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The USD/JPY pair saw a fresh wave of selling during the Asian session on Wednesday, with the pair dropping below 142.00 in the last hour. This reversed some of the gains made overnight and paused the recovery from the lowest level since July 2023, which was reached earlier in the week. Meanwhile, fundamental analysis indicates that the most probable outcome for spot prices is a decline, although market participants may exercise caution in placing aggressive wagers ahead of pivotal central bank events.

The Federal Reserve (Fed) will announce its decision following its two-day meeting on Wednesday, with expectations that it will commence its policy easing cycle. The market will then turn its attention to the Bank of Japan's (BoJ) policy update on Friday, which will play a pivotal role in influencing the Japanese Yen (JPY) and provide fresh impetus to the USD/JPY pair. Meanwhile, cautious market sentiment and diverging expectations of future policy from the Fed and BoJ are driving safe-haven flows towards the JPY, exerting downward pressure on the USD/JPY.

The market is pricing in the likelihood of a 50 basis point interest rate cut by the Federal Reserve, amid signs of easing inflationary pressures. This has the effect of overshadowing Tuesday's better-than-expected US retail sales data, which is not helpful for the US dollar (USD) in consolidating an overnight rebound from the 2024 low. Conversely, recent indications from Bank of Japan officials point towards a further interest rate increase by the Japanese central bank before the end of the year. This has been a significant contributing factor to the recent relative rise in the Japanese Yen, which has helped to create a favourable tone around the USD/JPY pair.

Meanwhile, the JPY bulls appeared to remain undaunted by Japan's trade data for August, which revealed a notable decline in both exports and imports. Official data indicates that Japan's exports have risen for the ninth consecutive month, with an increase of 5.6% year-on-year in August. However, this growth is occurring at a slower pace than anticipated. This was accompanied by a much smaller-than-expected 2.3% rise in imports, which had little impact on the underlying bullish sentiment around the Japanese Yen. This indicates that the outlook for the USD/JPY pair in the near term is negative and supports the likelihood of a continuation of the recent downtrend.

Trade recommendation: Trading mainly by Sell orders from the current price level.

The GBP/USD pair reached a high on a relatively quiet Monday, marking the start of the new trading week with a renewed bullish sentiment and a move back towards 1.3200. Investor sentiment remains positive as markets anticipate significant central bank speeches this week, with a potential rate cut by the Federal Reserve and another Bank of England (BoE) speech widely expected.

The US retail sales figures are scheduled for release on Tuesday, but the key indicator, which typically causes some volatility, is not expected to have a significant impact this week unless the data deviates significantly from expectations. The month-on-month retail sales growth for August is forecast to decelerate to 0.2% from July's 1.0%, while the underlying month-on-month retail sales figure (excluding auto purchases) is expected to slow to 0.3% from 0.4%.

In the UK, the latest Consumer Price Index (CPI) data will be released at the start of Wednesday. It is anticipated that the annualised figure for August will remain at 2.2% year-on-year. As with US retail sales, the standalone figure is not expected to have a significant impact on the market as long as it falls within a reasonable range of average market forecasts.

Investors anticipate that the Federal Reserve will commence a new cycle of interest rate reductions on Wednesday. The key issue now is not when this will occur, but rather the extent of the cuts. CME's FedWatch tool indicates that traders anticipate a 60% probability of a 50 bp reduction in the federal funds rate, with the remaining 40% expecting a more modest 25 bp cut. Betting markets also estimate an overall rate cut of 125-150 bps by the end of the year, with traders believing there is about an 80% chance of the Fed funds rate reaching 400-425 bps by 18 December, compared to the current interest rate of 525-550.

The Bank of England will also issue its own rate statement on Thursday, but it is anticipated to be considerably less noteworthy than the Fed's statement. It is anticipated that the Bank of England will maintain its principal discount rate at 5.0% this week. Additionally, the Monetary Policy Committee (MPC) is expected to vote in favour of maintaining the rate at seven to two, in contrast to the previous Bank of England meeting where a vote was cast to cut the rate by a quarter point, resulting in a five to four outcome.

