pullback towards 159.66 before resuming its upward trajectory towards 161.44. The pair’s direction will depend on further signals from Japanese authorities and global risk sentiment.

Market Overview

The crypto market capitalisation has retreated to levels seen at the start of the week, near $2.17T, having failed to mount a sustained rally. The market remains cautious, trading just above its 50-day moving average, which has served as support since the second half of July. Among the popular coins, the top performers over the last day were Uniswap (+8.7%), Filecoin (+4.6%) and VeChain (+4.4%). Notably, Uniswap, with a 60% rise, leads the gains over the last 30 days. The worst performers were Cosmos (-4.2%), Zcash (-3.4%) and Basic Attention Token (-3%). Cosmos has lost 18% over the month, hitting a multi-year low of $1.23 amid high trading volumes and coming relatively close to its all-time low of $1.13, recorded at the market bottom in March 2020.

Bitcoin found support late on Thursday, but its rally stalled once again upon breaching the $65K level, pushing the price back down to $64K at the start of active trading in Europe. We have repeatedly warned of a prolonged consolidation for the leading cryptocurrency following a decline towards the 200-week moving average, as has been the case in several previous instances. It appears that there is active rotation among holders at these levels, but the price is trading within a narrow range.

News Background

Ethereum Institutional, which focuses on the institutional adoption of the ETH blockchain, has attracted over 100 investors as part of an ecosystem funding round. All proceeds will go towards accelerating work with banks, asset managers and custodians to develop their products within the ETH ecosystem.

According to Santiment, the number of Ethereum wallets with a non-zero balance has exceeded 200 million for the first time. Although a single user may own multiple wallets, this figure remains an important indicator of investor activity on the network.

30 July marked the 11th anniversary of the Ethereum mainnet’s launch. On that day, the first block was created, heralding the era of smart contracts and decentralised applications. Over the years, the project has evolved from an experimental idea into a global infrastructure, becoming the foundation for the development of DeFi and NFTs, and for the transition to the Proof of Stake consensus algorithm.

XRP metrics: price, trading volume and open interest continue to decline. According to CryptoQuant, open interest on Binance has fallen to its lowest level since 2024. Over the past 12 months, XRP has fallen by more than 65%.

The FxPro Analyst Team

Intraday bias in EUR/USD stays on the upside for the moment. Rebound from 1.1323 should continue to 1.1621 cluster resistance (38.2% retracement of 1.2081 to 1.1323 at 1.1613). . Decisive break there will add to the case that whole correction from 1.2081 has completed with three waves down to 1.1323. In this case, next target is 61.8% retracement at 1.1791. Nevertheless, break of 1.1433 minor support will turn bias back to the downside, for 1.1323/1352 support zone instead.

In the bigger picture, focus is back on 38.2% retracement of 1.0176 to 1.2081 at 1.1353. Decisive break there will revive the case of medium term bearish trend reversal after rejection by 1.2 key cluster resistance level. Further fall should be seen to 61.8% retracement at 1.0904. Nevertheless, strong rebound from 1.1353, followed by break of 1.1621 resistance, will retain medium term bullishness.

Focus stays on rising channel floor (now at 158.14) in USD/JPY. Sustained break there will argue that fall from 163.97 is already correcting the whole rise from 139.87, and target 155.01 cluster support (38.2% retracement of 139.87 to 163.97 at 154.76). Strong rebound from the channel support will keep the rally from 139.87 intact. But still, even in this case, more consolidations would be seen below 163.97 for a while.

In the bigger picture, the break of 159.44 resistance turned support, together with bearish divergence condition in D MACD, suggests that a medium term top could be formed at 163.97 already. More consolidations would be seen in the near term. But still, outlook will remain bullish as long as 152.25 support holds. The long term up trend is still expected to continue at a later stage, only delayed.

Intraday bias in GBP/USD remains neutral first. Overall outlook is unchanged that corrective pattern from 1.3867 is extending. On the downside, below 1.3272 will target 1.3139 support. Nevertheless, break of 1.3557 will extend the rebound from 1.3139 towards 1.3675 resistance instead.

In the bigger picture, price actions from 1.3867 are a corrective pattern within the broader up trend from 1.0351 (2022 low). With 1.3008 support intact, medium term bullishness is maintained and break of 1.3867 is in favor for a later stage, towards 1.4248 key resistance (2021 high). However, firm break of 1.3008 will at least bring deeper fall to 38.2% retracement of 1.0351 to 1.3867 at 1.2524, with increased risk of bearish reversal.

Intraday bias in USD/CHF remains neutral for the moment, and more consolidations would be seen below 0.8205. Outlook will stay bullish as long as 0.8029 support holds, even in case of deep pullback. On the upside, sustained trading above 100% projection 0.7603 to 0.8041 from 0.7600 at 0.8198 will extend the rally from 0.7603 to 161.8% projection at 0.8469. However, decisive break of 0.8029 will bring deeper fall to channel support (now at 0.7911).

In the bigger picture, focus is now on 38.2% retracement of 0.9200 (2025 high) to 0.7603 at 0.8213. Decisive break will argue that USD/CHF is reversing the medium term trend, and turn focus to 0.8332 support turned resistance (2023 low) for confirmation. Nevertheless, rejection by 0.8213 will maintain medium term bearishness for another fall through 0.7603 at a later stage.

AUD/USD's rise from 0.6864 resumed by breaking through 0.7026 and intraday bias is back on the upside. Further rally should be seen to 100% projection of 0.6864 to 0.7026 from 0.6921 at 0.7083. On the downside, below 0.6988 minor support will turn intraday bias neutral again first.

In the bigger picture, considering bearish divergence condition in D MACD, a medium term top could be formed at 0.7277 after failing to sustain above 61.8% retracement of 0.8006 (2021 high) to 0.5913 (2024 low) at 0.7206. Deeper fall could be seen to 38.2% retracement of 0.5913 to 0.7277 at 0.6756 as a correction. But strong support should be seen there to bring rebound. Consolidations would continue below 0.7277 for a while.

USD/CAD's corrective fall from 1.4247 extended lower and intraday bias stays mildly on the downside. Strong support should be seen from 1.3965 cluster support (38.2% retracement of 1.3480 to 1.4247 at 1.3954) to bring rebound. On the upside, break of 1.4127 will bring stronger rally back to retest 1.4247.

In the bigger picture, current development suggests that fall from 1.4791 has completed as a three wave correction to 1.3480. It's still early to judge if rise from there a corrective bounce, or resumption of the larger up trend from 1.2005 (2021 low). But in either case, retest of 1.4791 high should be seen next.

Focus remains on 212.26 support in GBP/JPY. Strong rebound from there will keep the up trend from 184.35 intact. In this case, some more consolidations would be seen below 219.56 first, and upside breakout should follow at a later stage. However, decisive break of 216.58 will indicate that it's already correcting the rise from 184.35, and target 38.2% retracement of 184.35 to 219.56 at 206.10.

In the bigger picture, the long term up trend is in progress. As long as 55 W EMA (now at 208.95), another rally should be seen through 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90 at a later stage.