Daily Market Report

[FOREX.com]

USD/CAD Forecast: Trade Risks Continue to Weigh on the Loonie​

Over recent trading sessions, a growing sense of indecision has once again become evident around USD/CAD price action. For now, average movements over the last four trading sessions have failed to establish a clear directional bias, with daily fluctuations remaining close to 0.2%, a relatively modest figure compared to the moves above 0.6% observed last week

By : Julian Pineda CFA, CMT, Market Analyst

Over recent trading sessions, a growing sense of indecision has once again become evident around USD/CAD price action. For now, average movements over the last four trading sessions have failed to establish a clear directional bias, with daily fluctuations remaining close to 0.2%, a relatively modest figure compared to the moves above 0.6% observed last week. This situation continues to reflect a cautious market environment, driven first by the evolution of the trade dispute between Canada and the United States and, second, by the recent behavior of bond markets in both countries. As long as these factors remain largely unchanged, they could continue supporting a phase of indecision around USD/CAD in the sessions ahead.

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How Is the Tariff Situation Evolving?​

Recent trading sessions have been particularly important for the ongoing trade dispute between Canada and the United States. A few hours ago, markets learned about a new escalation after the White House announced that certain Canadian products, including dairy products, motorcycles, and alcoholic beverages, will be subject to import restrictions beginning later this month. In addition, other goods will face tariffs of up to 50% starting on September 15.

These measures partly respond to Canada's retaliatory tariffs introduced on September 8, which affect roughly $20 billion worth of U.S. products and also include duties of up to 50%. This situation highlights that both countries have once again entered a cycle of trade retaliation, increasing uncertainty surrounding the future of their economic relationship.

The key issue is that this environment may not be particularly favorable for the Canadian dollar. Data from late 2025 continues to show that Canada maintains a strong trade dependence on the United States, with more than 70% of total exports directed toward the U.S. market. This represents a significant component of Canadian economic activity, meaning any deterioration in trade relations could have a meaningful impact on growth prospects.

With that in mind, the tariff situation could begin limiting confidence in Canadian dollar-denominated investments because weaker growth expectations often reduce the attractiveness of a currency. Unless meaningful progress emerges in trade negotiations, this factor could continue favoring a phase of indecision or even a stronger bullish bias around USD/CAD in the weeks ahead.

Do Bond Markets Matter?​

Another important factor within the dynamic of these currencies is the behavior of fixed-income markets. Currently, U.S. 10-year Treasury yields remain above the 4.8% area and continue to maintain a constructive upward trajectory.

However, a similar picture is also emerging in Canada. Canadian 10-year government bond yields continue to trend higher and have already approached the 3.85% area. This suggests that while rising U.S. yields increase the relative appeal of the dollar, Canada continues to maintain supportive conditions within its own bond market.

Source: TradingEconomics

This situation remains important because, beyond highlighting the attractiveness of both fixed-income markets, it also shows that bond market conditions in Canada and the United States continue to evolve in a relatively similar manner. This dynamic may be limiting the ability of either the Canadian dollar or the U.S. dollar to establish clear dominance within the foreign exchange market.

As long as this sense of balance remains present, the recent indecision observed around USD/CAD could continue to be relevant. However, it is also important to consider that new U.S. inflation data will be released later this week. If those figures continue supporting the idea of a Federal Reserve that is more aggressive than the Bank of Canada, stronger demand for the U.S. dollar could develop and open the door to more consistent buying pressure within USD/CAD.

USD/CAD Technical Outlook​

Source: StoneX, Tradingview

• The Downtrend Continues Attempting to Hold: Price action over recent sessions continues to respect the major bearish trendline that has been developing since July of this year. For now, this remains the most important technical structure on the chart and could continue dominating market activity unless a more significant recovery begins to emerge. At the same time, recent sessions have also highlighted a growing phase of neutrality, a situation that may favor a short-term period of sideways trading if price action continues to lack a more defined direction.
• RSI: The RSI remains close to the neutral 50 level. In addition, the indicator has begun displaying a progressively flatter slope, a development that reflects balance between buying and selling momentum and continues to support a neutral outlook on the chart.
• MACD: A similar picture can be observed in the MACD, as the histogram continues to fluctuate near the neutral 0 line. This behavior reflects balance within the average strength of short-term moving averages and continues to support the idea that a phase of indecision remains relevant within recent USD/CAD price action.

