Today market outlook

[Zeologic]

AUD/USD shows a bullish bias, signaling "risk-on" market sentiment.

The AUD/USD commodity currency pair is exhibiting a bullish bias, having climbed from a low of 0.68655 on June 30 to a high around 0.71800 last week. Currently, the price sits near 0.71668 on the FXOpen chart, just below the upper band.

AUD/USD is currently driven by three key factors: the RBA's hawkish stance, the Federal Reserve's interest rate trajectory, and economic conditions in China—Australia's largest trading partner.

The RBA maintains a hawkish tone; meeting minutes reveal debates regarding potential further rate hikes, as Australian inflation remains above the 2%–3% target range. The benchmark interest rate currently stands at 4.35%. With inflation remaining elevated, the market has not entirely ruled out the possibility of additional rate hikes through late 2026.

Improving sentiment regarding China's economy, alongside economic stimulus measures, could bolster Australian exports—particularly commodities such as iron ore and coal.

However, downward pressures could push the AUD into bearish territory. US inflation data (PCE) and speeches by Federal Reserve officials remain the focus this week. If US inflation exceeds forecasts, the USD could strengthen on expectations of higher interest rates. Geopolitical tensions in the Middle East may drive safe-haven demand for the USD, while a global economic slowdown and weakening commodity demand could also weigh on the AUD.

Traders are currently monitoring Australian CPI data, RBA rate hike expectations, US PCE data and Fed commentary, commodity price movements, Chinese economic data, and the performance of the US Dollar Index (DXY).

From a technical perspective, AUD/USD is trading above the 200-day moving average, with a trend leaning from neutral to mildly bullish today. The projected fair value range for AUD/USD is 0.70800–0.72000. Immediate support lies around 0.71200, with the next target level near 0.70900. The nearest resistance is around 0.71780, and the next target is around 0.72000. This forecast could be wrong.

[Zeologic]

GBP/JPY outlook is neutral to bullish, but chasing highs requires caution.

The GBP/JPY cross—often nicknamed "The Beast"—is currently trading around 216.571, with a daily range of approximately 216.500–217.380. On the FXOpen chart, the price sits near 216.375, trading above the MA50.

GBP/JPY price dynamics are influenced by factors such as interest rates and global risk sentiment. The GBP continues to draw support from expectations of a relatively tight Bank of England (BoE) policy. Sterling recently traded near six-month highs against the USD, bolstered by solid UK data and persistent inflation concerns.

However, there are headwinds; UK retail sales fell 0.5% month-on-month in July, and the UK government recorded a budget deficit of approximately £1.8 billion—worse than anticipated. Fiscal pressures and high gilt yields pose risks to the GBP.

The BoE has maintained interest rates at 3.75%. Although some committee members have voiced support for a rate hike due to energy-driven inflation, UK macroeconomic uncertainty limits the scope for further GBP appreciation. A narrowing interest rate differential between the UK and Japan is gradually triggering a "carry trade" compression, which is slowly strengthening the JPY against the GBP.

Japanese inflation is picking up again. Headline inflation rose to approximately 1.9% in July, while underlying inflation indicators also increased. This has fueled speculation that the Bank of Japan (BoJ) could raise interest rates to 1.25% in September. A Reuters survey indicates that the majority of economists expect the BoJ to raise rates to 1.25% in September, with some anticipating further increases by late 2026.

Japan and the US have previously intervened to strengthen the Yen. According to Reuters, such interventions could mark a crucial turning point for the currency. Given that GBP/JPY is highly sensitive to JPY strength, the pair could react significantly if USD/JPY approaches extreme levels, or in response to verbal interventions by Japanese officials or hawkish statements from the BoJ. This could push GBPJPY lower.

Energy prices and geopolitical factors could significantly impact UK inflation and alter the Bank of England's (BoE) policy direction. Global market sentiment is also a key focus for traders; positive moves in global indices tend to drive GBPJPY higher, whereas sharp declines in stock markets can trigger a flight to the yen as a safe-haven asset.

From a technical perspective, GBPJPY is trading above its 200-day moving average. The projected price range for GBPJPY today is approximately 215.80–217.80. Immediate support lies at 216.10, with the next target at 215.90. Immediate resistance is around 217.30, with the next target near 217.80. This forecast could be wrong.

[Zeologic]

USD/JPY volatility likely to rise throughout the week

Last week, the safe-haven USD/JPY pair exhibited high volatility. The USD strengthened against the JPY, supported by the Federal Reserve's hawkish stance. On August 28, USD/JPY formed a bullish candle on the FXOpen chart, recording a high of 160.203, a low of 159.294, and a close of 160.203.

The USD's rise last week was driven by the Fed's hawkish stance, which led the market to reconsider the possibility of a rate hike in September following hawkish comments from Fed Chair Kevin Warsh. The probability of a 25-basis-point hike was reported at around 57%. The US Dollar Index (DXY), which measures the USD's performance against six major currencies, surged from 99.098 to 99.726 in response to Warsh's speech. However, the market is now awaiting US labor data; Friday's Non-Farm Payrolls report will be a key factor in determining whether these Fed expectations hold firm.

Elevated US bond yields continue to maintain the US dollar's appeal against the yen through carry trade dynamics.

On the other hand, the Japanese yen has found support in domestic inflation data. Tokyo Core CPI for August rose to 1.8% year-on-year, up from the previous 1.7% and exceeding the 1.7% forecast. Tokyo inflation excluding food and energy reached approximately 2.0%. These conditions reinforce speculation that the Bank of Japan (BoJ) could raise interest rates at its September 17–18 meeting.

The most critical factor for the JPY is the risk of intervention by Japanese authorities. Japan reportedly spent approximately 15.4 trillion yen (USD 96.5 billion) to support the yen between July 30 and August 26. With the JPY once again approaching the 160 level, the risk of Japanese intervention or statements from the Ministry of Finance is rising. Consequently, a USD/JPY rise above 160 could make "buy" positions highly risky.

This week, traders will be watching for these key factors. The release of US Non-Farm Payrolls (NFP) data will determine the direction of the Federal Reserve's next policy move. Shifts in the Bank of Japan's (BoJ) rhetoric—specifically any hawkish signals or threats of market intervention—could trigger a sudden correction in USD/JPY. There is a strong positive correlation between US bond yields and USD/JPY; rising yields could push the pair above the 160.50 level.

From a technical perspective, USD/JPY is trading below the 50-day EMA but above the 200-day EMA. The estimated fair price range for USD/JPY is 157.800–161.000. Immediate support lies at 159.300, with the next target around 158.300. Immediate resistance is near 160.500, with the next target around 161.300. This forecast could be wrong.