Daily Forex Pulse — August 3, 2026

FX OVERVIEW

FX was dominated by the historic U.S.-Japan intervention to support the yen, which sharply weakened USDJPY and forced a repricing of carry positions. Broader risk sentiment improved as the U.S. paused military escalation against Iran, pushing oil prices lower and weighing on the dollar, although strong U.S. manufacturing data kept USD strength intact against several European currencies.

MAJOR PAIRS

USDJPY — Coordinated U.S.-Japan intervention drove USDJPY from near 164 to around 155.20, marking a decisive break in the rate-differential narrative and raising the cost of rebuilding short-yen positions. The pair faces resistance at 157.08, while the intervention framework points to potential downside toward 140.00 if authorities sustain their effort.

AUDUSD — AUDUSD held above the pivotal 0.7020 breakout level after reaching 0.7050, supported by fading Fed hike expectations, lower oil prices and improved geopolitical risk sentiment. A daily close above 0.7053 would reinforce the bullish structure and expose 0.7069, 0.7117 and 0.7184; initial support remains at 0.7021.

EURUSD — Eurozone manufacturing expansion and expectations of another ECB hike supported the euro, while Middle East de-escalation reduced safe-haven demand for the dollar. However, strong U.S. ISM manufacturing data and resistance at 1.1549–1.1550 capped gains; a failure there would target 1.1437, while a confirmed break opens 1.1615–1.1620.

GBPUSD — Sterling underperformed despite the broader risk-on backdrop after the BoE held rates at 3.75% and markets cut the probability of a September hike from 60% to 30%. GBPUSD remains capped by 1.3500 and the descending trendline, with renewed downside risk toward 1.3400, 1.3340 and 1.3270.

USDCHF — USDCHF extended its rebound toward 0.8100–0.8110 as weak Swiss inflation and the SNB’s 0.00% policy rate undermined the franc, while the dollar retained support above DXY 99.90. A daily close above the 21-day SMA near 0.8110 would strengthen the bullish case toward 0.8150 and 0.8200; a break below 0.8100 would invalidate the near-term setup.

USDCAD — USDCAD remained near the key 1.4000 psychological level and its 50-day EMA, with the pair supported by residual U.S. dollar strength despite the oil-price decline. A break below 1.4000 would expose 1.3900, while sustained support above the level keeps the near-term bias modestly bullish.

USDCNY — The PBoC set the central parity slightly stronger at 6.7898 versus 6.7894, signaling continued resistance to excessive yuan depreciation amid external dollar and trade pressures. The move implies a mildly supportive policy bias for CNY, though Fed expectations and capital-flow concerns remain the larger directional forces.

EURGBP — EURGBP rose to 0.8562 as the BoE’s dovish repricing weakened sterling relative to the euro. The cross retains an upside bias while markets continue to remove expectations of a near-term UK rate hike.

CENTRAL BANK WATCH

• U.S. Federal Reserve: Fed hike expectations continued to fade following a dovish shift in communication, despite stronger-than-expected ISM manufacturing PMI at 55.6. Upcoming labor-market data, particularly NFP, is the key test for whether markets extend the dovish repricing.
• Bank of Japan: The BoJ’s recent 1% rate hike remains insufficient to close the U.S.-Japan rate gap, but intervention has temporarily overridden that structural disadvantage. Markets now expect another hike in September.
• Swiss National Bank: The SNB remains on hold at 0.00% as Swiss inflation falls to 0.4% year-on-year and core inflation remains at 0.3%. The absence of tightening continues to weigh on CHF.
• Bank of England: The BoE held rates at 3.75% without signaling a path toward a September hike. The sharp decline in implied hike probability represents a clear dovish pivot for sterling.
• People’s Bank of China: The slightly firmer daily fixing indicates measured support for the yuan and a preference to limit disorderly depreciation.
• European Central Bank: Modest Eurozone manufacturing expansion, led by Germany, reinforced expectations for another rate hike in September and provided fundamental support for EUR.

MACRO DRIVERS

• Official intervention has become the dominant FX risk. The U.S.-Japan operation has changed USDJPY from a carry trade into a policy-sensitive intervention market, with further yen strength possible if authorities defend the new signal.
• Geopolitical de-escalation improved risk sentiment and weakened the dollar. Oil fell more than 5% as the U.S. paused potential military action against Iran, lifting equities and reducing demand for defensive USD positions.
• The dollar is losing rate support but remains resilient. Fading Fed hike expectations favor AUD and EUR, yet robust U.S. manufacturing data and elevated DXY levels continue to limit broad-based dollar weakness.
• Energy and policy divergence are separating commodity currencies. Lower oil prices support AUD through weaker USD and improved risk appetite but create a headwind for CAD, leaving USDCAD anchored near 1.4000.

POSITIONING IDEAS

• Bullish

  • AUDUSD: Long bias above 0.7020, targeting a confirmed break of 0.7053 toward 0.7069 and higher, supported by fading Fed hike expectations and improved risk sentiment.
  • EURGBP: Long bias as the BoE’s failed hike signal continues to weaken sterling relative to the euro.
  • USDCHF: Long bias above 0.8100–0.8110, targeting 0.8150 and 0.8200, supported by weak Swiss inflation and continued SNB inaction.

• Bearish

  • USDJPY: Short bias after the coordinated intervention, with 157.08 as the key resistance and 155.20/155.00 as the immediate downside zone. Sustained official support for the yen keeps 140.00 in focus as the longer-term policy-implied target.
  • GBPUSD: Short bias below 1.3500, targeting 1.3400 and potentially 1.3340, as the BoE’s dovish repricing removes the primary sterling catalyst.
  • EURUSD: Tactical short bias on repeated failure at 1.1550, with 1.1437 as the first downside objective; a strong U.S. payrolls outcome would reinforce the setup.