The dominant theme today is the weakening U.S. dollar ahead of July PCE inflation data and Fed Chair Kevin Warsh’s Jackson Hole speech on Friday. Treasury plans to expand long-term bond buybacks have pushed yields lower and encouraged flows toward currencies and alternative assets. At the same time, the Iran conflict and energy-price uncertainty remain important sources of volatility.

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🇪🇺/🇺🇸 EUR/USD: Outlook – Euro vs U.S. Dollar

Current market picture

• EUR/USD enters Wednesday with a cautiously constructive outlook after recovering from the recent correction. The pair closed around 1.1675 on Tuesday, compared with 1.1664 previously, as falling oil prices and improving prospects for U.S.-Iran negotiations reduced some immediate demand for the dollar.
• The euro is also receiving fundamental support from improving German economic sentiment. The recent Ifo improvement and upward revision to German second-quarter growth suggest that the euro-area economy is not losing momentum as quickly as previously feared.
• At the same time, traders are increasingly considering a more restrictive ECB stance. Expectations of another ECB rate increase have strengthened because energy costs remain a concern and inflation could prove persistent. This gives the euro a useful interest-rate advantage if the Federal Reserve becomes less aggressive.
• The main obstacle is that EUR/USD has already recovered substantially. Buyers therefore need fresh evidence to justify another sustained advance rather than simply extending the recent rebound.

Main factors affecting EUR/USD

• U.S. inflation: Wednesday’s July PCE and core PCE figures are the immediate catalyst. Softer inflation would weaken expectations for additional Fed tightening and could push EUR/USD higher. Stronger inflation would have the opposite effect. The data is particularly important because it is the final major inflation reading before the September Fed decision.
• Federal Reserve: Warsh’s Jackson Hole speech on Friday is likely to create larger moves than normal. A cautious message would favor the euro, while concern about persistent inflation would strengthen the dollar.
• ECB expectations: Markets are increasingly pricing a more hawkish ECB path, which provides a medium-term foundation for the euro.
• German economy: Better business confidence and stronger GDP estimates reduce recession concerns and make the euro more resilient.
• Energy prices and Iran: A sustained decline in oil prices would remove some inflation pressure from Europe and reduce demand for the dollar. Renewed Middle East escalation could reverse that relationship quickly.
• Treasury policy: Expanded U.S. bond buybacks have contributed to lower long-term yields and dollar selling, indirectly helping EUR/USD.

Support levels

• 1.1659: First important near-term pivot. Holding above it would keep buyers interested.
• 1.1637: Important downside support and the first major level where buyers could attempt to regain control.
• 1.1608: Stronger support and a more important defensive zone.
• 1.1570 area: A deeper correction toward this region would weaken the current bullish structure.

Resistance levels

• 1.1673: Immediate resistance and the first test for renewed buyers.
• 1.1705: Important upside barrier.
• 1.1722: Stronger resistance and a possible profit-taking area.
• A sustained move above 1.1722 would improve the medium-term outlook and expose higher levels.

Forecast

• Base case: Mildly bullish above 1.1637, with the pair likely to trade between 1.1640 and 1.1720 while markets wait for PCE and Jackson Hole.
• Bullish scenario: Soft U.S. inflation plus a cautious Warsh could push EUR/USD through 1.1705 and toward 1.1722, with a later attempt at 1.1750 possible.
• Bearish scenario: Hotter inflation or a hawkish Fed message could send the pair back below 1.1637 and toward 1.1608.
• The broader euro outlook remains constructive, but chasing the pair aggressively after a strong rebound is less attractive than buying controlled pullbacks.