Key Levels:

• 1.39403 – Key Resistance: A recent equilibrium area that coincides with the medium-term bearish trendline and the 50-period moving average. Sustained trading above this level could challenge the dominant bearish structure and create room for a more relevant bullish bias over the coming weeks.
• 1.38375 – Nearby Barrier: A level that coincides with the 200-period Simple Moving Average and the 61.8% Fibonacci retracement. It remains the most important equilibrium area observed over recent weeks and could continue supporting a broader phase of sideways trading if price action fails to move decisively away from this zone.
• 1.37641 – Critical Support: This area corresponds to recent lows and remains the most important downside barrier on the chart. A sustained break below this level would reinforce bearish control and could favor a broader extension of the dominant downtrend over the coming weeks.

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25

https://www.forex.com/en-us/news-an...-trade-risks-continue-to-weigh-on-the-loonie/

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD Buckles as Yields, Crude Oil and US Dollar Surge Into US CPI​

AUD/USD slides as surging oil, rising Treasury yields and hot US PPI revive Fed hike bets ahead of CPI.

By : Matt Simpson, Market Analyst

AUD/USD came under heavy pressure as surging crude oil, rising Treasury yields and hotter producer-price pressures revived expectations of a September Fed hike. The Australian dollar led FX majors lower as the US dollar rebounded, while Wall Street weakened ahead of CPI.



View related analysis:

• Dow Leads Wall Street Lower on Inflation Fears, Nasdaq Defies Weak Breadth
• US Dollar Outlook: Technical Case for USD Bounce as PPI and CPI Loom
• EUR/USD Could Be Vulnerable to Another Dip with ECB In Focus
• US Dollar Outlook: DXY Seasonality Meets NFP Volatility

AUD/USD Slides as Oil, Yields and Fed Bets Lift US Dollar​

Surging oil prices and a hot producer price report on the eve of CPI have weighed on Wall Street sentiment and boosted the US dollar, thanks to renewed expectations of a Fed hike in September. The dollar was also bolstered despite a hawkish hike from the ECB, which only exacerbated fears that the Fed may be forced to respond to rising energy costs rather than domestic demand. Bond traders are also pushing yields higher on Fed bets and growth concerns.

Source: ICE, TradingView

PPI Pressures Extend Beyond Energy ahead of CPI​

While headline producer prices landed on estimates, the internals showed that the hot PPI was not just an energy story, with price increases relatively broad-based. The fact that the latest rise in crude oil prices has yet to be fully captured by the data also leaves room for further pressure in coming months and sets the scene for consumer prices later today. Notice that the spread across producer prices is trending higher overall, although it could begin to narrow as higher upstream costs feed through to consumers with a lag.

US yields were also higher across the curve on a combination of monetary policy expectations and growth concerns. Bond traders decided to take on Scott Bessent’s claim that “I am the house”, sending the 30-year yield back above 5.3% — the level that initially triggered Bessent’s original buyback plan three weeks ago — and to its highest level since June 2007. That is a memorable date for seasoned traders, coming just ahead of the global financial crisis (GFC).

Source: BLS, LSEG

AUD/USD Leads FX Lower as US Dollar Surges With Oil and Yields​

• Crude oil prices rose 6.5% on Thursday and are up more than 11% from Friday’s close, with WTI trading around $103 and Brent now above $107.
• The US dollar index enjoyed its best day in nine, is on track to form a bullish pinbar and has formed a three-bar bullish reversal (morning star) on the daily chart.
• The Australian dollar was the weakest FX major, with AUD/USD falling more than 0.8% to mark its worst day in 56.
• The New Zealand dollar was not far behind, with its 0.75% decline sending it to a six-week low.
• EUR/USD broke out of its rising wedge pattern, realigning with the bearish move from the 1.1712 top and bringing a move towards the 1.1560 base into focus.
• USD/CAD bounced for a second day, in line with my near-term bullish bias.
• USD/JPY enjoyed its best day in 23, after showing mean-reversion clues following its 750-pip decline in just five days.
• Gold fell 1.2%, but for now is holding above last week’s low — an invalidation point for my near-term bullish bias outlined earlier this week.
• The Nasdaq led Wall Street lower with a 1% decline, following the warning signs from weak breadth highlighted in yesterday’s article.
• S&P 500 futures fell 0.59% to a 27-day low, while the Dow Jones is teasing a break of 52,000 after its fourth consecutive daily decline.

