The euro declined in the European market on Monday at the start of the week’s trading against a basket of global currencies, retreating from a three-week high against the US dollar, driven by profit-taking and correction activity.

Reports indicated that the European Central Bank is likely to keep interest rates unchanged next month, but discussions around further monetary easing and potential cuts may resume in the autumn if the eurozone economy weakens.

Price Overview

• EUR/USD fell by 0.2% to 1.1694, down from the opening level of 1.1719, after hitting an intraday high of 1.1726.

• The euro ended Friday’s session up nearly 1.0% against the dollar, marking its biggest daily gain since August 1, and reaching a three-week high at 1.1743, following comments from Jerome Powell at Jackson Hole.

• For the past week, the euro rose by 0.15% against the dollar, posting its third consecutive weekly gain.

US Dollar

The dollar index rose by 0.25% on Monday, beginning to recover from a three-week low of 97.56, reflecting renewed strength in the US currency against a basket of major currencies.

Beyond technical buying from lower levels, the dollar rebounded at the start of the week as markets await further evidence on the likelihood of a Federal Reserve rate cut in September.

According to data from the London Exchange, traders now price an 84% chance of a 25-basis-point rate cut in September, with cumulative cuts amounting to 53 basis points by year-end.

Fed Chair Jerome Powell stated at Jackson Hole on Friday that shifting risk balances may warrant policy adjustments, with current indicators showing rising downside risks to the labor market.

European Interest Rates

• Five sources told Reuters that the European Central Bank is expected to keep rates unchanged next month, though discussions on further cuts could resume in the autumn if eurozone growth weakens.

• ECB President Christine Lagarde said at Jackson Hole on Saturday that the tightening measures adopted in 2022 and 2023 did not trigger a recession or a sharp increase in unemployment, as was historically the case.

• Money market pricing currently shows less than a 30% chance of a 25-basis-point ECB rate cut in September.

• Investors will closely monitor upcoming eurozone economic data and remarks from ECB officials in the coming period to reassess these probabilities.

The Japanese yen fell in Asian markets on Monday at the start of the week’s trading against a basket of major and minor currencies, giving up a one-week high against the US dollar, as part of correction and profit-taking moves after a strong daily gain at the end of last week.

Following more hawkish comments by Bank of Japan Governor Kazuo Ueda at the annual Jackson Hole Economic Symposium, expectations rose that the central bank may soon resume policy normalization and raise interest rates after a pause since January.

Price Overview

• Today’s yen exchange rate: the dollar rose against the yen by 0.45% to (147.53¥), from Friday’s close at (146.86¥), with the lowest level during the day’s trading at (146.75¥).

• The yen ended Friday’s session up 1.0% against the dollar, its third daily gain in the past three sessions, and the biggest daily rise since August 1, after Fed Chair Jerome Powell hinted at a US interest rate cut in September.

• The yen posted a 0.2% gain against the dollar last week, its second consecutive weekly rise, driven by expectations of two Fed rate cuts before the end of this year.

US Dollar

The dollar index rose on Monday by 0.25%, recovering from a three-week low of 97.56 points, reflecting a rebound in US currency levels against a basket of global peers.

Beyond low-level buying, the dollar recovered at the start of the week, as markets await fresh evidence on the likelihood of a Fed rate cut in September.

According to London exchange data, traders now price an 84% probability of a 25 basis-point cut in September, with cumulative cuts of 53 basis points by year-end.

Powell said at Jackson Hole on Friday that shifting risk balances may warrant an adjustment in monetary policy, with current indicators showing rising downside risks in the labor market.

Kazuo Ueda

Bank of Japan Governor Kazuo Ueda said at Jackson Hole on Saturday that wage increases are spreading beyond large firms and are likely to continue accelerating due to a tightening labor market.

These remarks reinforced market expectations that the BOJ may resume rate hikes soon after its January move, with traders now seeing a potential increase at the October meeting.

Japanese Interest Rates

• Market pricing of a BOJ 25-basis-point hike in September is currently stable around 45%.

• To reassess these odds, investors are awaiting further data on inflation, unemployment, and wages in Japan.

Outlook for the Yen

• Homin Lee, chief macro strategist at Lombard Odier, expects the yen to strengthen to 140 per US dollar over a 12-month horizon, though he forecasts the policy rate will remain within a limited range in the near term.

• Lee said: “We assume the BOJ’s next rate hike will come in January next year, not October.” He added: “It is likely the bank will keep the real policy rate very low in deeply negative territory until year-end, only considering gradual rate increases thereafter.”

Most cryptocurrencies rose in Friday’s trading amid a rebound in markets, particularly high-risk assets, following comments from Federal Reserve Chair Jerome Powell at the Jackson Hole symposium.

Powell hinted during his speech at Jackson Hole on Friday at a possible interest rate cut in the coming period, but emphasized that elevated uncertainty makes the task of monetary policymakers more complicated.

