Oil prices retreat after the US-Iran truce while Japan’s inflation strengthens the yen. Traders now focus on FOMC, PCE inflation, gold, forex and stocks.

Forex Market Today: Oil Prices Retreat After US-Iran Truce as Japan Inflation Boosts the Yen Ahead of FOMC

TraderFactor Market Update: July 28, 2026

Economic Calendar

Market Analysis

Currencies / Forex

The foreign exchange market has entered the new week with a notable shift in sentiment as geopolitical tensions between the United States and Iran show signs of easing. Investors who previously rushed into the US dollar for safety are gradually reducing defensive positions following reports that both countries have paused military strikes and resumed diplomatic discussions. The improvement in market sentiment has encouraged flows back into equities and higher-risk currencies, although the dollar remains supported by expectations that the Federal Reserve could maintain restrictive monetary policy for longer.

Despite the improving geopolitical backdrop, traders remain cautious ahead of Wednesday’s FOMC meeting. Markets overwhelmingly expect the Federal Reserve to leave interest rates unchanged, but Chairman Jerome Powell’s comments could determine whether the dollar resumes its recent rally or extends its correction. Inflation remains one of the Fed’s biggest concerns, particularly after elevated oil prices increased concerns that energy costs could delay progress toward the central bank’s inflation target.

EURUSD

EURUSD continues to recover modestly after recent weakness as the US dollar softens following the improvement in Middle East sentiment. Reduced safe-haven demand has allowed buyers to push the pair back toward the 1.1400 region, although gains remain limited ahead of the Federal Reserve meeting.

Fundamentally, traders are also monitoring Germany’s GDP figures and Friday’s Eurozone inflation report. Stronger-than-expected economic data could provide additional support for the euro, while disappointing numbers may reinforce expectations that the European Central Bank remains cautious about tightening policy further. Technically, sustained trading above 1.1400 could encourage further upside toward 1.1450, while failure to hold current support may expose the pair back toward 1.1330.

GBPUSD

Sterling remains relatively resilient despite ongoing dollar strength over recent weeks. Investors are increasingly positioning ahead of Thursday’s Bank of England policy decision, where interest rates are expected to remain unchanged.

The market’s primary focus will be the accompanying monetary policy statement and Governor Bailey’s comments. If policymakers continue expressing concerns about persistent inflation, the pound could attract additional buying interest. However, any indication that economic growth is slowing faster than expected may pressure GBPUSD lower. From a technical perspective, 1.3250 remains important support while resistance sits near 1.3360.

AUDUSD

The Australian dollar remains highly sensitive to inflation expectations after the Reserve Bank of Australia Governor reiterated that policymakers continue evaluating whether previous rate increases are sufficient to return inflation toward target.

Attention now shifts toward Wednesday’s Australian CPI report. A stronger inflation reading would increase speculation that the RBA may need to maintain tighter monetary policy for longer, supporting AUD. Conversely, softer inflation could weigh heavily on the currency. Technically, AUDUSD continues consolidating below 0.7000, with traders awaiting a clear breakout catalyst.

NZDUSD

The New Zealand dollar remains under pressure despite improving global risk appetite. Although geopolitical concerns have eased, broader US dollar strength and relatively weaker domestic fundamentals continue limiting upside momentum.

Traders also remain cautious ahead of the Federal Reserve meeting, which could significantly influence all dollar-denominated currency pairs. A dovish Fed could provide temporary relief for NZDUSD, while a hawkish outcome may trigger another move lower toward recent support.

USDCAD

USDCAD remains supported despite the recent decline in oil prices. Normally, lower crude prices weaken the Canadian dollar because energy exports represent a significant portion of Canada’s economy.

However, improving market sentiment has limited aggressive buying in the US dollar, creating a relatively balanced environment for the pair. Traders will also monitor Friday’s Canadian GDP report for fresh clues regarding domestic economic growth. Strong GDP figures could strengthen CAD and pressure USDCAD lower.

USDJPY

USDJPY remains elevated despite stronger-than-expected Japanese inflation data. Japan’s annual inflation rate increased to 1.5%, exceeding the previous 1.4% reading, providing fresh support for the yen.