Source: LSEG



This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of FOREX.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.

AUD/USD Technical Analysis: Australian Dollar vs US Dollar​

Implied volatility is finally curling higher, with the 1-week now 0.783 points above the 1-month, showing traders foresee more volatile conditions in the coming days. AUD/USD formed a notable bearish engulfing candle, finally seeing momentum turn after a multi-week rally that had been showing signs of exhaustion into resistance.

Note the two small shooting star candles just above 72c, showing bulls were running out of steam, while the 1-week implied volatility band has widened to 0.7086–0.7227. Perhaps more interestingly, risk reversals are now curling lower, showing that options traders have increased their demand for puts — or downside protection — relative to calls.

With the US dollar continuing to look oversold heading into CPI, and the prospect of a September Fed hike still in play, AUD/USD could be looking at a pullback towards 71c over the coming weeks if risk appetite remains dented.

Source: ICE, TradingView

https://www.forex.com/en-us/news-an...ds-crude-oil-and-us-dollar-surge-into-us-cpi/

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

ASX 200 Slides as Oil, Yields and Rate Risks Hit Sentiment​

The ASX 200 suffered its worst week in six months as surging oil, higher bond yields and renewed rate-hike bets drove a broad risk-off move.

By : Matt Simpson, Market Analyst

The ASX 200 suffered its worst week in six months with a 2.9% decline as surging oil prices, rising global bond yields and renewed RBA and Fed rate-hike expectations drove a broad risk-off move. With sector correlations surging and momentum stretched to the downside, traders now face a balance between deeper downside risks and the potential for a near-term rebound.



View related analysis:

• Dow Leads Wall Street Lower on Inflation Fears, Nasdaq Defies Weak Breadth
• ASX 200 Eyes Break of 8900 as Sector Weakness Builds
• Australian Dollar Outlook: AUD/USD Rally Stalls as Fed Risk Returns
• AUD/USD Buckles as Yields, Crude Oil and US Dollar Surge Into US CPI

ASX 200 Slides as Oil, Yields and Rate Risks Hit Sentiment​

The ASX suffered its worst week in six months with a 2.9% decline. Surging oil prices amid the Middle East escalation, rising global bond yields and renewed bets that the RBA and Fed are on track to hike rates this month sent the ASX to a nine-week low. It now seems likely to snap its five-month winning streak, despite being only halfway through September.

And despite the volatility of the past year, the ASX is now down 1.6% year to date. These could be the hallmarks of a grinding top — as the saying goes, “tops are a process, bottoms are an event”. The bearish RSI divergence on the monthly chart heading into the March high adds weight to the case for a potential top.

Source: TradingView





This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of FOREX.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.

ASX 200 Sector Correlations Surge as Risk-Off Mood Deepens​

You can tell a broader macro play is underway because correlations between ASX sectors and the index have been slammed into overdrive. Most sectors now have 10- and 20-day correlations above 0.8, while financials and materials — which together account for more than half of the ASX 200 — have 10-day correlations above 0.8. Such tightly clustered correlations suggest macro forces are overwhelming stock- and sector-specific drivers, which is typical of a broad risk-off move.

Source: LSEG

How Deep Could the ASX 200 Pullback Become?​

The question now, of course, is how much deeper this pullback could become. Referring back to the monthly chart, a move down to 8,400 would still leave the ASX confined within the volatile range of the past year, so such a selloff may not be particularly extreme. That said, I would expect solid support above 8,000 unless we receive the green light for a broader global stock market selloff.