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🇬🇧/🇺🇸 GBP/USD Outlook – British Pound vs U.S. Dollar

Current market picture

• GBP/USD remains one of the stronger major currency pairs, with sterling recently holding above 1.36 and trading near a six-month high. Reuters reported sterling around 1.3632 on Tuesday.
• The pound has benefited from expectations that the Bank of England may need to maintain or increase interest rates because UK inflation remains uncomfortable. July inflation accelerated to 2.9%, while core inflation remained elevated.
• The pound also benefits from broad dollar weakness. Treasury intervention in the long-term bond market has reduced some upward pressure on U.S. yields, making the dollar less attractive.
• However, sterling’s strength is becoming increasingly dependent on expectations rather than fresh UK economic surprises. That creates vulnerability if upcoming U.S. data unexpectedly strengthens the dollar.

Main factors affecting GBP/USD

• Bank of England: Persistent UK inflation keeps the possibility of another rate increase alive. This is currently one of the pound’s strongest fundamental supports.
• U.S. PCE: A weak U.S. inflation reading would probably help GBP/USD extend its advance.
• Jackson Hole: A dovish Warsh would strengthen the pound’s relative position, while a hawkish message could trigger profit-taking.
• UK fiscal policy: High gilt yields and uncertainty surrounding the government’s October budget remain risks. Investors will be watching whether future spending is funded through borrowing or taxation.
• Risk sentiment: Sterling generally performs better when investors are comfortable holding risk-sensitive assets.
• Iran and oil: Higher energy prices could complicate the inflation outlook for both the UK and U.S., but a renewed geopolitical shock could favor the dollar temporarily.

Support levels

• 1.3622: Immediate support and the most important short-term buying zone.
• 1.3591: Secondary support.
• 1.3556: Stronger correction support.
• 1.3524: Major defensive level. A break here would significantly weaken the bullish outlook.

Resistance

• 1.3670: Main immediate resistance.
• A convincing break above 1.3670 would expose 1.3700–1.3720, with room for further gains if U.S. inflation disappoints.
• The inability to break 1.3670 repeatedly would increase the probability of another range-bound correction.

Forecast

• Base case: Bullish-to-neutral while above 1.3622.
• Bullish scenario: A break above 1.3670 could attract momentum buying toward 1.3700 and possibly 1.3750.
• Bearish scenario: Strong U.S. inflation or a hawkish Warsh could push GBP/USD below 1.3622, opening 1.3591 and then 1.3556.
• The pound currently looks somewhat stronger than the euro because UK rate expectations remain relatively firm.

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🇺🇸/🇯🇵 USD/JPY Outlook – U.S. Dollar vs Japanese Yen

Current market picture

• USD/JPY remains around the psychologically important 159 area. The pair is caught between strong dollar demand and growing expectations that the Bank of Japan will accelerate policy tightening.
• Recent intervention by Japanese authorities demonstrated that policymakers are increasingly uncomfortable with excessive yen weakness, although the market response has so far been temporary.
• The latest Reuters poll shows a major increase in expectations for a September BOJ rate increase to 1.25%. Fifty-seven percent of economists now expect a September hike, compared with only 5% in July.
• This creates a complicated setup: near-term price action still favors USD/JPY buyers, but the medium-term risk is shifting toward yen strength.

Main factors affecting USD/JPY

• BOJ tightening: Rising expectations for a September hike are the strongest argument for yen appreciation.
• Japanese inflation: Persistent inflation gives the BOJ more justification to raise rates.
• U.S. PCE and Fed policy: Hot U.S. inflation would support Treasury yields and USD/JPY, while softer inflation could reduce the yield advantage of the dollar.
• Currency intervention: Levels near 160 remain politically sensitive. Traders should be particularly cautious with large USD/JPY longs as intervention risk increases.
• Iran and oil: Higher oil prices are especially problematic for Japan because of its dependence on imported energy, potentially hurting the yen through the trade balance.
• U.S. fiscal concerns: Concerns about American debt and Treasury-market intervention can undermine the dollar even while geopolitical risk occasionally supports it.

