Fundamental Market Analysis for August 17, 2026 (EURUSD, GBPUSD, USDJPY)

EURUSD:

The euro starts the new week from a firmer fundamental position following Friday’s weakening of the US dollar. US retail sales unexpectedly declined in July, while more moderate inflation data reduced the probability of a Federal Reserve rate hike in September. For EURUSD, this weakens the US currency’s advantage and leaves room for a moderate recovery in the pair.

The euro is also supported by expectations of further ECB tightening. A recent survey of economists shows that most expect another rate hike in September amid inflation remaining above target and continued resilience in the eurozone economy. The divergence between Federal Reserve and ECB policy expectations is becoming more favorable for the European currency, although high energy prices continue to limit market confidence.

The main risk remains a recovery in demand for the US dollar if global market sentiment deteriorates or US data come in stronger than expected. However, at the start of the session, the fresh repricing of US monetary policy remains the dominant factor. As long as this backdrop persists, the fundamental advantage remains with the euro, and the base-case scenario supports further gains in EURUSD.

Trading idea: BUY 1.1570, SL 1.1540, TP 1.1645

GBPUSD:

The pound enters Monday with support from the latest UK economic data. June GDP grew more strongly than expected, while previously released business activity indicators pointed to an improvement in the services sector. This reduces concerns about a sharp slowdown in the UK economy and allows the market to maintain a more resilient assessment of the British currency’s outlook.

At the same time, the US dollar lost some support after an unexpected decline in US retail sales and more moderate inflation readings. The probability of a Federal Reserve rate hike in September has fallen noticeably, while UK short-term interest rates remain elevated. For GBPUSD, this combination reduces pressure from the interest rate differential and supports demand for the pound.

The main constraint is the approach of important UK inflation and labor market data, which could change expectations for Bank of England policy. The upside potential therefore does not appear one-sided. Nevertheless, there is currently no strong local factor weighing on the pound, while the softer US dollar impulse coincides with resilience in the UK economy. If these conditions persist, the bias remains toward a moderate rise in GBPUSD.

Trading idea: BUY 1.3540, SL 1.3505, TP 1.3620

USDJPY:

The yen begins the session from a stronger fundamental position following a notable shift in expectations for Bank of Japan policy. The market has significantly increased the probability of a rate hike as early as the September meeting, while recent reports indicate that the central bank is considering a faster pace of tightening due to inflation risks and the prolonged weakness of the national currency. This provides support for the yen.

At the same time, the US side of the USDJPY equation has weakened. Soft US retail sales and moderate inflation reduced the probability of a Federal Reserve rate hike in September, limiting support for the dollar from monetary policy expectations. US Treasury yields remain elevated, but the dollar’s previous advantage has become less clear than it was at the beginning of August.

The risk of further action by the Japanese authorities remains an additional factor. Following the recent joint intervention by Japan and the United States, Japanese officials continue to emphasize their readiness to respond to excessive yen weakness. Against the backdrop of a softer US dollar impulse and rising expectations of a Bank of Japan rate hike, the base-case scenario supports a decline in USDJPY during the current session.

Trading idea: SELL 159.30, SL 159.65, TP 158.45

Get a 300% bonus on every deposit of $100 or more and increase your trading volume!