Fundamental Market Analysis for August 28, 2026 (EURUSD, GBPUSD, USDJPY)

Event to watch today:

17:00 EET. USD - Federal Reserve Board Chair Kevin Warsh will deliver a speech

EURUSD:

The euro begins the European session near weekly lows as the market approaches Federal Reserve Chair Kevin Warsh's speech with heightened attention to inflation risks in the US. Several Fed officials recently reiterated the need to maintain a firm stance on price pressures, and the probability of a rate hike by year-end has increased. This supports the dollar and limits EURUSD recovery.

The local backdrop for the euro appears more mixed. Market participants are awaiting fresh data on inflation and economic activity in France, which could adjust expectations for the ECB. However, until their publication, the European currency lacks a new confirmed driver capable of outweighing the dollar's strength. At the same time, current ECB policy expectations provide some support for the euro, but they do not yet change the overall balance of the current session.

The key factor remains the market's reaction to signals from the Fed at Jackson Hole. If Warsh confirms the priority of fighting inflation and does not soften rate expectations, demand for the dollar is likely to persist. A softer rhetoric would pose a risk to this scenario, but until such a signal appears, the basic fundamental backdrop remains in favor of further EURUSD decline.

Trading idea: SELL 1.1650, SL 1.1680, TP 1.1575

GBPUSD:

The pound enters Friday's session after declining to weekly lows, with the main local factor related to revised expectations for the Bank of England. The market now prices in a smaller rate hike by the end of 2026, while a full 25-basis-point increase is expected only in 2027. Lower UK bond yields further reduce interest rate support for the pound.

UK inflation accelerated to 2.9% in July, but this did not lead to sustained stronger expectations for tighter policy. The labor market remains a restraining argument for the Bank of England, and there are few new domestic data points today that could quickly change this assessment. Therefore, the British currency is more dependent on external conditions and the direction of the US dollar.

The dollar holds near its weekly high ahead of the Fed chair's speech at Jackson Hole, and recent statements from regulator officials continue to emphasize inflation risks. If the market continues to price in higher rates in the US, GBPUSD will remain under pressure. A shift in scenario would require a significantly more dovish signal from the Fed or a new strong factor favoring the pound.

Trading idea: SELL 1.3590, SL 1.3625, TP 1.3505

USDJPY:

The yen is receiving fundamental support following fresh Tokyo data: core inflation in August accelerated to 1.8%, and the ex-food-and-fuel measure reached 2.0%. This strengthens expectations for a rate hike by the Bank of Japan as early as September. A limitation on USDJPY growth remains the recent experience of currency interventions, which makes the market more cautious about further yen weakness.

Meanwhile, the dollar retains stronger momentum in the current session. The US currency is holding near its weekly high, and Fed officials continue to point to persistent inflation risks. The market has increased the probability of further US policy tightening by year-end, so the interest rate differential continues to support the dollar. The yen, meanwhile, has already given up part of its previous strength after interventionist actions.

The main risk for long positions remains new signals from Japanese authorities and an acceleration in the repricing of the Bank of Japan's September decision. However, so far, fresh statistics have not led to sustained yen strengthening, and the dollar factor remains dominant. If the Fed Chair's speech confirms a tough stance on inflation, the base case allows for moderate continuation of USDJPY growth.

Trading idea: BUY 159.45, SL 159.15, TP 160.20

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