Support levels

• 159.09: Immediate support and key short-term pivot.
• 158.50: Important secondary support.
• 158.16: Additional downside target.
• 157.96: Stronger support.
• 155.50: Major medium-term support if the yen begins a larger recovery.

Resistance levels

• 159.65: Immediate resistance.
• 160.79: Major psychological and intervention-sensitive zone.
• 161.66: Stronger resistance.
• 162.71–162.96: Higher resistance region.

Forecast

• Base case: Range-bound with a slight upward bias while above 159.09.
• Bullish USD/JPY: A sustained break above 159.65 could send the pair toward 160.79.
• Bearish USD/JPY: Failure at 159.65 followed by a break below 159.09 could accelerate the decline toward 158.50 and 157.96.
• The larger risk is that the market is underestimating the impact of a BOJ hike combined with intervention.

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₿ BTC/USD Outlook – Bitcoin

Current market picture

• Bitcoin has entered a completely different market environment from the weakness seen earlier in the summer. It recently broke above $80,000, reaching roughly $81,200 before retreating toward the $79,000–$80,000 region.
• The rally has been supported by renewed institutional demand, strong spot ETF inflows, lower long-term Treasury yields and expectations that U.S. fiscal policy could encourage liquidity and concern about dollar purchasing power.
• Reuters reports Bitcoin has gained about 28% during August, while ETF demand has strengthened substantially.
• However, the speed of the rally is also its biggest weakness. A large portion of the move was amplified by short liquidations, meaning some of the buying was forced rather than long-term investment demand.
• The market therefore needs to prove that Bitcoin can hold above $78,000–$80,000 rather than simply spike through the level.

Main factors affecting Bitcoin

• Treasury bond buybacks: Expanded purchases of long-term Treasuries have reduced yields and encouraged investors toward alternative assets.
• ETF inflows: Sustained institutional inflows would provide the strongest confirmation that the rally is becoming structurally stronger.
• Federal Reserve: Softer inflation or a less restrictive Fed would improve liquidity conditions and potentially support Bitcoin.
• PCE: A hotter-than-expected inflation reading could trigger a temporary risk-asset correction.
• Jackson Hole: Warsh’s comments could significantly affect Bitcoin through Treasury yields and dollar expectations.
• Regulation: Progress toward the CLARITY Act and clearer U.S. crypto regulation could encourage institutional participation.
• Profit-taking: Investors who bought below $70,000 now have substantial unrealized gains and may sell into strength.
• Leverage: Excessive leverage remains a major risk because a relatively modest decline can trigger another wave of forced liquidations.

Support levels

• $80,000: Psychological pivot.
• $78,900–$79,000: Immediate support.
• $76,000: Important short-term support.
• $73,000: Major defense zone because many recent buyers entered around this area.
• $68,000: Critical medium-term support. Losing it would seriously damage the recovery story.

Resistance levels

• $81,500: Immediate upside target.
• $83,000: Important breakout confirmation level.
• $88,000–$90,000: Major resistance and a likely profit-taking region. Current market analysis identifies this as the next major test.
• $95,000–$100,000: Larger bullish target if ETF inflows remain strong and the $90,000 area is cleared.

Forecast

• Base case: Consolidation between roughly $77,000 and $83,000 after the unusually rapid rally.
• Bullish scenario: Holding $80,000 and breaking $83,000 could open a path toward $88,000–$90,000.
• Very bullish scenario: Sustained ETF demand and favorable Fed/regulatory developments could eventually take Bitcoin toward $95,000–$100,000.
• Bearish scenario: Failure to hold $78,000 could send Bitcoin toward $73,000. A break below $73,000 would increase the probability of a deeper correction toward $68,000.

