The US Dollar (USD) maintained its strength across major currency pairs following the release of robust US economic data. July’s Personal Consumption Expenditures (PCE) price index accelerated to 0.2% month-on-month, surpassing the 0.1% consensus, while the annual rate climbed to 3.7% [1][2]. This uptick in inflation reinforced market expectations for at least one more Federal Reserve rate hike before year-end, with investors awaiting further policy cues from Fed leadership at the upcoming Jackson Hole symposium [1][2].
In the currency markets, USD/CHF remained steady after a 0.5% gain the previous day, trading around 0.8050 during Asian hours [1]. The Swiss Franc’s outlook is clouded by a disconnect between market pricing and Swiss National Bank (SNB) commentary, with Commerzbank noting that while markets price a rate hike by mid-2027, recent reports suggest the SNB may keep rates unchanged until the end of 2027—a scenario seen as unlikely given current inflation trends [1]. Meanwhile, the Swiss ZEW Survey showed economic resilience, with the Expectations index rising to 12.1 in August 2026 from 10.0 in July, and the current conditions gauge up to 8.8 [1].
The GBP/USD pair consolidated near its weekly low below 1.3600, pressured by the strong USD and sticky US inflation data [2]. However, US Treasury buyback strategies and optimism over a potential US-Iran deal, including a temporary maritime route through the Strait of Hormuz agreed by Iran and Oman, kept US bond yields depressed and capped further USD gains [1][2]. Geopolitical risk premiums remain in play, supporting crude oil prices and the Greenback, while traders await Fed Chair Kevin Warsh’s speech at Jackson Hole for further direction [2].
Elsewhere, the EUR/JPY cross traded around 185.70, maintaining a bullish bias above key moving averages and consolidating near recent highs. Technical analysis suggests the pair could retest the all-time high of 187.95, with downside support at 185.60 and 184.77 [3]. The Euro was the strongest against the British Pound in daily percentage changes [3].
The AUD/JPY cross advanced to near 114.45, buoyed by hotter-than-expected Australian CPI inflation data, which saw July’s CPI rise 1.0% versus a 0.8% forecast and a 0.1% decline in June [4]. Market expectations for a Reserve Bank of Australia (RBA) rate hike in September rose to 38% from 17%, with a hike fully priced by February next year [4]. Bank of Japan (BoJ) Deputy Governor Ryozo Himino emphasized the need for timely rate hikes but gave no explicit timing, while Rabobank strategists highlighted the potential for further FX intervention if the BoJ hikes rates [4]. Technicals for AUD/JPY remain bullish above the 100-day SMA, with resistance at 115.00 and support at 113.60 and 113.20 [4].
CONCLUSION
Robust US inflation data has reinforced expectations for further Fed tightening, supporting the US Dollar against major peers. Meanwhile, shifting central bank outlooks in Switzerland, Australia, and Japan are driving volatility and repricing in their respective currencies. Market participants remain cautious ahead of key policy signals from the Jackson Hole symposium.