Trading recommendation: We follow the level of 1.3200, when fixing above it we take Buy positions, when rebounding we take Sell positions.

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The EUR/USD currency pair commenced the week on a positive note, rising to the 1.1090 level during the Asian trading session on Monday. Investors are now awaiting the US Federal Reserve's (the Fed) decision, which is expected later this week. There is still no consensus among market participants as to whether the Federal Reserve will cut interest rates by 25 or 50 basis points.

The CME FedWatch Tool indicates that there is a 48.0% probability of the Federal Reserve cutting rates by 25 basis points at the September meeting. The probability of a 50 basis point rate cut has increased to 52.0%, up from 50.0% a day earlier.

Investors will be monitoring the FOMC press conference closely in order to gain insight into the future trajectory of US interest rates. Should Fed Chairman Jerome Powell announce a more aggressive easing approach, this could exert downward pressure on the US dollar, thereby providing potential momentum for EUR/USD.

European Central Bank (ECB) Governing Council member and Central Bank of Ireland Governor Gabriel Makhlouf stated on Friday that the central bank is still operating in a 'highly uncertain environment' and will rely on data to inform future monetary policy decisions. Mr Makhlouf was keen to stress that the ECB is not committing to a specific rate choice, but remains 'determined to ensure' that eurozone inflation returns to the 2% target 'in a timely manner'.

The latest research from Rabobank highlights that the ECB announced a second rate cut in this cycle last week, with another cut expected before the end of the year. The latest ECB staff forecasts also reflect a downward revision to eurozone growth. While expectations of Fed policy easing may weaken the US dollar, Rabobank believes that unfavourable eurozone fundamentals are likely to limit EUR/USD's upside potential in the near term.

Trade recommendation: We follow the level of 1.1100, when fixing above it we take Buy positions, when rebounding we take Sell positions.

The USD/JPY pair weakened further below the mid 141.00s during the Asian session on Friday and is now back closer to the YTD low reached earlier this week. Moreover, the fundamental backdrop seems to be leaning in favor of bearish traders and supports the prospects of a continuation of the established downtrend seen over the past two months.

The US Dollar (USD) fell to a fresh weekly low amid rising bets for more aggressive Federal Reserve (Fed) policy easing next week, bolstered by the release of a softer-than-expected US Producer Price Index (PPI) on Wednesday. In fact, markets are now pricing in a more than 40% probability that the US central bank will cut borrowing costs by 50 basis points at the end of its September meeting. This keeps US Treasury yields near 2024 lows, which puts pressure on the dollar and leads to a decline in the USD/JPY pair.

The Japanese Yen (JPY), on the other hand, continues to receive support from hawkish signals from the Bank of Japan (BoJ) indicating that it will raise interest rates further if the economic outlook matches forecasts. Moreover, BoJ board member Naoki Tamura said on Thursday that the road to ending soft policy is still very long. This represents a significant divergence from dovish Fed expectations, which in turn encourages further pullback in Japanese Yen (JPY) and contributes to the tone of the USD/JPY pair.

The aforementioned fundamental backdrop indicates that the path of least resistance for spot prices remains to the downside, although traders may prefer to move sideways ahead of a key central bank event that could occur next week. The Fed is due to announce its decision at the end of its two-day meeting next Wednesday. This will be followed by the BOJ's policy update on Friday, which will determine the next leg of directional movement for the USD/JPY pair. Nevertheless, the pair remains on track to end the second week in the negative.

Trading recommendation: Trade predominantly with Sell orders from the current price level.

The EUR/USD pair struggled to gain momentum during the Asian session on Thursday and fluctuated in a narrow range, just above the psychological 1.1000 mark, or the four-week low reached the previous day. Traders, prefer to wait for the much-anticipated European Central Bank (ECB) meeting before positioning themselves for the next leg of directional movement.

The ECB is widely expected to cut interest rates by 25 basis points (bps) amid signs that Eurozone inflation is cooling. The bets were supported by data that Germany's consumer price (CP) index fell to its lowest level in three years in August and touched the ECB's 2% target. This in turn undermined the common currency and acted as a headwind for EUR/USD amid moderate strength in the US Dollar (USD).