However, the broader trend still favors the US dollar because of the significant interest rate differential between the United States and Japan. Markets also remain alert to possible intervention from Japanese authorities should USDJPY continue moving toward fresh multi-year highs. The upcoming Bank of Japan Outlook Report may provide additional insight into future policy normalization.

USDCHF

USDCHF remains firm as the Swiss franc continues balancing traditional safe-haven demand against the broader strength of the US dollar. The easing of geopolitical tensions has reduced some demand for defensive assets, allowing the pair to remain comfortably above key support.

Near-term direction will largely depend on the Federal Reserve meeting and any renewed geopolitical developments from the Middle East. Technically, the pair continues trading within a constructive medium-term uptrend.

Crypto / Bitcoin

Bitcoin continues trading defensively near the $63,500 level as investors weigh improving geopolitical sentiment against the prospect of higher US interest rates for longer. The easing of tensions between the United States and Iran has encouraged some investors to return to risk assets, helping Bitcoin stabilize after recent volatility. However, the cryptocurrency remains sensitive to movements in the US dollar and Treasury yields, both of which are expected to react sharply to this week’s Federal Reserve decision.

From a technical perspective, Bitcoin remains trapped within a broad consolidation range after failing to establish a sustained move above recent resistance. Immediate support is located around $62,500, while resistance remains near $65,500. A dovish Federal Reserve could encourage renewed buying interest across digital assets, whereas a hawkish policy outlook may strengthen the dollar further and pressure Bitcoin toward lower support levels.

Gold

Gold prices remain relatively stable near $4,050 despite easing geopolitical tensions. Normally, reduced demand for safe-haven assets would place greater downward pressure on bullion. However, investors remain cautious ahead of the Federal Reserve meeting and continue holding positions as protection against inflation risks and potential policy uncertainty.

Technically, gold continues consolidating after its recent pullback from record highs. Buyers continue defending support around $4,020, while resistance remains near $4,100. The direction of gold this week will largely depend on the Federal Reserve’s communication. A dovish outcome could weaken the US dollar and support renewed upside momentum, while a more hawkish stance may strengthen yields and temporarily pressure precious metals.

Stocks / Equities

Global equity markets continue benefiting from improving geopolitical sentiment after reports suggested the United States and Iran are exploring renewed diplomatic discussions. The reduction in immediate military risks has improved investor confidence, allowing stocks to recover from recent weakness. Nevertheless, traders remain cautious because monetary policy remains the dominant driver of broader financial markets.

The Federal Reserve meeting is expected to determine whether equity markets can extend their recovery. Investors continue balancing resilient corporate earnings against concerns that persistent inflation—supported partly by previously elevated oil prices—could delay future interest rate cuts. Lower oil prices are providing some relief for inflation expectations, although energy markets remain highly sensitive to geopolitical headlines.

NAS100

The NAS100 continues recovering as improving market sentiment encourages investors back into technology shares. Growth stocks generally benefit when geopolitical risks ease and bond yields stabilize.

Technically, the index remains above important support near 27,500, while immediate resistance sits around 28,200. A dovish Federal Reserve could encourage another leg higher, while stronger-than-expected inflation guidance may weigh on technology valuations.

US30

The Dow Jones Industrial Average remains well supported as investors rotate toward large-cap value companies. Financial and industrial stocks continue benefiting from expectations that the US economy remains relatively resilient despite ongoing global uncertainty.

Support remains near 51,900, while resistance is located around 52,600. Continued improvements in market sentiment may allow the index to challenge fresh highs if economic data remains supportive.

SP500

The S&P 500 continues consolidating after recovering from recent geopolitical-driven volatility. Investors remain optimistic that easing Middle East tensions could improve global business confidence, although the Federal Reserve remains the primary near-term catalyst.

Technically, the index continues holding comfortably above support around 7,360, while resistance remains close to 7,500. A softer tone from Chairman Powell could encourage further gains, whereas a hawkish outlook may trigger short-term profit-taking across broader equity markets.