He confirmed that the labor market remains strong and the economy has shown resilience, though risks have increased recently, noting that tariffs could push inflation higher again—something the Fed is keen to avoid.

He pointed out that the benchmark interest rate is about 1% lower than its level a year ago, and that low unemployment gives the Fed room to proceed cautiously in adjusting monetary policy, adding that the baseline outlook and shifting risk balance may indeed warrant a reassessment of the current stance.

Powell said that FOMC decisions will remain “tied solely to data assessment,” stressing the central bank’s commitment to achieving 2% inflation in order to preserve long-term expectations stability.

In assessing the economy, the Fed Chair noted that job growth has slowed alongside weaker consumer spending, adding that labor supply and demand are in an “unusual balance.” He also stressed that monetary policy will undergo a periodic review every five years to adapt to structural changes in the economy.

Ethereum

As for trading, Ethereum jumped on CoinMarketCap at 20:57 GMT by 14.6% to $4,845.2, with weekly gains of about 11%.

Global crude oil exports remain strong, surpassing the latest ten-year seasonal average. However, demand has also remained firm this summer, absorbing increased supply from South America—led by Brazil and Guyana—and higher production in the Middle East as OPEC+ continues easing output cuts.

As a result, the market appears balanced as the northern hemisphere’s peak consumption season draws to a close. But concerns point to a surplus emerging in the fourth quarter, leading to weaker prices once peak demand ends and OPEC+ unwinds more of its cuts.

South America Drives Higher Crude Shipments

Mark Toth, analyst at energy trade flow consultancy Vortexa, wrote this week that “despite fears that the rapid unwinding of output cuts by the eight key OPEC+ members, followed by higher exports, particularly from Saudi Arabia and the UAE, could push crude markets into surplus, this has not yet materialized in a meaningful way.”

Global crude and condensate loadings remained elevated in the first half of August 2025 at about 41 million barrels per day, according to Vortexa estimates. This is 2% above the 2016–2024 seasonal average and higher than 2023 and 2024 levels.

Pacific Basin exports were 7% below their seasonal average, but South America—where Brazil and Guyana are boosting production—led the increase. South American exports ran 9% above the 2016–2024 August seasonal high during the first 15 days of the month. Broader Atlantic Basin exports also stayed strong, Vortexa data showed.

Exports from the most important producing and exporting region, the Middle East, have not risen despite the ongoing unwinding of OPEC+ cuts. One reason is that some members, such as Iraq, are compensating for prior overproduction rather than boosting output. Another is stronger oil demand for power generation in Middle Eastern countries during extreme summer heat—a typical seasonal pattern for Saudi Arabia and other Gulf exporters.

This combination of offsetting overproduction and higher local demand has slowed inventory builds within the wider OPEC+ group, with onshore crude stocks down 4% from the seasonal average, according to Vortexa’s global inventory report dated August 15.

Downward Pressure on Oil Prices Emerging

Toth noted that “with local demand among OPEC+ members set to decline after summer and production rising in September, the durability of the current price stability is questionable.”

The Dubai market backwardation between front-month and third-month contracts narrowed to $2.37 per barrel on August 15 from about $3 at the start of the month, Argus data cited by Vortexa showed. Even so, backwardation—where near-term prices are higher than later months, reflecting tight supply—remains above the $2.104 average seen in Dubai during the first half of 2025.

But analysts are beginning to notice the narrowing as a sign that traders believe supply will be plentiful once summer peak travel demand fades.

This summer’s market was supported by strong global refinery runs and tighter fuel markets, especially diesel in the United States.

Still, spot premiums over later contracts are declining—a sign that traders expect rising supply to ease tightness once demand weakens after the summer peak.

As refinery runs ease after September, with OPEC+ adding more supply, the tightness will fade. The International Energy Agency (IEA) said last week in its monthly report that global crude consumption would near an all-time high of 85.6 million barrels per day in August, with year-on-year growth of 1.6 million barrels per day in Q3—well above the first-half average increase of just 130,000 barrels per day.

Even so, consensus points to weaker demand in Q4, when growing supplies are expected to flood the market.

Strong South American and Atlantic Basin exports, along with expectations of demand softening, are already weighing on crude spreads and price structures.

Toth explained that the seasonal decline in European crude import demand and the start of refinery maintenance in autumn are “already feeding into downward pressure on Atlantic Basin crude prices.” The Brent-Dubai exchange of futures for swaps (EFS), which shows the premium of ICE Brent over Dubai swaps, fell from a peak of $3.70 per barrel in late June to just $0.23 on August 18, Argus data showed.

He added that “benchmark crude prices themselves also appear under increasing pressure, with levels sliding since the sharp rally in late July.”

Concerns over oversupply are rising as peak demand season ends, even though inventories remain low, including at key U.S. pricing hubs. It will take some time before slower demand and higher supply translate into a clear surplus, while geopolitical and macroeconomic factors may sway market sentiment and rebalance supply and demand.