USD/JPY declines 0.21% on Monday and trades around 159.80 at the time of writing, after briefly moving above the psychological 160.00 level.

USD/CHF trades with a downside bias on Monday as the US Dollar (USD) struggles to gain traction despite rising Federal Reserve (Fed) interest rate hike expectations and Middle East tensions. At the time of writing, the pair trades around 0.8080, down roughly 0.15% on the day.

USD/CAD falls 0.24% on Monday and trades around 1.3870 at the time of writing, after reaching its highest level in more than two weeks earlier. The pair comes under pressure from both a stronger Canadian Dollar (CAD), supported by rising Oil prices, and a modest pullback in the US Dollar (USD).

Scotiabank strategists Shaun Osborne and Eric Theoret observe that the Canadian Dollar (CAD) is little changed, with USD/CAD trading around their fundamental equilibrium estimate near 1.3920.

EUR/USD holds modest gains on Monday during American trading hours as the US Dollar (USD) struggles to build on Friday’s strength, which followed hawkish remarks from Federal Reserve (Fed) Chair Kevin Warsh at the Jackson Hole Symposium.

Wee Khoon Chong at BNY reports strong Japanese macro data and resilient housing and commerce indicators, supporting the narrative that Japan has exited deflation and Bank of Japan (BoJ) normalization remains in play.

GBP/JPY trades on the back foot on Monday as the Japanese Yen (JPY) strengthens against its major peers. The Pound Sterling (GBP), meanwhile, lacks a fresh domestic catalyst as UK markets remain closed for the Summer Bank Holiday.

The US Dollar (USD) is down 0.3% to near 159.65 against the Japanese Yen (JPY) during the European trading session on Monday. The USD/JPY pair declines as the Japanese currency outperforms its peers on hopes of support from the United States (US)-Japan joint intervention.

The Euro (EUR) posts marginal gains against the US Dollar (USD) on Monday, but it remains close to Friday’s lows at 1.1578, as bulls fail to find significant acceptance above 1.1600.

NZD/USD trades around 0.5910 on Monday, virtually unchanged on the day at the time of writing. The New Zealand Dollar (NZD) retains some support from improving Chinese activity data, but the move remains limited as investors prepare for the Reserve Bank of New Zealand (RBNZ) decision on Wednesday.

The British Pound (GBP) is marginally higher at around 1.3545 against the US Dollar (USD) during the European trading session on Monday. The GBP/USD pair rebounds as the US Dollar corrects after a strong upside move on Friday.

AUD/USD trades around 0.7160 on Monday at the time of writing, down a modest 0.08% on the day. The Australian Dollar (AUD) struggles to find a clear direction following the release of mixed Chinese economic data, while investors also assess the latest indications on Australian inflation.

EUR/JPY extends its losses for the second successive day, trading around 185.20 during European hours on Monday. The technical analysis of a daily chart indicates that the currency cross is remaining within the ascending channel pattern, signaling a bullish bias.

HSBC strategists highlight a bearish stance on the Canadian Dollar (CAD), noting that the breakdown in US–Canada trade talks has driven USD/CAD higher but is unlikely to be a persistent drag.

The Japanese Yen (JPY) pares some losses on Monday’s European session, as the US Dollar (USD) pulls back against its main peers, with the dust from the Jackson Hole meeting settling.

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight an unexpectedly sharp EUR/USD drop to 1.1577, with the pair closing weaker at 1.1584. They see scope for further downside but doubts a quick test of 1.1550 due to oversold conditions.

The Euro (EUR) is up 0.15% to near 1.1600 against the US Dollar (USD) during the European trading session on Monday. The major currency pair gains as the US Dollar corrects after a strong Friday.

OCBC FX Strategist Sim Moh Siong and Christopher Wong note that stronger Australian Consumer Price Index (CPI) and resilient household spending have revived expectations of another Reserve Bank of Australia (RBA) hike, helping AUD/USD retest resistance near 0.7180–0.7200.

BNY’s Geoff Yu expects the Reserve Bank of New Zealand to deliver another 25bp hike to 2.75%, supported by elevated inflation and strong confidence data.

The USD/CAD pair pulls back from an over two-week high, around the 1.3910-1.3915 region, earlier this Monday, stalling the recent goodish recovery from a three-month low. Spot prices, however, lack follow-through selling and trade just below the 1.3900 mark during the early European session.

The Swiss Franc (CHF) shows moderate gains on Monday's early European session, as the US Dollar (USD) loses momentum with the dust of the Jackson Hole summit settling.

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note AUD/USD briefly broke above 0.7200 to 0.7208 before reversing to 0.7158. Intraday, they expect further pullback toward 0.7145, with limited downside and resistance at 0.7170/0.7185.

Here is what you need to know on Monday, August 31:

The Euro (EUR) is looking for direction against the British Pound (GBP) on Monday, following a sharp reversal last Friday, with bears eyeing the bottom of the last two weeks’ trading range, just below 0.8550.

The NZD/USD pair gains momentum to near 0.5915 during the early European trading hours on Monday. Better-than-expected Chinese economic data provides some support to the China-proxy New Zealand Dollar (NZD) against the US Dollar (USD). 

OCBC FX Strategist Sim Moh Siong and Christopher Wong highlight that the Japanese Yen (JPY) has already benefited from aggressive market pricing for Bank of Japan (BoJ) tightening, with an 85% chance of a September hike implied.

United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann report that GBP/USD fell sharply to 1.3527 and closed at 1.3540, contradicting expectations for range trading. Intraday, they see limited further losses within 1.3520–1.3570 due to oversold conditions.

The British Pound (GBP) edges up on Monday but remains close to two-week lows against the US Dollar (USD).

Danske Research Team notes that Federal Reserve (Fed) Chair Kevin Warsh’s hawkish Jackson Hole speech pushed EUR/USD lower, with markets now pricing September as nearly a coin-flip for a rate hike.

The Euro (EUR) is down 0.1% to near 185.20 against the Japanese Yen (JPY) during the European trading session on Monday. The cross faces pressure as the Japanese Yen (JPY) outperforms its peers amid fears that the Bak of Japan (BoJ) will raise interest rates in the September policy meeting.