Fundamental Market Analysis for August 26, 2026 (EURUSD, GBPUSD, USDJPY)
Event to watch today:
15:30 EET. USD - Change in GDP quarter over quarter
EURUSD:
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The euro is receiving support from fresh signals that the ECB is prepared to raise interest rates at its September meeting. Recent reports indicate that the central bank is considering an increase from 2.25% to 2.50% amid inflation of around 3% and persistent pressure from energy prices. For EURUSD, this strengthens the relative appeal of the euro, particularly as the eurozone economy continues to show resilience.
Another factor supporting the European currency is the latest August business activity data. The eurozone composite PMI rose to 52.1, while the manufacturing sector recorded its strongest performance in several years. These figures do not eliminate risks to economic growth, but they reduce the likelihood that the ECB will be forced to abandon a tighter policy stance because of economic weakness.
The US dollar is trading without a clear directional impulse ahead of the release of the July Personal Consumption Expenditures price index. The US Dollar Index has paused after three consecutive days of gains, while investors are waiting for fresh signals on inflation and the Federal Reserve’s policy outlook. Against this backdrop, euro-specific factors appear stronger, so the base-case scenario allows for a recovery in EURUSD if current ECB expectations remain intact.
Trading idea: BUY 1.1670, SL 1.1640, TP 1.1745
GBPUSD:
The pound remains supported by expectations surrounding the Bank of England following a series of more resilient UK economic releases and persistent inflationary pressure. The market continues to price in the possibility of a rate increase before the end of the year, while GBPUSD is holding near six-month highs. This provides support for sterling as long as incoming data do not force investors to materially reassess expectations for monetary policy.
The UK fundamental backdrop is not entirely one-sided. High government bond yields and questions surrounding the financing of fiscal initiatives are limiting the pound’s upside potential, as higher borrowing costs increase the market’s sensitivity to the October budget. However, within the current session, these risks remain secondary to expectations surrounding the Bank of England and the recent resilience of the UK economy.
The US currency is starting the day without a strong directional move. Market participants are waiting for the July Personal Consumption Expenditures price index and fresh signals from the Federal Reserve. With the dollar impulse currently limited and sterling retaining its own source of support, the bias remains toward moderate gains in GBPUSD if the current backdrop persists.
Trading idea: BUY 1.3640, SL 1.3605, TP 1.3720
USDJPY:
The yen is receiving fresh fundamental support following an acceleration in inflation within Japan’s services sector. The Services Producer Price Index rose by 3.6% year on year in July, up from a revised 3.4% in June, strengthening the case for further interest rate increases by the Bank of Japan. This is important for USDJPY because expectations of faster policy tightening reduce part of the dollar’s previous interest-rate advantage.
A recent survey of economists showed a notable shift in expectations: the majority now see the possibility of the Bank of Japan raising its policy rate to 1.25% as early as September, while the market is close to fully pricing in such a move. The yen’s sensitivity is also supported by the recent joint intervention by Japan and the United States in the foreign exchange market, which keeps attention focused on excessive weakness in the Japanese currency.
There is currently no strong opposing impulse from the dollar. The US currency is trading in a narrow range ahead of the July Personal Consumption Expenditures price index and fresh Federal Reserve signals, while the latest Japanese data are strengthening expectations for the Bank of Japan. As a result, the base-case scenario allows for a decline in USDJPY if the current repricing of interest rate expectations continues.
Trading idea: SELL 159.05, SL 159.45, TP 158.15
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