Geopolitics

Geopolitical developments continue to influence financial markets, although the tone has improved considerably compared to the past two weeks. After nearly two weeks of sustained military exchanges between the United States and Iran around the Strait of Hormuz, both governments have signaled a willingness to reduce hostilities. The Trump administration paused further strikes while Tehran also suspended retaliatory attacks, allowing diplomatic channels to reopen. President Trump has since stated that Washington is in discussions with Iran and suggested there is a realistic possibility of reaching an agreement before meeting Israeli Prime Minister Benjamin Netanyahu. Investors have welcomed these developments, helping improve overall market sentiment.

Despite the recent optimism, markets remain extremely sensitive to geopolitical headlines. Traders understand that negotiations remain fragile and any breakdown in talks could quickly reverse the recent improvement in sentiment. Oil markets remain particularly vulnerable because the Strait of Hormuz handles a significant portion of global crude exports. At the same time, reports suggesting renewed efforts toward a ceasefire in the Russia-Ukraine conflict have further supported investor confidence. While global markets have shifted toward a more constructive outlook, geopolitical risks remain elevated and continue to influence currencies, commodities, equities, and cryptocurrencies.

Economic Calendar

Monday

Trading activity remains relatively quiet with no major scheduled economic releases. Market participants are primarily reacting to improving geopolitical developments following the temporary pause in military action between the United States and Iran.

Although economic data is limited, investors continue monitoring headlines from the Middle East and developments surrounding potential ceasefire negotiations between Russia and Ukraine. These geopolitical events remain capable of generating sudden market volatility.

Tuesday

RBA Governor Speech

Reserve Bank of Australia Governor Michele Bullock is scheduled to discuss the central bank’s monetary policy outlook. During her latest remarks, she questioned whether previous policy tightening has been sufficient to bring inflation back toward target.

Markets will carefully assess whether the Governor maintains a hawkish tone by indicating that further tightening remains possible or adopts a more cautious stance. Hawkish comments could support the Australian dollar, while dovish guidance may pressure AUD pairs.

Japan Inflation Report

Japan’s latest inflation data showed annual inflation rising to 1.5%, up from 1.4% previously.

The stronger reading has provided fresh support for the Japanese yen by increasing speculation that the Bank of Japan may gradually normalize monetary policy. However, policymakers remain cautious given the country’s long history of low inflation.

US Consumer Confidence

Later in the session, attention shifts to the United States with the release of the Conference Board Consumer Confidence Index.

This report measures households’ expectations regarding employment, income, and future spending. Strong consumer confidence generally supports the US dollar because it signals resilient economic activity, while weaker readings may increase concerns about slowing growth.

Wednesday

Australian CPI

Australia’s Consumer Price Index will provide one of the week’s first major inflation updates.

A stronger inflation reading would reinforce expectations that the Reserve Bank of Australia may maintain restrictive monetary policy for longer, supporting the Australian dollar. Conversely, softer inflation could reduce tightening expectations and pressure AUD.

Federal Reserve Interest Rate Decision (FOMC)

This is the week’s most important event.

Markets widely expect the Federal Reserve to leave the Federal Funds Rate unchanged at 3.75%.

However, investors will pay far greater attention to the accompanying policy statement and economic projections than to the rate decision itself.

Although oil prices have eased from their recent highs, energy costs remain elevated compared with historical averages. Higher oil prices increase transportation, manufacturing, and business expenses, placing upward pressure on inflation across the economy. Persistent inflation makes it more difficult for the Federal Reserve to justify cutting interest rates quickly.

If policymakers continue emphasizing inflation risks, markets may reinforce expectations that interest rates remain higher for longer, supporting the US dollar while potentially weighing on equities, gold, and cryptocurrencies.

FOMC Press Conference

Chairman Jerome Powell’s press conference frequently generates more volatility than the interest rate announcement itself.

Traders will closely examine every comment regarding inflation, labor market conditions, economic growth, and future monetary policy.

A hawkish tone generally strengthens the dollar and Treasury yields while pressuring gold and stocks.

A dovish message could weaken the dollar and support broader risk assets.

Thursday

German Preliminary GDP (q/q)

Germany’s preliminary GDP report provides an early assessment of economic growth within Europe’s largest economy.

