USD: There is a risk it could drop further in the near-term – MUFG

Matías Salord FXStreet

The recent pullback of the US dollar makes analysts at MUFG Bank more cautious over chasing the greenback further to the upside in the near term. They warn that next week’s US CPI report for August poses another downside risk for USD.

Key Quotes:

“It has been a volatile week in the foreign exchange market. In the first half of the week the dollar extended its recent advance hitting fresh year to date highs against other major currencies. EUR/USD hit a fresh year to date low of 0.9864 on Tuesday followed by cable hitting fresh year to date low at 1.1406, and USD/CNY and USD/JPY hitting fresh year to date highs at 6.9799 and 144.99 respectively on Wednesday. After putting in place fresh year to date highs the USD has since corrected sharply lower in recent days. It has been the largest sell-off for the dollar index since July.”

“The pullback for the USD has made us more cautious over chasing further USD upside in the near-term. We are not convinced that it is the start of a more sustained reversal lower for the USD, but there is a risk it could drop further in the near-term.”

“One potential downside risk in the week ahead for the USD is the release of the latest US CPI for August. The Fed has already downplayed the weaker US CPI report for July, but another weaker CPI report for August could challenge market expectations for a third consecutive 75bps hike later this month.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD bulls seem hesitant as Hormuz ship attack supports safe-haven USD

The GBP/USD pair sticks to a positive bias for the second straight day, albeit it remains below the previous day's swing high and trades just below the 1.3200 mark during the Asian session on Friday. Furthermore, the fundamental backdrop warrants caution before positioning for any meaningful recovery from November 2025 lows, around the 1.3140 region, touched on Wednesday.

EUR/USD holds above mid-1.1300s amid Hormuz risks, bearish setup

The EUR/USD pair struggles to capitalize on the previous day's modest recovery gains and oscillates in a narrow band during the Asian session. Spot prices, however, hold above mid-1.1300s and the lowest level since May 2025, set on Thursday, warranting some caution for bearish traders.

Gold: Eyes on Death Cross and $3,950 support

Gold sellers return early Friday, with eyes on $3,950, despite easing Fed rate hike bets. The US Dollar catches a fresh haven bid amid global risk aversion and Hormuz tensions. Gold awaits Death Cross confirmation as RSI returns to the bearish zone on the daily chart.

Bitcoin slides to a fresh yearly low, Ethereum breaks down, XRP signals more losses

Bitcoin, Ethereum and Ripple remain under heavy selling pressure on Friday, falling over 7%, 9% and 8%, respectively, so far this week. BTC has fallen to a fresh yearly low, ETH slipped below key support, while XRP continues to lose momentum.

Asian stock markets plummet as Apple price hike raises inflation concerns, KOSPI dives over 8%

Asian equity markets on Friday are significantly down as price hikes announced by Apple Inc. due to memory chip shortages have prompted fears of high inflation globally and concerns on earning projections of various companies that rely on these sophisticated chips for their final products.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.