The US CPI report released on Wednesday showed that US consumer prices are generally declining. However, the core CPI indicates that underlying inflation remains resilient and dashes hopes of a larger rate cut by the Federal Reserve (Fed) next week. This is underpinned by a rise in US Treasury bond yields and brings the Dollar Index (DXY), which tracks the quid against a basket of currencies, to a one-month peak.

At the same time, the markets fully appreciated the prospects of the Fed easing cycle and a 25 bps rate cut following the FOMC meeting on 17-18 September. This, along with the optimistic market sentiment, has restrained further strengthening of the safe-haven US Dollar. This should continue to provide some support for EUR/USD ahead of a key central bank risk event and warrants caution from bearish traders.

Investors may also prefer to wait for the ECB's updated economic forecasts, which, along with Christine Lagarde's comments, will have an impact on the EUR exchange rate. In addition, the publication of the US Producer Price Index (PPI) could provide fresh impetus to EUR/USD and create some meaningful trading opportunities later in the North American session.

Trading recommendation: Trade predominantly with Sell orders from the current price level

The EUR/USD exchange rate ended a three-day losing streak on Wednesday, trading near 1.1050 during the Asian session. The increase in EUR/USD can be attributed to a decline in the value of the US dollar in anticipation of the release of the North American Consumer Price Index (CPI) data. The inflation report may provide new indications regarding the potential scale of the Federal Reserve's (the Fed) interest rate reduction in September.

The US dollar (USD) is encountering difficulties in the context of a sustained reduction in US Treasury bond yields.  As of this writing, the two-year and ten-year US Treasury bond yields are at 3.57% and 3.62%, respectively.

However, last week's US labour market report has introduced an element of uncertainty regarding the likelihood of an aggressive interest rate cut by the Federal Reserve (Fed) at its September meeting. The CME FedWatch Tool indicates that the market anticipates a minimum 25-basis-point rate cut by the Fed at its September meeting. The probability of a 50 bps rate cut has decreased slightly to 31.0% from 38.0% a week ago.

The euro was subject to downward pressure as a result of the latest German inflation data. The Harmonised Index of Consumer Prices (HICP) increased by 2.0% year-on-year in August, in line with expectations. The monthly index showed a 0.2% decline, in line with forecasts. Similarly, the Consumer Price Index (CPI) remained at 1.9% year-on-year in August, meeting market expectations.

Trade recommendation: Trading predominantly Buy orders from the current price level.

The Pound-Dollar pair extended its losing streak for the third consecutive day, trading near 1.3060 during Tuesday's Asian session. The pair's decline can be attributed to a strengthening US Dollar (USD), which received support as the latest US labor market data increased uncertainty over the likelihood of an aggressive interest rate cut by the Federal Reserve (Fed) at its September meeting.

According to the CME FedWatch Tool, markets fully expect the Fed to cut rates by at least 25 basis points (bps) at its September meeting. The probability of a 50 bps rate cut fell slightly to 29.0% from 30.0% a week ago.

Federal Reserve Bank of Chicago (Fed) President Austan Goolsbee noted on Friday that Fed officials are beginning to agree with the broad market's view that a rate adjustment by the U.S. central bank is inevitable, CNBC reported.

In the U.K., investors are closely watching employment data for the quarter ended in July, which is due to be released on Tuesday. This labor market report could have a significant impact on market expectations regarding the Bank of England's (BoE) interest rate decisions for the rest of the year.

Trading recommendation: Trade mainly with buy orders at the price level of 1.3080. Consider Sell orders at the price level of 1.3050.

The USD/JPY pair ended its four-day losing streak, trading near 142.90 during the Asian session on Monday. The USD/JPY recovery can be partly attributed to lower than expected Japanese gross domestic product (GDP) data. However, strong economic growth, rising wages and persistent inflationary pressures continue to support expectations that the Bank of Japan (BoJ) may continue to raise interest rates, which could limit the decline in the Japanese Yen (JPY).