Stronger growth would support the euro by improving confidence in the Eurozone outlook, while weaker growth could reinforce concerns about slowing economic activity.

Bank of England Rate Decision

The Bank of England is widely expected to leave the Official Bank Rate unchanged at 3.75%.

Markets will primarily focus on policymakers’ assessment of inflation and future interest rate expectations. Persistent inflation could encourage a hawkish message that supports the pound, while concerns about slowing growth may weaken sterling.

US Core PCE Price Index

The Core Personal Consumption Expenditures (Core PCE) Price Index represents the Federal Reserve’s preferred measure of inflation because it excludes the more volatile food and energy components and provides a clearer picture of underlying price pressures.

Even though oil prices have recently retreated, they remain relatively elevated, and sustained energy costs can gradually influence broader inflation through higher transportation and production expenses. A stronger-than-expected Core PCE reading would likely strengthen the US dollar by reducing expectations for future interest rate cuts. Conversely, softer inflation could weaken the dollar while supporting gold and equities.

Friday

Bank of Japan Outlook Report

The Japanese yen has remained under pressure for much of the year because of the significant interest rate gap between Japan and the United States.

Although recent inflation data has strengthened the yen slightly, traders continue watching for potential intervention from Japanese authorities if USDJPY approaches new multi-year highs.

The Bank of Japan’s Outlook Report may provide fresh guidance regarding inflation, growth, and the future pace of policy normalization.

Eurozone Inflation Report

Eurozone inflation remains a key driver of European Central Bank policy expectations.

Higher inflation would likely support the euro by reinforcing expectations that policymakers maintain restrictive monetary policy. Softer inflation could have the opposite effect.

Canadian GDP (m/m)

Canada’s monthly GDP report provides insight into the overall health of the Canadian economy.

Stronger economic growth typically supports the Canadian dollar, while weaker data may increase expectations for future policy easing.

Revised University of Michigan Consumer Sentiment

The week concludes with the revised University of Michigan Consumer Sentiment Index.

This survey measures consumer confidence regarding future economic conditions, spending intentions, and inflation expectations. Stronger sentiment generally supports the US dollar, while weaker confidence may encourage expectations of slower economic growth.

Final Outlook

Financial markets have entered the second half of the week with noticeably improved sentiment following the temporary de-escalation in tensions between the United States and Iran. The reduction in immediate geopolitical risks has encouraged investors to move back into equities and other risk-sensitive assets while reducing demand for traditional safe havens. Oil prices have retreated from recent highs above $90, easing some inflation concerns, although crude remains historically elevated and continues to present upside risks should negotiations deteriorate.

Despite the improving geopolitical backdrop, the Federal Reserve remains the primary driver for global markets this week. Investors expect interest rates to remain unchanged, but the accompanying statement and Chairman Jerome Powell’s press conference could significantly reshape expectations for the remainder of the year. Persistent inflation, supported by still-elevated energy prices, means policymakers are unlikely to signal aggressive interest rate cuts in the near future. As a result, the US dollar may remain relatively well supported, particularly if the Fed maintains a cautious stance.

Looking ahead, traders should also monitor Australia’s inflation report, the Bank of England policy decision, Core PCE inflation, Eurozone CPI, Canada’s GDP, and the Bank of Japan’s Outlook Report. Together, these events are likely to create significant volatility across forex, commodities, equities, bonds, and cryptocurrencies.

Overall, markets have temporarily shifted back toward a risk-on environment, but sentiment remains highly dependent on both geopolitical headlines and central bank communication. Traders should continue managing risk carefully because conditions can change rapidly.

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About the Author

Zahari Rangelov

Head of Business Development, TraderFactor

Zahari specializes in broker analysis, regulatory research, and trading education. He has over a decade of experience helping traders navigate the complex world of online brokers.  His expertise spans technical and fundamental analysis, medium-term trading strategies, risk management, and trading psychology. A respected mentor and speaker, Zahari regularly leads webinars and seminars covering market sentiment, speculative instruments, and automated trading systems. His research-backed, practical approach has established him as a trusted authority within the global trading community.

 

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Reviewed by Alex Kanyi, Head of Compliance at TraderFactor

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Last Updated: July 2026

 

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