US indices showed mixed movement last week and spent most of the time consolidating near previously reached levels. They found support amid expectations of an imminent end to the conflict in the Middle East. At the same time, a shift in sentiment among Federal Reserve officials regarding monetary policy acted as a restraining factor: the regulator might raise interest rates before the end of 2026.
The dollar strengthened in the currency market. A key factor for this rise was the results of the Federal Reserve's meeting, where the regulator signalled that rising inflation could allow it to hike its key interest rate by the end of 2026. Only 8 out of 19 Fed officials advocated for keeping rates at current levels through the end of 2026.
Brent crude oil prices fell significantly. The decline was driven by expectations that the conflict between the US and Iran would be resolved. Markets are anticipating the Strait of Hormuz opening up again and oil shipments resuming to the global market. These developments are expected to bring supply and demand into balance.
Germany. Manufacturing PMI
Germany's economy is focused on manufacturing. So far in 2026, the index has remained in growth territory (above the 50 mark). However, high energy prices, rising unemployment and geopolitical uncertainty are weighing on the country's industrial sector. Global analysts expect the index to slip back into contraction territory during the reporting period. This is unfavourable for the euro because lower key indicators will keep the ECB from continuing to raise its key interest rate. In this environment, EUR/USD could decline to 1.1310.
UK. Services Sector PMI
The services sector accounts for a substantial part of the UK's GDP, approximately 75%. According to the latest data, the index has fallen below the 50 mark, which signals that the sector is cooling. A key factor behind the pressure was the drop in new orders driven by persistently weak domestic and foreign demand in the context of high economic and political uncertainty. Global analysts expect the downturn in the services sector to continue. This would be a negative development for the British pound, given the sector's economic importance. Against this background, GBPUSD may decline to 1.3100.
US. Durable Goods Orders
Global analysts forecast a decline in durable goods orders. This is a worrying signal because declining orders indicate a slowdown in production and industrial investment in the US. Lower key macroeconomic indicators could cause the Federal Reserve to revise its monetary policy outlook. Since its June meeting, markets expect the US regulator to hike its key interest rate by the end of the year. However, Fed officials have noted that US economic growth could slow to 2.2%, and the weak durable goods orders number reinforces these expectations. As a result, given the economic cooldown, the central bank might delay raising rates. That's unfavourable for the dollar. In these conditions, USD/JPY could drop towards 160.30.