Five FX pairs you should be watching in August 2026

• The Federal Reserve maintains a data-dependent stance after the July FOMC hold, positioning the August CPI and the upcoming PCE prints as the primary catalysts for September rate expectations, following a notable 9–3 voting split among officials¹.
  
• Global currency dynamics are being shaped by active central bank maneuvers, including the Bank of Japan’s recent yen interventions² and the Reserve Bank of Australia’s rate hold with a persistent and clear hawkish policy bias³.
  
• Investor focus in August may center on incoming inflation data as participants navigate a lull in major policy decisions and assess the balance between cooling and sticky inflation.

August 2026 presents a foreign exchange environment defined by strict data dependency following the Federal Reserve’s decision to maintain rates at its July FOMC meeting¹. With no central bank policy meeting scheduled until mid-September, incoming inflation and job market metrics can be the primary catalysts for near-term market volatility and shifts in September interest rate expectations. Traders and institutional participants face a delicate macro backdrop as central banks worldwide navigate the divide between persistent price pressures and cooling economic activity. Consequently, technical structures across major and cross-currency pairs reflect this transitional phase, with key technical breakdowns, range compressions, and trendline tests offering crucial tactical insights ahead of the autumn policy decisions.

On Wednesday, July 29th, 2026, at the Federal Open Market Committee (FOMC) meeting, the Federal Reserve decided to maintain its benchmark interest rate at 3.50% – 3.75%. The decision highlighted growing internal debates over monetary policy trajectory, resulting in a 9–3 vote. Regional Fed Presidents Beth Hammack, Neel Kashkari, and Lorie Logan dissented, advocating for a 25-basis-point rate hike to further combat inflationary pressures¹.

The official FOMC statement emphasized that economic activity continues to expand at a solid pace, bolstered by steady capital investment and strong productivity gains, despite broader geopolitical uncertainties in the Middle East. Inflation remains above the Fed’s 2.0% target, influenced in part by energy price fluctuations and sector-specific supply shocks¹.

During the post-meeting press conference, Fed Chair Kevin Warsh reinforced the committee’s commitment to returning inflation to target. Refraining from explicit forward guidance, Chair Warsh clarified that the rate hold should be viewed as a period of data-dependent evaluation rather than a formal pause, keeping future policy options open in light of incoming macroeconomic data².

The Bureau of Economic Analysis reported that headline Personal Consumption Expenditures (PCE) inflation cooled to an annual rate of 3.7% in June, down from 4.1% in May. It decreased 0.1% month over month, primarily due to lower energy prices. Core PCE- which excludes food and energy costs and serves as the Federal Reserve’s preferred inflation metric - rose 0.1% month-over-month and brought the annual rate down slightly to 3.3%. Meanwhile, consumer spending grew by 0.3% over the month, driven by gains in healthcare and motor vehicles. However, spending continued to outpace personal income growth (0.2%), pushing the personal savings rate down to 2.7%, possibly as elevated costs led households to tap into their savings⁵.

With no Federal Reserve meeting on the calendar until September 15–16, investors and market participants will turn their full attention to the upcoming August inflation reports, specifically the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index, scheduled for August 26⁶. Following the Fed’s July decision to hold rates steady amid a notable 9–3 vote split, central bankers made it clear that future policy moves remain strictly data-dependent¹. Because the seven-week gap between meetings leaves market participants without fresh guidance or interest rate adjustments from Fed officials, these August inflation prints may be the crucial deciding factor in market expectations. Traders will closely examine whether cooling price pressures validate a potential rate hold at the September meeting or if sticky inflation reinforces the hawkish concerns raised by dissenting Fed presidents.

Japanese monetary authorities conducted a foreign exchange market intervention during the New York trading session on July 30, buying yen and selling U.S. dollars to pull the domestic currency back from near four-decade lows, exacerbated by high import energy costs. The unannounced intervention triggered a sharp single-day decline of approximately 2.4% in USD/JPY, directly preceding the Bank of Japan’s (BoJ) monetary policy announcement. At the conclusion of its meeting, the BoJ maintained its benchmark short-term interest rate unchanged at 1.00%, following its previous policy rate adjustment in June². Despite holding rates steady, central bank officials maintained a hawkish stance, emphasizing that persistent upside risks to inflation and sustained currency weakness keep the door open for further monetary tightening, with market consensus pointing to a potential rate hike to 1.25% by year-end⁷. Since the price drop, USD/JPY has regained some of its earlier losses, moving back up to 159.45.