Japan's annualised GDP grew by 2.9% in the second quarter, slightly below the preliminary 3.1% and market estimate of 3.2%. Nevertheless, the figure was the strongest annualised rate since the first quarter of 2023. On a quarterly basis, GDP grew 0.7% in the second quarter, falling short of the market forecast of 0.8%, but showing the strongest quarterly growth since the second quarter of 2023.

In addition, the US dollar received support as Friday's US economic data added to uncertainty over the likelihood of an aggressive interest rate cut by the Federal Reserve (Fed) at its September meeting. According to the CME FedWatch Tool, markets fully expect the Fed to cut rates by at least 25 basis points (bps) at its September meeting. The probability of a 50 bps rate cut fell slightly to 29.0% from 30.0% a week ago.

The US Bureau of Labour Statistics (BLS) reported that non-farm payrolls (NFP) increased by 142,000 jobs in August, lower than the forecast of 160,000 but better than the downwardly revised July figure of 89,000. Meanwhile, the unemployment rate fell to 4.2%, as expected, down from 4.3% in the previous month.

Trading recommendation: Watch the level of 142.40, if the level is below we consider Sell position, if the level rebounds we consider Buy position.

The GBP/USD pair traded in positive territory for the third consecutive day around 1.3185 on Friday during Asian trading hours. Sustained weakness in the US dollar (USD) provides some support to the major pair. Market participants will be keeping a close eye on the US Non-Farm Payrolls data for August (NFP) due out later on Friday.

On Thursday, Automatic Data Processing (ADP) reported that private sector employment grew at the weakest pace in three and a half years in August. The US private sector added 99,000 new jobs in August, down from a downwardly revised 111,000 in July and below the forecast of 145,000.

Markets expect the Federal Reserve (Fed) to cut interest rates at its 17-18 September meeting. Later in the day, the Bureau of Labour Statistics will release the much-anticipated non-farm payrolls report, which is expected to show that the US economy added 160,000 jobs in August. This report has been a key event in shaping market expectations for the Fed Funds rate. A weaker than expected result could trigger a significant Fed rate cut and further undermine the dollar.

On the other hand, modest expectations of an interest rate cut by the Bank of England (BoE) are boosting the Pound Sterling (GBP). Last month, Bank of England Governor Andrew Bailey said that he believes long-term inflationary pressures are easing, but that there is no rush to cut rates further as it is too early to declare victory over inflation. Investors believe that the probability that the Bank of England will cut interest rates at the meeting on 12 September is about 25%, but the probability of a rate cut is fully embedded in the November price.

Trading recommendation: Trade predominantly with Buy orders from the current price level

#NVIDIA shares plunged by 9.5% due to an antitrust investigation by the U.S. Department of Justice. This drop resulted in a $279 billion loss in NVIDIA's market capitalization, marking the largest single-session stock decline in the history of U.S. public companies.

FreshForex experts have analyzed the key risk factors affecting the company’s stock value:

• Antitrust investigation: The crash was triggered by a Bloomberg report that the U.S. Department of Justice (DOJ) has launched an antitrust investigation into #NVIDIA. Authorities suspect the company of abusing its dominant market position, making it difficult for customers to switch to other suppliers. According to sources, the DOJ has requested data from #NVIDIA that may form the basis of a lawsuit against the company.
• Impact of insider trading: xperts suggest that insider information about the investigation could have triggered the sell-off of #NVIDIA shares, which has caught the attention of the U.S. Securities and Exchange Commission (SEC).
• Financial performance and recession risk: Despite the stock drop, #NVIDIA's financial performance remains strong: revenue in the second quarter of the 2025 fiscal year increased by 122%, reaching $32.5 billion, while net income was $16.6 billion. The majority of the company’s revenue comes from data center products, including AI processors.

However, concerns about a possible U.S. recession and investor skepticism over the return on investments in AI infrastructure continue to pressure the market. Experts are comparing the current situation to the dot-com bubble of the 1990s, which led to a global market collapse.

• NVIDIA’s rise and fall in 2024: Since the beginning of 2024, #NVIDIA shares have risen by 118%, and on June 20, the company briefly became the world's most valuable public company with a market cap of $3.46 trillion. However, by the end of June, the stock had dropped by 13%, resulting in a $430 billion loss in capitalization.

