Daily Market Report
08/21/2026
EUR/USD ranged in the high 1.16s to low 1.17s overnight. The Euro (EUR) is trading a few pips below 1.1700 against a depressed US Dollar (USD) on Friday, on track for a more than 1% weekly rally, and with the three-month high of 1.1710 at a short distance. Solid Eurozone business activity figures have improved confidence in the common currency, while the Greenback remains on its back foot since the US Treasury announced a plan to boost buybacks of long-term Treasuries on Wednesday.
The US Dollar remains on the defensive, following the US Treasury’s plan to boost buybacks of long-term Government Bonds, aimed at stemming a sharp rally in yields. The yield for the 30-year Treasury note hit fresh 19-year highs at 5.33% earlier this week, as news that national debt had topped USD 40 trillion prompted bondholders to demand higher compensation.
Strategists argue that “the Treasury is trying to manage longer-term rates—which have been rising because markets are questioning the Fed’s commitment to inflation fighting and investors are worried about the sustainability of US fiscal policy.” In their view, if higher yields are unable to “fully take the strain from those concerns, the USD will have to,” leaving the Dollar vulnerable as investors reassess both the policy outlook and the fiscal backdrop.
The British Pound (GBP) rallied to fresh six-month highs against the US Dollar (USD) on Friday, boosted by stronger-than-expected UK business activity data, while the US Dollar remains depressed following the US Treasury’s plan to boost bond buybacks. The GBP/USD pair has breached the 1.3660 level for the first time since February and is trading just above 1.3670 at the time of writing.
National Statistics figures revealed that retail consumption contracted 0.5% in the UK in July, meeting the market’s expectations and following a 0.7% increase in June. Year-over-year, sales increased at a 1.6% pace, down from 3.8% in June and below the consensus 2.2%.
Beyond that, Public Sector Net Borrowing increased by GBP 1.8 billion in July, below June’s GBP12.78 bullion but exceeding the market expectations of GBP0.3 billion.
The USD/JPY pair struggles to capitalize on the previous day’s recovery from the 158.00 mark, or a one-and-a-half-week low, and meets with fresh supply on Friday. Spot prices stick to modest intraday losses around the 158.60 area through the first half of the European session and remain on track to end in the red for the first time in three weeks.
The Japanese Yen (JPY) gets a minor lift after domestic data showed that core consumer inflation accelerated during July, bolstering the case for an interest rate hike by the Bank of Japan (BoJ). In fact, the core Consumer Price Index (CPI), excluding fresh food items, rose 1.8% YoY in July, up from a 1.6% advance in the previous month and marking the fastest pace since January. Adding to this, an index that strips out both volatile fresh food and fuel prices, which is closely watched by the BoJ as a clearer gauge of underlying inflation, rose 1.9% from a year earlier after a 1.7% gain in June. This, along with the prevailing US Dollar (USD) selling bias, exerts some downward pressure on the USD/JPY pair.
Source: FX Street