Daily Market Report
09/01/2026
EUR/USD ranged in the high 1.15s to low 1.16s overnight. The Euro (EUR) nudges lower against the US Dollar (USD) on Tuesday, giving away some of Monday’s gains, with the EUR/USD pair hovering just above 1.1600, following rejection at the 1.1620 area. German Retail Sales data have not been particularly supportive, but the market might await the Eurozone Harmonized Index of Consumer Prices (HICP) release, due later on the day to make investment decisions.
The euro, however, is facing headwinds from the higher Oil prices stemming from the escalating tensions between the US and Iran. The price of the Brent barrel remains above $90, after rising more than 6% from last week’s lows, boosted by the resumption of hostilities between the US and Iran. These prices pose serious pressure on the Eurozone’s economic growth.
In the Middle East, a tense calm reigned on Monday, but tensions remain high. US President Donald Trump threatened further action, as the US military attempts to curb Iranian capabilities to control sea traffic through the Strait of Hormuz, a corridor used to transport about a fifth of the global Oil supply before the war.
The GBP/USD pair trades in negative territory around 1.3545 during the early European trading hours on Tuesday. Federal Reserve (Fed) Chair Kevin Warsh’s hawkish remarks at the Jackson Hole symposium underpin the US dollar (USD) against the British Pound (GBP).
Strategists highlight that market pricing has turned more constructive on BoE tightening prospects, with investors currently assigning “a ~60% chance of a 25bpt at the next BoE meeting on September 16” and “a cumulative 36bpts of tightening by year-end.” They add that, in terms of sentiment, “the October 28 budget” will be crucial, noting it “will remain a key focus for markets over the next couple of months” as investors assess the UK’s fiscal stance alongside the evolving policy outlook.
The US Dollar (USD) is up 0.15% to near 160.00 against the Japanese Yen (JPY) during the European trading session on Tuesday. The USD/JPY pair strengthens as the US Dollar outperforms due to surging United States (US) Treasury Yields amid fiscal concerns and questions over the credibility of the Federal Reserve’s (Fed) decision-making.
Analysts highlight that the latest commentary from the BoJ has sharpened market expectations for further tightening. They note that “markets were already pricing a high likelihood of a 25bp hike to 1.25% at the September meeting,” but stress that “the remarks added to the pressure with markets now pricing a rate hike by 70%.”
Source: FX Street