Despite its strong financial performance, NVIDIA faces serious market and legal challenges that could impact its future development. It’s important to note that the demand for innovative technologies could shift the situation, and the tech giant’s growth remains possible.

EUR/USD trades close to 1.1080 during the Asian session on Thursday.

The dollar weakened after the publication of the July JOLTS report on the number of open job vacancies in the US, which failed to meet expectations and pointed to a further slowdown in the labour market. Job openings fell to 7.673 million in July, down from 7.910 million in June. This is the lowest level since January 2021 and below market expectations of 8.10 million.

Traders are now awaiting the release of ISM services PMI and US initial jobless claims scheduled for Thursday. On Friday, attention will shift to US non-farm payrolls (NFP) data for more information on the potential size of the Federal Reserve's (Fed) expected rate cut this month.

Atlanta FRB President Raphael Bostic said on Wednesday that the Fed is in a favourable position, but added that it should not maintain restrictive policy for too long, according to Reuters. FXStreet's FedTracker system, which rates the tone of Fed officials' speeches on a dovish to hawkish scale of 0 to 10 using a proprietary artificial intelligence model, rated Bostic's words as neutral with a score of 4.6.

In the eurozone, the producer price index rose 0.8 per cent month-on-month in July, the biggest increase since December 2022. This followed an upwardly revised 0.6% increase in June and was well above market forecasts of 0.3%. However, the eurozone services PMI fell to 52.9 in August from 53.3 in the previous month. Meanwhile, the composite PMI fell to 51.0, missing expectations and below the previous reading of 51.2, which was expected to be unchanged.

The Euro could face trouble amid strong speculation that the European Central Bank (ECB) will cut interest rates in September. This would be the ECB's second interest rate cut since it began to move towards policy normalisation in June. Policymakers remain confident that inflation will gradually return to the 2% target by 2025.

Trading Recommendation: Watch the level of 1.1110, if the level is fixed above we take Buy positions, if the level bounces back we take Sell positions.

The Japanese Yen (JPY) continues to strengthen against the US Dollar (USD) following the release of Jibun Bank's Services PMI data on Wednesday. The index was revised to 53.7 in August from an initial estimate of 54.0. Despite this being the seventh consecutive month of growth in the services sector, the latest reading was unchanged from July.

Japan's Chief Cabinet Secretary Yoshimasa Hayashi said on Wednesday that he was ‘closely monitoring developments in domestic and international markets with a sense of urgency.’ Hayashi emphasised the importance of pursuing fiscal and economic policies in close coordination with the Bank of Japan (BoJ). He also emphasised the need to calmly assess market movements, but declined to comment on daily stock fluctuations.

The US Dollar is receiving support as traders are cautious ahead of the release of US employment data, particularly the August Non-Farm Payrolls (NFP). This data may provide additional information on the possible timing and extent of Federal Reserve (Fed) rate cuts.

Trading recommendation: We follow the level of 144.90, if it is fixed below, we consider Sell positions, if it rebounds, we consider Buy positions.

The GBP/USD pair is trading on a weak note near 1.3120 in the early European session on Tuesday. The major pair's decline is being fuelled by a strengthening US Dollar (USD) ahead of key economic data releases from the US. Bank of England (BoE) Deputy Governor Sarah Breeden will speak later on Tuesday, followed by the release of the US manufacturing Purchasing Managers' Index (PMI) from ISM.

Investors increasingly believe the US Federal Reserve (Fed) will begin easing monetary policy at its upcoming meeting in September, estimating the probability of a 25 basis points (bps) rate cut at nearly 69%, according to CME's FedWatch tool. Fed Chairman Jerome Powell not only said at the annual symposium in Jackson Hole last month that ‘it is time for a policy adjustment.’

More Fed rate cuts could put pressure on the US dollar in the near term. Analysts at Rabobank currently expect four Fed rate cuts between September and January, and then a rate hold until the end of 2025. Friday's US Non-Farm Payrolls (NFP) report will be more significant than usual and could provide some hints on the size and pace of Fed rate cuts. The US economy is expected to have added 163,000 jobs in August and the unemployment rate is expected to have fallen to 4.2%.

