Daily Forex Pulse — August 4, 2026

FX OVERVIEW

Coordinated U.S.-Japan intervention to support the yen is the dominant FX driver, sharply increasing volatility and capping yen crosses despite wide U.S.-Japan rate differentials. Geopolitical risk around Iran and the Strait of Hormuz is sustaining safe-haven demand for the dollar, while softer Fed expectations provide selective support for the euro and other currencies.

MAJOR PAIRS

USDJPY — Coordinated U.S.-Japan intervention pushed the pair toward the 155 area after USDJPY approached multi-decade highs, establishing 155 as the key policy and technical battleground. The near-term bias is bearish below 155, with breaks exposing 152.50 and 150.00; however, the broader bias remains upward while the Fed-BoJ yield gap and carry demand remain intact, with 160, 161.26 and 164 potential upside targets if intervention loses credibility.

AUDJPY — The cross rebounded from oversold conditions toward 110.70, but yen intervention has sharply limited the recovery. The bearish structure remains intact below 112.85–113.00, and a sustained break above 113 is unlikely while authorities prioritize yen stabilization.

USDCHF — USDCHF slipped below 0.8100 as fading risk appetite and safe-haven demand supported the franc, but the SNB’s dovish stance continues to favor a weaker CHF and structurally higher USDCHF. A break below the 0.8040 neckline would target 0.8000, while a move above 0.8150 would reinforce the bullish dollar setup.

EURUSD — EURUSD remains range-bound near 1.1500 as Middle East tensions support the dollar and traders await U.S. payrolls. Falling September Fed hike odds, now at 64.7% versus 77%, provide a bullish euro catalyst, but resistance at 1.1555–1.1600—particularly 1.1565—must clear to open 1.1615; support sits at 1.1480–1.1460.

GBPUSD — Sterling remains vulnerable after Governor Bailey’s dovish post-meeting guidance contradicted the MPC’s hawkish vote and ruled out further hikes. The pair holds above 1.3389 and 1.3273, but failure at 1.3495 risks a decline toward 1.3334 and 1.3273; a clean break above resistance would target 1.3559.

NZDUSD — NZDUSD is consolidating around 0.5870, with the RBNZ’s hawkish stance offset by geopolitical risk, higher inflation concerns and renewed support for the dollar. Support at 0.5865 is pivotal: a break below would turn the bias lower, while a move above 0.5909 would target 0.5950.

USDCAD — USDCAD is holding near 1.4050 as weak oil prices undermine the commodity-linked Canadian dollar and offset broader dollar softness. The pair has support at 1.4000 and resistance at 1.4070–1.4105; a break above 1.4150 would target 1.4200, while a sustained oil rebound would reverse the bullish setup.

USDCNY — The PBOC set the USD/CNY fixing at 6.7917, signaling a modestly stronger yuan and reinforcing Beijing’s preference for exchange-rate stability. The stronger-than-expected fix limits near-term yuan depreciation, but opaque policy management and U.S.-China tensions leave USD/CNY exposed to abrupt repricing.

USDKRW — The won is positioned to benefit from further yen appreciation, reflecting its increasing sensitivity to JPY moves and supportive Asian PMI and export momentum. The bias is for KRW strength if yen intervention holds, although stronger won appreciation could eventually draw a policy response from the Bank of Korea.

CENTRAL BANK WATCH

• U.S.-Japan authorities: The coordinated intervention, supported by the U.S. Treasury through the FIMA Repo Facility, represents an unusually strong policy commitment to yen stabilization. Its immediate effect is to cap USDJPY and yen crosses, although sustained reversal requires credible follow-through.
• Federal Reserve: September hike expectations have fallen to 64.7% from 77%, reducing support for the dollar ahead of U.S. payrolls. The next major repricing risk is a strong NFP report, which could restore hawkish Fed expectations.
• Bank of England: The MPC retained a hawkish internal bias, but Governor Bailey’s dovish communication and explicit rejection of further hikes weakened sterling and damaged policy credibility.
• Swiss National Bank: The SNB remains dovish and continues to favor a weaker franc, supporting carry trades and the structural upside case for USDCHF.
• Reserve Bank of New Zealand: The RBNZ’s hawkish stance is supporting NZDUSD, but geopolitical risk and dollar strength are preventing a sustained breakout.
• People’s Bank of China: The stronger-than-expected 6.7917 fixing signals active management against excessive yuan weakness and reinforces the PBOC’s control over USD/CNY.

MACRO DRIVERS

• Intervention has replaced rate differentials as the immediate yen driver. The U.S.-Japan coordination is forcing a rapid reduction in yen shorts and raising volatility across Asian FX.
• Geopolitical risk is supporting the dollar and energy volatility. The U.S.-Iran confrontation and potential Strait of Hormuz disruption threaten an oil shock, with asymmetric downside for energy-importing economies.
• Fed repricing is becoming more two-way. Lower rate-hike probabilities support EURUSD and GBPUSD, but strong U.S. labor data could quickly restore dollar demand.
• Capital is rotating within Asia. A stronger yen and resilient regional PMI data favor KRW and selected Asian currencies, while the PBOC is using the daily fix to contain yuan volatility.

POSITIONING IDEAS

• Bullish

  • USDCAD — Long bias while oil remains weak and the pair holds above 1.4000; a break above 1.4150 would confirm an extension toward 1.4200.
  • USDCHF — Structural long bias based on the SNB’s dovish stance and preference for a weaker CHF; 0.8150 is the upside trigger.
  • EURUSD — Tactical long bias on a softer-than-expected U.S. payrolls report, with 1.1565 the breakout level and 1.1615 the initial target.

• Bearish

  • USDJPY — Tactical short below 155 as coordinated intervention and official yen support create downside risk toward 152.50 and 150.00.
  • AUDJPY — Short bias below 112.85–113.00; intervention should keep rebounds corrective and limit AUD strength against the yen.
  • GBPUSD — Short rallies below 1.3495 while Bailey’s dovish guidance and bearish sterling positioning remain dominant; downside targets are 1.3334 and 1.3273.