Hawkish Fed Lifts Dollar, Pressures Markets (08.31.2026)

Global markets came under pressure after Fed Chair Kevin Warsh’s hawkish remarks strengthened expectations for a September rate hike. 

The dollar index held near 99.6 Monday, building on Friday's sharp gain after hawkish remarks from Fed Chair Warsh lifted September rate-hike bets to 57% from 40% a week earlier. The euro fell toward 1.16 and sterling approached 1.35 as the dollar gained, while the yen weakened beyond 160 amid persistent rate differentials and high energy costs. Gold dropped below $4,450 and silver retreated toward $66.50 as higher rate expectations weighed on precious metals. Meanwhile, renewed tensions involving Iran and the Strait of Hormuz kept geopolitical and inflation risks in focus.

Euro Drops to $1.16

The euro fell toward $1.16, touching its lowest level since August 19 as a stronger US dollar was supported by hawkish remarks from Fed Chair Kevin Warsh, who stressed that inflation remains problematic. Meanwhile, surprising French and Spanish inflation figures strengthened European Central Bank tightening bets, with markets now pricing the deposit rate to reach 2.80% by March and assigning a 60% probability of reaching 3%.

The first resistance is positioned at 1.1630 while the support starts from 1.1570.

Gold Falls Below $4,450

Gold fell below $4,450 per ounce on Monday, building on Friday's steep decline as hawkish signals from Fed Chair Kevin Warsh pushed September rate-hike odds up to 57%. Warsh stressed that inflation has not slowed meaningfully, confirming commitment to the 2% target. Additionally, rising oil prices following US strikes on Iranian Hormuz mine-layers pressured gold, though the metal still maintains an August gain above 10%.

First resistance is seen at $4450, with initial support near $4400.

Yen Weakens Past 160

The Japanese yen slipped past 160 per dollar on Monday, touching near one-month lows as hawkish comments from Fed Chair Kevin Warsh lifted September rate-hike expectations to 57%. Despite erased gains from July's joint intervention, market expectations for a Bank of Japan hike are growing. Wide rate differentials, ongoing fiscal worries, and high oil prices continue pressuring the currency.

First resistance is seen at 160.00, with initial support near 159.00.

Sterling Drops Toward $1.35

The British pound fell toward $1.35, hitting its lowest level since August 19. Hawkish comments from Fed Chair Kevin Warsh supported the dollar by noting inflation has not meaningfully slowed. Declining Brent crude prices eased UK inflation concerns and pushed Bank of England rate hike expectations into 2027, with markets currently pricing 24 basis points of tightening by December.

From a technical view, resistance stands near 1.3590, with support around 1.3500.

Silver Retreats Around $66.50

Silver traded near $66.50 per ounce on Monday following a 4% drop on Friday, pressured by hawkish signals from Fed Chair Kevin Warsh that raised September rate-hike odds to 57%. Warsh warned inflation remains sticky, reinforcing commitment to the 2% target. Rising oil prices after US strikes on Iranian targets also weighed on silver, though the metal stays set for a 15% monthly gain in August.

From a technical view, resistance stands near $67.40, while support is located around $66.00.