• The long-term weekly structure shows GBP/JPY maintaining its macro multi-year ascending channels, defined by a long-term red resistance line above and two rising blue support lines below (Support Line 1 and Support Line 2).
  
• Key macro drivers highlighted on the chart include the volatile period around “Japan’s elections” in April 2026, followed by an aggressive upward move initiated after “FOMC April 30” that pushed the exchange rate into major multi-year resistance.
  
• Recent price action reflects an accelerating sell-off, catalyzed by the combination of “FOMC July 29 and PCE data July 30” alongside reported Japanese central bank intervention (“BOJ intervention”)².
  
• The July 27th weekly candle, which included BOJ intervention, shows price action found resistance at the upper resistance line (Red line), fell below its monthly PP of 214.66, and found support above support line 1, as marked on the chart. Over the following two weeks, price action moved higher and is currently challenging its monthly PP of 214.66.
  
• Immediate resistance levels: Long-term ascending red resistance line (218.000–219.000 range); Yearly resistance 1 (R1): 220.344.
  
• Immediate support levels: Ascending blue Support Line 1 (209.00–211.00); Yearly Pivot Point (PP): 202.363; Macro blue Support Line 2 extension.
  
• RSI (14): Positioned at 54.01 with its moving average at 60.07, moving in line with price action. It is also important to note that, following the BOJ intervention, the price drop didn’t push RSI to its oversold level of 30, and it reversed from level 48.00, potentially because its formulas are based on the closing price.
  
• Stochastic (14, 1, 3): The fast %K line (51.05) has just crossed above the slow %D line (36.15).

• AUD/CAD continues to trade inside a large converging channel/wedge pattern, defined by a slightly sloped upper red resistance trendline and a gradually rising lower red support trendline.
  
• Chart annotations (1, 2, 3) highlight consecutive potential upward exhaustion gaps within the structure, and the most recent bullish swings resulted in a “Shortfalls” below the main upper resistance line around 0.98800–0.99000.
  
• Over the past 5 trading days, price action has continued to trade within a tight range between its weekly PP of 0.9863, which acts as resistance, and its monthly PP of 0.9832, which acts as support. The fast EMA9 and SMA9, and the intermediate SMA21, are converging within the midrange.
  
• The 9-day EMA (0.9847), 21-day MA (0.9845), and 9-day MA (0.9855) are tightly aligned, reflecting neutral, compressed near-term momentum.
  
• Immediate resistance levels: The EMA9 at 0.9847, the SMA9 at 0.9855, weekly PP: 0.9863; upper red resistance trendline (0.99000 zone); monthly resistance 1 (R1): 0.9909. clustered 9/21 EMAs (0.9845–0.9855).
  
• Immediate support levels: Monthly PP: 0.9832; lower red support trendline intersection with the monthly support 1 (S1): 0.9775.
  
• RSI (14): Flat at 51.14 with its moving average line at 49.58, straddling the 50 neutral mark and indicating a balance between buyers and sellers.
  
• Stochastic (14, 1, 3): The Fast %K line (55.68) has crossed above the Slow %D line (49.50), reflecting mild upside momentum within the broader range.

• The daily chart reveals a rising wedge formation that followed a downtrend that began in 2022. The wedge upper and lower borders are marked by red lines.
  
• Following a surge to multi-month highs near monthly R1 (0.8206), price action experienced a sharp corrective pullback toward the weekly pivot point (0.8091), breaking below the ascending black trendline, and finding support above the weekly S1 of 0.8046. The price action over the past few days shows a strong bullish bounce, lifting the pair back to 0.8125. However, it fell short of a pullback to the previously broken black trendline extension.
  
• Convergence among the three moving averages within the 0.8103–0.8117 range signals market indecision, which is further reinforced by today's inside candle pattern.
  
• Immediate resistance levels: weekly R1: 0.8125; weekly R2 of 0.8170, and monthly R1 of 0.8181, intersection with the ascending black line extension.
  
• Immediate support levels: The moving averages convergence with the range of 0.8103 - 8.8117, the monthly PP of 0.8095, and the weekly PP of 0.8091.
  
• RSI (14): Currently reading 53.07 with its moving average at the same level, both at the neural level.
  