On the other hand, markets expect the Bank of England not to cut the rate at the September meeting, while there is an 87.2% chance of a 25bp rate cut at the November meeting. In the absence of crucial economic data from the UK this week, dollar price dynamics will be the main driver for GBP/USD.

Trading recommendation: Trade mainly with buy orders at the price level of 1.3160. We consider sell orders at the price level of 1.3090.

The EUR/USD exchange rate ended a three-day losing streak on Monday, trading near 1.1050 during the Asian session. The increase in EUR/USD can be attributed to a decline in the value of the US dollar (USD) in response to the dovish stance adopted by the US Federal Reserve (Fed). However, the July US Personal Consumption Expenditure (PCE) index may provide support for the USD, limiting the potential for the pair to rise further.

On Friday, the US Bureau of Economic Analysis reported that the core personal consumption expenditure (PCE) price index rose 2.5% year-on-year in July, matching the previous reading of 2.5% but falling short of the forecast of 2.6%. Meanwhile, the core PCE index, which excludes volatile food and energy prices, saw a 2.6% year-on-year increase in July, matching the previous reading of 2.6%. This figure was slightly below the consensus forecast of 2.7%.

The CME FedWatch Tool indicates that the market anticipates a 25-basis-point reduction in the Federal Reserve interest rate at the upcoming September meeting. Atlanta Fed President Rafael Bostic, one of the most prominent hawks on the FOMC, stated last week that it may be an opportune time to consider a rate cut due to further cooling inflation and higher-than-expected unemployment. The FXStreet FedTracker indicator, which rates the tone of Fed officials' speeches on a dovish to hawkish scale of 0 to 10 using a special artificial intelligence model, rated Kashkari's words as neutral with a score of 5.6.

European Central Bank (ECB) Governing Council member François Villeroy de Galhau stated on Friday, according to Bloomberg, that there are 'good reasons' for the central bank to consider cutting its key interest rate in September. Mr. de Galhau suggested action at the upcoming meeting on 12 September, noting that a decision on a new rate cut would be fair and prudent.

Trade recommendation: Trading predominantly Buy orders from the current price level.

Following the release of Tokyo Consumer Price Index (CPI) data on Friday, the Japanese Yen (JPY) is showing signs of recovery against the US Dollar (USD). The Bank of Japan's (BoJ) hawkish stance on monetary policy is reinforced by rising inflation in Tokyo, which in turn supports the Japanese Yen and exerts downward pressure on the USD/JPY pair.

The Tokyo Consumer Price Index (CPI) increased to 2.6% year-on-year in August, up from 2.2% in July. The core CPI also increased to 1.6% year-on-year in August, up from the previous reading of 1.5%. Furthermore, Japan's unemployment rate saw an unexpected increase to 2.7% in July, above the market estimate and June's 2.5%. This represents the highest rate since August 2023.

The decline in the USD/JPY may be limited as the US dollar maintains its recent gains following the release of stronger-than-expected economic data on Thursday. However, dovish comments from the Federal Reserve may curb further dollar strength.

Trade recommendation: Trading mainly by Buy orders from the current price level.

The GBP/USD pair is back to the 29-month high set on Tuesday at 1.3266. The pair is being helped by renewed selling in the US Dollar despite the prevalence of risk-off-oriented flows following disappointing guidance from US AI titan Nvidia.

The diverging monetary policy outlook between the US Federal Reserve (Fed) and the Bank of England (BoE) also remains in favor of the GBP/USD uptrend.

ECB Governing Council member Klaas Knot said on Wednesday that he is waiting for more information before deciding whether to support an interest rate cut in September. Nevertheless, markets expect the ECB to cut borrowing costs next month amid easing price pressures and an uncertain economic outlook.

