Daily Forex Pulse — August 27, 2026

FX OVERVIEW

The dollar remains the dominant macro force, supported by above-consensus U.S. PCE inflation and renewed expectations for a hawkish Federal Reserve. The main exceptions are the Australian dollar and Korean won, where domestic inflation, central-bank credibility, semiconductor flows, and capital inflows are driving sharp outperformance. Geopolitical escalation and U.S. trade action against Canada add a defensive risk premium, while markets await Kevin Warsh’s Jackson Hole speech for the next major dollar catalyst.

MAJOR PAIRS

AUDUSD — AUD/USD rallied toward 0.7185 after Australian July CPI exceeded expectations, with headline inflation at 3.5% year-on-year versus 3.3% expected and trimmed mean inflation still elevated at 3.6%. Markets now nearly fully price a 25 bp RBA hike by year-end; the pair remains bullish above the 20-day EMA at 0.7100, with 0.7276 as the next major upside target, although an RSI near 69 leaves room for profit-taking.

EURUSD — EUR/USD remains rangebound near 1.1650 as firm eurozone data and a 96% probability of an ECB hike in September offset renewed dollar strength from hot U.S. PCE inflation. The pair has repeatedly failed at 1.1685–1.1692 resistance, leaving the near-term bias neutral to slightly bearish ahead of Warsh’s Jackson Hole speech; a dovish Fed signal would reopen 1.1710 and potentially 1.1800.

GBPUSD — Sterling is under pressure as sticky U.S. inflation revives expectations of a September Fed hike while the BoE offers limited hawkish support. GBP/USD has retreated from 1.3656–1.3676 and is testing the rising-channel floor at 1.3597; a break below 1.3565 would confirm a bearish reversal, targeting 1.3526 and 1.3481.

USDJPY — USD/JPY retains a bullish bias as the U.S.-Japan rate gap, hawkish Fed expectations, and Japan’s fiscal fragility continue to outweigh intervention risk. The pair is holding above support at 158.90–158.60; a break above 159.63 would target 160.66, 162.13, and potentially the 163.99 swing high.

NZDUSD — NZD/USD is pressing the lower end of its weekly range near 0.5930 as stronger U.S. PCE data supports the dollar. The pair remains vulnerable below 0.6000 resistance, but the 0.5900 ascending trendline and 200-day SMA at 0.5844 provide important support; a sustained break below 0.5900 would strengthen the downside case.

USDCAD — USD/CAD is trading near 1.3886, with reciprocal 50% U.S.-Canada tariffs damaging the Canadian growth outlook and creating a structural negative for CAD. Near-term technical momentum is softer below the 20-day EMA and 50% Fibonacci level around 1.3901–1.3908, exposing 1.3819 and 1.3702, but the fundamental tariff shock argues against treating dips as a durable CAD recovery and leaves upside risk if U.S. yields rise further.

USDCNY — USD/CNY remains tightly managed, with the PBoC setting the central rate at 6.7840, a modest 0.017% appreciation from the prior fix but still materially above the Reuters estimate of 6.7261. The PBoC is prioritizing stability over market-driven depreciation, limiting near-term USD/CNY volatility despite broad dollar strength.

USDKRW — USD/KRW has fallen toward 1,380, its lowest level in 11 months, as a 3.00% BoK policy rate, semiconductor exports, corporate buybacks, and foreign capital inflows strengthen the won. The outlook remains decisively bearish for USD/KRW, with WGBI inclusion and Samsung/SK Hynix-related flows potentially pushing the pair toward 1,350–1,340.

USDSGD — USD/SGD edged higher as stronger U.S. data interrupted the dollar’s recent decline, but the pair remains rangebound without a domestic Singapore catalyst. Warsh’s Jackson Hole speech is the key breakout risk: a hawkish message would extend the rebound, while a dovish signal would revive downside pressure.

USDMXN — USD/MXN broke below 17 for the first time since May 2024, highlighting strong peso carry demand and reduced sensitivity to volatility. The move supports a bearish USD/MXN bias, although a sharp geopolitical or risk-off shock would threaten the peso’s carry advantage.

CENTRAL BANK WATCH

  • Reserve Bank of Australia: Hot CPI sharply increased expectations for renewed tightening. Markets now price a near-fully certain 25 bp hike by year-end, with September hike odds rising to 38%.
  • Federal Reserve: Above-forecast PCE inflation has revived expectations for a hawkish policy path, even as September hike pricing remains limited in some markets. Warsh’s Jackson Hole speech is the principal near-term policy risk for the dollar.
  • European Central Bank: Markets assign a 96% probability to a September rate hike, supported by persistent inflation concerns and resilient German data.
  • Bank of England: The BoE remains cautious on further hikes, leaving sterling exposed to external U.S. rate repricing.
  • Bank of Korea: The BoK raised rates 25 bp to 3.00% but removed explicit language pointing to further hikes. Markets nevertheless price rates reaching 3.50% within six months, reflecting confidence in Korea’s growth and capital-flow outlook.
  • People’s Bank of China: The PBoC delivered another tightly controlled daily fix, signaling a preference for yuan stability and limited speculative volatility.

MACRO DRIVERS

  • U.S. rate repricing: Hot PCE inflation is supporting Treasury yields and the dollar, particularly against GBP and NZD, while keeping EUR/USD capped below 1.17.
  • Commodity and trade risk: U.S.-Canada reciprocal tariffs threaten Canadian exports and GDP, while Middle East escalation raises the risk premium around oil and global risk assets.
  • Asia capital flows: Semiconductor demand, AI investment, corporate buybacks, and expected WGBI inflows are producing a structural bid for KRW assets.
  • Carry and risk sensitivity: MXN remains supported by carry demand and low volatility, while yen weakness continues to fund carry positions despite rising intervention concerns.

POSITIONING IDEAS

Bullish

  • AUDUSD — Long bias on the CPI-driven repricing of RBA tightening; 0.7276 is the next key upside objective above 0.7185.
  • USDJPY — Long bias while the pair holds 158.60–158.90, targeting a break through 159.63 toward 160.66 and above; the U.S.-Japan rate differential remains supportive.
  • KRW crosses / short USDKRW — Favor won exposure through short USD/KRW, supported by semiconductor inflows, corporate buybacks, current-account strength, and expected WGBI demand.
  • Short USDMXN — The break below 17 and persistent carry demand support further peso strength, provided global risk sentiment remains stable.

Bearish

  • GBPUSD — Short bias on renewed Fed hawkishness and fragile sterling technicals; a break below 1.3565 targets 1.3526 and 1.3481.
  • NZDUSD — Short bias below 0.6000 while U.S. inflation keeps the dollar supported; 0.5900 is the key breakdown level.
  • EURUSD — Tactical short bias below 1.1692 ahead of Jackson Hole, with the pair vulnerable to a hawkish Warsh signal despite ECB support.
  • USDCAD — Tactical downside toward 1.3819 while price remains below 1.3908, but the broader trade shock favors CAD underperformance and creates a significant countertrend upside risk.

This content is for informational purposes only and does not constitute financial, investment, or trading advice. Always consult a qualified financial professional before making any investment decisions.