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🪙 XAU/USD Outlook – Gold vs U.S. Dollar

Current market picture

• Gold remains firmly bullish on the broader view despite Tuesday’s pullback. It reached approximately $4,696 before retreating toward $4,647, showing that sellers remain active around the $4,700 region.
• The broader rally is being supported by a weaker U.S. dollar, lower long-term yields, concerns about U.S. fiscal sustainability and continuing geopolitical uncertainty.
• Treasury’s expanded bond-buyback strategy has been particularly important because it has encouraged investors to reassess the future path of U.S. yields and the dollar.
• Gold is also benefiting from strong central-bank and international investment demand. China’s gold imports through Hong Kong increased in July, adding another supportive element.
• Nevertheless, gold has moved rapidly and is vulnerable to profit-taking, especially if PCE inflation or Warsh’s speech pushes rate expectations higher.

Main factors affecting gold

• U.S. PCE: Softer inflation would reinforce expectations for less restrictive Fed policy and support gold.
• Fed policy: A hawkish Warsh could lift yields and pressure gold, while a more cautious stance would favor another advance.
• U.S. dollar: Continued dollar weakness remains one of gold’s clearest bullish catalysts.
• Treasury debt policy: Continued bond purchases and concerns about fiscal sustainability support demand for real assets.
• Geopolitical tensions: The Iran conflict and uncertainty around the Strait of Hormuz continue to support demand for gold.
• Oil prices: Higher energy prices can create inflation concerns, complicating the Fed outlook and producing two-way volatility in gold.
• Profit-taking: After the sharp rally, investors may lock in gains near $4,700.

Support levels

• $4,607: First major support and preferred buying area.
• $4,581: Secondary support.
• $4,512: Important deeper correction level.
• $4,459: Major medium-term support.
• $4,427–$4,360: Lower defensive region.

Resistance levels

• $4,680: Immediate resistance.
• $4,700–$4,707: Major psychological and technical barrier.
• $4,780: Next significant target.
• $4,800: Major psychological resistance.
• A sustained break above $4,800 would materially improve the possibility of a move toward $5,000.

Forecast

• Base case: Bullish but volatile, with consolidation between approximately $4,580 and $4,700.
• Bullish scenario: Holding above $4,607 and breaking $4,707 could expose $4,780 and $4,800.
• Bearish scenario: A hawkish Fed response to inflation could push gold below $4,581 toward $4,512.
• The medium-term structure remains positive as long as gold remains comfortably above $4,500.

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📊 Summary Table: Forex Analysis As of August 26, 2026

Instrument	Overall Bias	Key Support	Key Resistance	Preferred Strategy	Main Catalyst
🇪🇺 EUR/USD	Mildly Bullish	1.1637 / 1.1608	1.1705 / 1.1722	Buy pullbacks above 1.1637	U.S. PCE + ECB expectations
🇬🇧 GBP/USD	Bullish	1.3622 / 1.3591	1.3670	Buy dips or confirmed breakout	BoE rate expectations
🇯🇵 USD/JPY	Neutral / Cautiously Bullish short term	159.09 / 158.50	159.65 / 160.79	Buy near support; sell below 159.09	BOJ hike + intervention risk
₿ BTC/USD	Bullish but Extended	$78,900 / $73,000	$83,000 / $88,000–$90,000	Buy controlled pullbacks	ETF flows + Treasury liquidity
🪙 XAU/USD	Bullish	$4,607 / $4,581	$4,707 / $4,780	Buy dips or confirmed break	PCE + Fed + dollar + fiscal risk

Overall trading view

• Strongest bullish setups: Bitcoin and Gold, although both have become stretched after their rapid advances.
• Best FX buying setup: GBP/USD while it remains above 1.3622.
• Best value-on-pullback setup: EUR/USD around 1.1637–1.1650.
• Most dangerous position: Aggressive USD/JPY longs near 160 because intervention and September BOJ expectations create asymmetric downside risk.
• Most important event for all five markets: July PCE on Wednesday, followed by Fed Chair Kevin Warsh’s Jackson Hole speech on Friday. The market is particularly sensitive because core PCE has remained above the Fed’s 2% target for an extended period.