Stronger-than-forecast economic data in recent months and optimism about the new Labor government are supporting the British pound. Comments from Bank of England (BoE) Governor Andrew Bailey also support the British Pound. Bailey stated that “policy should remain restrictive for long enough until the risks of inflation holding steady around the 2% target over the medium term dissipate. Therefore, the exchange rate will be sustainable.” According to a Reuters poll, economists expect another 25 basis points (bps) rate cut from the Bank of England this year

Trading recommendation: Trade mainly with buy orders at the price level of 1.3220. Consider sell orders at the price level of 1.3170.

The Japanese yen (JPY) declined slightly against the US dollar (USD) on Wednesday. However, conflicting outlooks from the Bank of Japan (BoJ) and the Federal Reserve (Fed) are putting downward pressure on the USD/JPY pair. Bank of Japan Governor Kazuo Ueda told parliament on Friday that the central bank may consider further interest rate hikes if its economic forecasts prove accurate.

The yen's decline may be limited by hawkish sentiment around the Bank of Japan (BoJ). Meanwhile, Fed Chairman Jerome Powell noted at a symposium in Jackson Hole that ‘the time has come for policy adjustment.’ However, Powell did not specify the timing and magnitude of potential rate cuts.

In addition, San Francisco Fed President Mary Daly said in an interview with Bloomberg TV on Monday that ‘it's time’ to start cutting interest rates, probably by a quarter of a percentage point.

According to the CME FedWatch Tool, markets fully expect the Federal Reserve to cut rates by at least 25 basis points (bps) at its September meeting.

Trading recommendation: Trade predominantly with Sell orders from the current price level

At the start of the new trading week, the GBP/USD exchange rate saw a slight decline, falling below 1.3200 on Monday. This marks the end of a seven-day winning streak that saw the pair rise more than 3% from 1.2800 to a 29-month high of 1.3230.

UK markets were closed on Monday due to a bank holiday, which had the effect of reducing the volume of sterling flows and providing a boost to the US dollar. Following a period of heightened risk appetite, markets are currently adopting a more cautious stance in light of the Federal Reserve's indication that a rate cut is likely to occur in September, barring any significant shifts in economic data.

The economic calendar for the upcoming trading week is expected to be relatively inactive. On Thursday, the anticipated figure for US gross domestic product (GDP) for the second quarter is expected to remain unchanged at an annualised rate of 2.8%. The focus on Friday will be on the July core Personal Consumption Expenditure (PCE) price index, which is expected to remain unchanged at 0.2% month-on-month. The year-on-year PCE inflation rate is forecast to increase from 2.6% to 2.7%. Nevertheless, investors anticipate that inflation is approaching the Federal Reserve's 2% target, which may result in a rate cut in September.

US durable goods orders saw an unexpected increase of 9.9% in July compared to the previous month, exceeding the projected 4.0% and reversing a revised contraction of -6.9% in June. However, concerns persist as, when excluding transport costs, durable goods orders declined by -0.2% month-on-month, worse than the anticipated 0.0% and 0.1% in June, which were revised down from 0.5%.

Trading recommendation: Trading predominantly Buy orders from the current price level.

The EUR/USD pair continues to rise for the second session, trading near 1.11900 during the Asian session on Monday. The rise in EUR/USD is attributed to the decline in the US dollar following a dovish speech by US Federal Reserve (Fed) Chairman Jerome Powell at a symposium in Jackson Hole on Friday.

Fed Chairman Jerome Powell stated, “The time has come for policy adjustment.” Although Powell did not specify when the rate cut would begin or what its potential size would be, markets expect the U.S. central bank to announce a 25 basis point rate cut at its September meeting.

In addition, Philadelphia Fed President Patrick Harker emphasized on Friday the need for the U.S. central bank to gradually lower interest rates. Meanwhile, Chicago Fed President Austan Goolsbee noted that monetary policy is currently as restrictive as possible and the Fed is now focused on achieving its employment mandate.

As for the euro, European Central Bank (ECB) Governing Council member Olli Rehn said on Friday that slowing inflation along with weakness in the eurozone economy strengthen the case for lower borrowing costs next month, Bloomberg reported. Growth prospects in Europe, especially in the manufacturing sector, are quite weak, strengthening the case for a rate cut in September.

Trading recommendation: Trade predominantly with Buy orders from the current price level