CB Tightening Expectations Drive Markets (08.27.2026)

Global markets remained focused on shifting monetary policy expectations and developments surrounding the Strait of Hormuz. 

The dollar index stayed above 99 Thursday, building on gains as firm US data lifted Fed rate-hike expectations. July PCE inflation rose 0.2% monthly, topping forecasts, with annual inflation at 3.7%. The euro held near multi-month highs as markets continued to anticipate further ECB tightening, while sterling remained close to $1.36 on expectations for additional Bank of England rate hikes. Gold recovered toward $4,610, and silver stayed above $68 as investors assessed stronger U.S. inflation data and upcoming Fed signals. Meanwhile, the yen stabilized near 159.2 as expectations for a September Bank of Japan rate hike increased.

Euro Stable Near Multi-Month High

The euro hovered near $1.165, maintaining its strongest level since mid-May as lower oil prices reflected market optimism over the Strait of Hormuz following Iran-Oman talks. While ECB officials lean toward a September rate hike, broader tightening plans remain cautious. Isabel Schnabel warned prolonged conflict could trigger further rate increases, with markets currently pricing under 40 basis points of additional tightening by year-end.

The first resistance is positioned at 1.1680 while the support starts from 1.1610.

Gold Trades Around $4,610

Gold trades around $4,610 per ounce on Thursday, recovering most of its previous session losses as investors evaluated Fed policy signals ahead of September's meeting. Surprising July PCE inflation data reinforced hawkish rate expectations. Markets now look to Kevin Warsh's Jackson Hole address, while lingering US debt concerns and an 11% monthly rise in Chinese imports provided underlying support.

First resistance is seen at $4680, with initial support near $4585.

Yen Firms Amid BOJ Speculation

The yen held steady near 159.2 per dollar on Thursday as market expectations for Bank of Japan rate hikes intensified. Money markets now price an 87% chance of a rate increase to 1.25% in September. Former board member Adachi anticipates hikes in September and January, while Deputy Governor Himino reinforced inflation vigilance. Governor Ueda will miss the Jackson Hole symposium due to scheduling conflicts.

First resistance is seen at 159.70, with initial support near 159.00.

Pound Trades Near $1.36

The British pound traded near $1.36, remaining close to its mid-February high as investors priced in Bank of England rate hikes despite falling crude prices. Brent fell for a third consecutive session following Hormuz reopening talks, though lingering inflation and debt concerns maintained the pair's constructive backdrop as traders look for clear directional confirmation.

From a technical view, resistance stands near 1.3630, with support around 1.3540.

Silver Keeps Above $68

Silver trades above $68 per ounce on Thursday, approaching two-month highs as investors assessed Fed policy signals ahead of September's meeting. Stronger July PCE inflation data reinforced a cautious interest rate outlook. While markets look to Kevin Warsh's Jackson Hole address, silver continues to gain support from dollar debasement hedging and solid industrial demand across solar energy, electric vehicles, and AI infrastructure.

From a technical view, resistance stands near $70.00, while support is located around $68.20.