• Stochastic (14, 1, 3): The fast %K line and the slow %D line, both at the same neutral level at 48.14.

• The macro daily structure shows USD/CAD breaking out (“Breakout”) above the upper border of its long-term descending red channel/wedge in early June, following multiple historical attempts.
  
• Following the breakout, the pair advanced aggressively, as marked by the black ascending trendline, before consolidating within a top range near 1.4250 (highlighted in the yellow box) above its monthly R1 (1.4171).
  
• On July 14th 2026, price action broke below the ascending trendline and attempted a first pullback to the black line extension, where it faced resistance. It then attempted a second pullback that fell short of the line extension, and price resumed its drop.
  
• The drop took the price below the SMA50 which intersectas with the monthly PP of 1.4081, all the way to monthly S1 of 1.3923 where it has found support so far.
  
• A second support level lies below price action, represented by the range between weekly S1 at 1.3883 and weekly S2 at 1.3827, with the SMA200 lying mid-range.
  
• The 9-day EMA (1.3974) intersects with the weekly PP of 1.3982, forming a confluence of resistance above price action.
  
• A second level of resistance lies above price action, represented by the monthly PP of 1.4081, at the intersection with the SMA50.
  
• RSI (14): Positioned at 34.98 with its moving average at 40.35, just above its oversold level.

• EUR/USD daily structure shows price continuing to trade within a widening formation as marked by the blue lines on the chart. An inverted complex head-and-shoulders pattern attempt began in January 2026, as marked by blue arcs and the red downward-sloping neckline.
  
• The chart highlights key structural developments, including the early-year “Gap - War start” spike, the support line represented by the widening formation lower border, and a recent “Exhaustion gap” push following a positive divergence (+ Div) signal on Stochastics.
  
• Following the FOMC decision and the PCE release in July 2026, price action staged a strong short-term expansion off the support region (1.13000–1.13400), breaking above the 9-day EMA (1.1521), the 21-day MA (1.1473), and the weekly support (Previously resistance) 1 (S1) at 1.1512. The upside move reached 1.1580, where it encountered resistance.
  
• At present, price action continues to trade below its weekly PP of 1.1546 and above an intermediate confluence of support, represented by the weekly S1 of 1.1512, intersection with EMA9 and SMA9.
  
• So far, price action has been unable to reach the neckline of the aforementioned inverted complex head and shoulders pattern. A continuation of the failure may suggest a shortfall. Pattern remains under construction.
  
• A confluence of resistance lies above price action, represented by the intersection of the neckline, the monthly R1 at 1.1601, and the weekly R1 at 1.1592.
  
• A second level of support lies below price action, at the intersection of the monthly PP of 1.1477 and the intermediate SMA21, and the weekly S2 of 1.1466.
  
• RSI (14): Currently positioned at 57.54 with its moving average line at the same level, reflecting a neutral phase.
  
• Stochastic (14, 1, 3): The fast %K line and the slow %D line are converging at the overbought level.

In summary, August 2026 represents a critical phase of data-dependent evaluation for global central banks following the heightened volatility observed at the close of July. With the Federal Reserve’s policy calendar vacant until mid-September, market participants will pivot their focus to incoming inflation metrics, specifically the CPI and PCE reports, which serve as the primary catalysts for shifts in interest rate expectations. Concurrently, the Bank of Japan’s active currency interventions and the persistent hawkish biases maintained by institutions like the RBA highlight a continued struggle to balance economic cooling with inflationary pressures. This environment suggests that volatility can remain a dominant characteristic of the FX landscape throughout the month.

Footnotes

1https://www.federalreserve.gov/newsevents/pressreleases/monetary20260729a.htm

2https://www.bloomberg.com/news/articles/2026-07-31/boj-data-suggest-japan-intervention-of-about-8-45-trillion-yen

3https://www.vanguard.com.au/adviser/learn/insights/markets-and-economy/rba-on-hold-retains-hawkish-bias

4https://www.federalreserve.gov/live-broadcast.htm

5https://www.bea.gov/news/2026/personal-income-and-outlays-june-2026

6https://www.bloomberg.com/markets/economic-calendar

7https://www.reuters.com/world/asia-pacific/rate-hike-bets-leave-yens-post-intervention-gains-bojs-mercy-2026-08-13/