Daily Market Report

09/02/2026

EUR/USD ranged in the high 1.15s to low 1.16s overnight. The Euro (EUR) is trading lower against the US Dollar (USD) for the second consecutive day on Wednesday, weighed by risk aversion amid growing tensions in the Middle East, while rising bets of Federal Reserve (Fed) interest rate hikes support speculative demand for the US Dollar. The EUR/USD pair trades at 1.1580, after being rejected at the 1.1620 area on Tuesday.

In the Eurozone, data from Spain revealed that unemployment increased well beyond expectations in August and that the Italian Producer Prices Index accelerated in July. Also on Wednesday, the European Central Bank (ECB) Committee member, Joachim Nagel, affirmed that “markets see over 95% chance of a September rate hike”, yet with no visible impact on the Euro as that outcome has already been priced in.

The British Pound (GBP) is down 0.1% to near 1.3500 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair drops as the US Dollar extends its advance, with market participants pricing in a 25 basis points (bps) interest rate hike by the Federal Reserve (Fed) in the policy meeting this month.

Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann has favored an early interest rate hike to counter risks of high inflation projections.

“The research is very clear. It’s ​better (for interest rates) to be a ​little bit too high and then, of course, ‌correct ⁠if necessary.” BoE’s Mann said in an interview on Tuesday. Mann added, “And that’s the underpinnings of the 25 ​basis-point ​hike I ⁠voted for in the last meeting,” Reuters reported.

The USD/JPY pair touches a fresh high since July 31 on Wednesday, though it lacks follow-through buying and remains below 160.50 through the Asian session.

The Japanese Yen (JPY) continues its relative underperformance on the back of fiscal concerns stemming from a surge in bond yields, which increases the cost of servicing Japan’s massive debt pile. The US Dollar (USD), on the other hand, climbs to a nearly three-week top as oil-driven inflation fears reaffirm bets for a September interest rate hike by the Federal Reserve (Fed) amid escalating US-Iran tensions.

Source: FX Street