Forex Today: EMU’s flash inflation and the ISM Manufacturing in the spotlight

Pablo Piovano FXStreet

The US Dollar (USD) started the week on the defensive, slipping back to multi-week troughs amid the inactivity in the US markets and a broad-based firmer tone in the risk complex.

Here's what to watch on Tuesday, September 2:

The US Dollar Index (DXY) dropped for the fifth day in a row, hitting five-week lows near 97.50 ahead of a week packed with key US data releases. The ISM Manufacturing will take centre stage ahead of the final S&P Global Manufacturing PMI, Construction Spending and the RCM/TIPP Economic Optimism Index.

EUR/USD surpassed the 1.1700 hurdle to clinch fresh six-day peaks following the continuation of the downward bias in the Greenback. Next on tap on the domestic calendar will be the preliminary Inflation Rate in the Euroland, alongside speeches from the ECB’s Elderson and Machado.

GBP/USD advanced to two-week highs near 1.3550, extending further the ongoing multi-day recovery. The next data release on the UK docket will be the final S&P Global Services PMI on September 3.

USD/JPY added to Friday’s uptick past the 147.00 barrier, always amid the multi-week consolidative phase. The final S&P Global Services PMI is next in Japan on September 3.

AUD/USD maintained its march north unabated, hovering around the 0.6560 region and trading closer to its monthly highs. The Q2 Current Account results are next in Oz.

Prices of American WTI rose to five-day highs near the $65.00 mark per barrel, propped up by selling pressure on the US dollar and supply disruption fears.

Gold prices rose further on Monday, refocusing on their all-time highs around the $3,500 mark per troy ounce, always on the back of rising bets of a rate cut by the Fed later in the month. Silver prices rallied past the key $40.00 mark per ounce for the first time since September 2011.

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Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD stays offered just above 1.1400

EUR/USD keeps the downtrend well in place for yet another day, challenging the 1.1400 contention zone on Tuesday. The continuation of the selling impulse in spot comes amid decent gains in the US Dollar, which continues to find support in the persistent effervescence surrounding the US-Iran crisis.

Middle East crisis intensifies, Gold up

Gold now seems to have embarked on a consolidative phase below the key $4,100 mark per troy ounce in the latter part of Tuesday’s session. Meanwhile, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP extends recovery as on-chain activity grows

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.