Fundamental Market Analysis for July 29, 2026 (EURUSD, GBPUSD, USDJPY)
Event to watch today:
21:00 EET. USD - FOMC Rate Decision
EURUSD:
EURUSD is holding near 1.1395 after falling to its lowest levels of the month. The ECB kept interest rates unchanged last week and emphasized the high degree of uncertainty caused by the energy shock. This stance does not provide the euro with an independent source of support, as the central bank continues to assess the impact of higher energy prices on inflation and economic activity without committing to a predetermined policy path.
The Federal Reserve’s decision remains the main driver of the session. The US dollar is trading close to a one-month high as the market allows for the possibility of a rate increase today and expects firm signals even if the current policy settings are maintained. Elevated US Treasury yields and investor caution amid renewed tensions in the Middle East are providing additional support to the American currency.
The main risk for the euro is that the divergence between Federal Reserve and ECB expectations continues to favor the dollar. A potential pause by the Federal Reserve has already been partially priced in, although softer comments could quickly change market sentiment. Until such a signal emerges, the baseline scenario allows for a further decline in EURUSD, with the selling idea supported by the dominant fundamental impulse of the current session.
Trading idea: SELL 1.1395, SL 1.1425, TP 1.1320
Event to watch today:
21:00 EET. USD - FOMC Rate Decision
GBPUSD:
GBPUSD is trading near 1.3295, close to its lowest levels since early July. The pound is being restrained by weaker signals from the UK labor market and caution ahead of the Bank of England’s decision on Thursday. The market largely expects the policy rate to remain at 3.75%, meaning the British currency would need a more convincing indication that the central bank is prepared to continue tightening monetary policy.
The domestic backdrop in the United Kingdom remains mixed. Inflation is still above the Bank of England’s target, but weaker demand for workers reduces the risk of a sustained acceleration in wage growth. At the same time, uncertainty surrounding future government spending and how it will be financed is limiting demand for the pound, particularly as investors favor the dollar ahead of the Federal Reserve’s important decision.
The US currency retains an advantage due to elevated yields and expectations of a firmer Federal Reserve stance. The selling scenario would come under pressure if the central bank left rates unchanged and gave the market grounds to reduce expectations of a September increase. Until that happens, the pound’s domestic drivers appear insufficient to outweigh the broader dollar impulse, leaving the downside scenario for GBPUSD as the priority.
Trading idea: SELL 1.3295, SL 1.3330, TP 1.3225
Event to watch today:
21:00 EET. USD - FOMC Rate Decision
USDJPY:
USDJPY is holding near 163.85, close to its highest levels in four decades. The interest rate differential continues to favor the dollar: the Bank of Japan’s policy rate stands at 1.0%, while US Treasury yields remain elevated. Ahead of the Japanese central bank’s meeting, the market expects the rate to remain unchanged, although further policy tightening later remains possible.
Expectations surrounding the Federal Reserve’s decision are supporting the pair. Even without a rate increase, an emphasis on inflation risks could preserve demand for the dollar and interest rate differential trades. Higher oil prices are also complicating the outlook for Japan as a major energy importer, as they increase costs for the economy without guaranteeing an immediate strengthening of the yen through monetary policy.
The main constraint remains the risk of action by the Japanese authorities. The finance minister has again confirmed readiness to respond to excessive currency fluctuations, while further yen weakness following the Federal Reserve and Bank of Japan decisions could increase the likelihood of practical measures. Nevertheless, until intervention is confirmed, the dollar retains the advantage, and the cautious baseline scenario allows for further USDJPY gains with limited upside potential.
Trading idea: BUY 163.85, SL 163.50, TP 164.55
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