Rate Hike Bets Rise as Oil Fuels Inflation Risks (09.08.2026)

Global markets remained focused on rising energy prices and expectations for further monetary tightening across major economies. 

The dollar index eased to around 98.8 Tuesday, falling for a second session as the yen extended gains on BOJ tightening bets and ongoing carry trade unwinding. Investors await this week's inflation data ahead of next week's Fed meeting, with markets pricing roughly 60% odds of a 25bp hike following Friday's strong jobs data. The euro held above 1.16 ahead of an expected ECB rate hike, while sterling gained ground as hawkish Bank of England signals supported expectations for additional tightening. Gold stayed near $4,400 and silver recovered above $66 as elevated oil prices kept inflation and geopolitical risks in focus. Meanwhile, the yen strengthened beyond 154, reaching its highest level since February as markets increasingly anticipated a Bank of Japan rate hike this month.

Euro Holds Steady Above $1.16

The euro held steady just above $1.16 as market participants assessed political shifts in Germany following the far-right AfD party's decisive election victory in Saxony-Anhalt, which dealt a setback to Chancellor Merz's conservative coalition. Investors are also monitoring climbing crude oil prices near multi-week peaks after US military strikes on Iranian oil tankers, adding to inflationary pressures. Meanwhile, traders fully price an ECB interest rate increase this Thursday, with high expectations for a subsequent hike before year-end.

The first resistance is positioned at 1.1640 while the support starts from 1.1600.

Gold Holds Near $4,400 Amid Rate Hikes

Gold hovered near $4,400 on Tuesday, constrained by expectations of upcoming rate hikes from major central banks as elevated oil prices keep inflation risks high. Traders see a 60% chance of a Fed rate increase next week, alongside expected tightening from the ECB and BOJ. Ongoing US-Iran conflict maintains upward pressure on energy prices, providing a underlying cushion for bullion.

First resistance is seen at $4460, with initial support near $4380.

Yen Strengthens Past 154

The Japanese yen advanced past 154 against the dollar on Tuesday, reaching its strongest point since February and extending its recovery from July's historic lows. Broad unwinding of carry trades, expectations of capital repatriation, and external pressure for tighter monetary policy drove the currency higher. Investors increasingly anticipate a Bank of Japan rate hike this month, supported by the administration's open stance toward tightening and wage growth accelerating at its fastest pace since 1997.

First resistance is seen at 154.50, with initial support near 152.80.

Sterling Gains Traction Near 1.3540

GBP/USD consolidated near 1.3540, establishing higher lows as UK Finance Minister Healey's fiscal discipline pledge helped stabilize government bond yields near 5.15%. Although strong US jobs data initially supported the dollar, dollar momentum slowed following hawkish remarks from the Bank of England's chief economist, with investors now anticipating up to two British rate increases over the next six months.

From a technical view, resistance stands near 1.3560, with support around 1.3500.

Silver Recovers Above $66

Silver climbed above $66 on Tuesday, though gains remained capped as traders prepared for potential interest rate increases from global central banks responding to oil-driven inflation. Markets currently price in a 60% probability of a Fed rate hike next week, with tightening also anticipated from the ECB and BOJ. Sustained US-Iran tensions keep energy prices elevated, offering continuous structural support for precious metals.

From a technical view, resistance stands near $67.50, while support is located around $66.00.