But with prices falling so aggressively last week, bears may want to tread carefully in the early stages of this week to avoid getting caught short in a market that may need to snap back higher over the near term.



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ASX 200 Options Levels: 8700 Support, 8800 Resistance​

With the ASX 200 around 8,740, the options map points to 8,725–8,700 as the main support zone, with particularly heavy put positioning at 8,700. A clean break below there brings 8,650 into focus as the stronger deeper support level.

On the upside, 8,775–8,800 is the first resistance and pivot zone. Above that, 8,825 is the cleaner resistance level, while 8,900 becomes the next major pivot if the rebound extends.

Source: ASX, TradingView

SPI 200 Bears Press Their Advantage as Oversold Risks Build​

SPI 200 volume and open interest (right chart) increased on Thursday and Friday, showing bears were actively backing the selloff rather than the move simply reflecting long liquidation. However, with prices still holding above the 8,691 swing low, there is a risk of near-term short covering unless bears can force a break lower soon.

Either way, bears may prefer to fade into rallies, with the 8,656.2 low a likely downside target this week. But with the daily RSI (2) extremely oversold, my guess is that the July low will provide initial support.

https://www.forex.com/en-us/news-an...s-as-oil-yields-and-rate-risks-hit-sentiment/

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY: Has Buy the Dip Turned into Sell the Rip?​

Both the US and Japan have rate decisions this week and both are expected to hike rates. But perhaps the bigger question is one of positioning and whether USD/JPY longs will pare back exposure.

By : James Stanley, Sr. Strategist

USD/JPY Talking Points:​

• USD/JPY has carried a bullish bias for much of the past five years and while the fundamental tilt remains to the long side, the question now is whether a larger retracement is ahead.
• This week brings rate decisions from both Japan and the US, and Scott Bessent has previously warned that he knows what the Bank of Japan will do. This week we’ll hear more on that matter.

This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of Forex.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.

USD/JPY was my third top chart for this week and if we do see a continued sell-off in the pair, there could be consequences elsewhere. We caught a glimpse of this back in July of 2024, when a cascading USD/JPY with a carry trade unwinding hit many levered trades, such as tech stocks. So even though odds of a US rate cut were going higher, stocks cratered for a few weeks, and the big reason why was leverage produced by the carry trade was coming out of the market.

To be sure, stocks selling off isn’t a necessity in a bearish USD/JPY scenario, it’s just a possibility as there’s some degree of linkage between the two markets. With low Japanese rates investors flocked to borrow money cheaply in the Japanese Yen. That cheap money then seeped into several markets, tech stocks included; so if we do see the tide receding and Japanese rates moving higher, then, logically, many of the trades funded by that cheap money could similarly retrace.

At this point, however, the fear appears to be somewhat contained, as the delta between inflation data of the two economies remains pretty wide. But, if we do hear of any surprises from the Japanese side, and given the surge in Japanese government bond rates there’s certainly motivation for it, then we could see a whole host of new scenarios to entertain.

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First thing first – the trend: From the weekly chart below we can see a clear bullish lean over the past five-plus years. But, there’s also been several retracements, each of which have been aggressive. This takes on the ‘up the stairs, down the elevator’ logic that is commonplace with such scenarios. And perhaps more importantly, over the past month-plus, it appears as though there’s been a clear change-of-pace.

USD/JPY Weekly Chart​

Chart prepared by James Stanley; data derived from Tradingview

USD/JPY: Don’t Fight the Fed​

The old saying is don’t fight the Fed but that’s evolved here, as it’s more of the US Treasury Department and the Bank of Japan that’s of concern. That’s also reason for this recent change in the chart, as the dual intervention in late-July has shifted matters, even with the fundamental bias remaining tilted to the long side of the pair.

Interestingly, it’s the Fed that’s expected to push that divergence even more this week when they walk into Wednesday’s rate meeting. This is followed by the BoJ later in the week, and they too are expected to hike rates. But, perhaps more important is how sellers respond, and such as we’ve seen this morning with the 155.00 test, they’ve used that rally to so far sell the pair.

USD/JPY Daily Chart​

Chart prepared by James Stanley; data derived from Tradingview

USD/JPY Shorter-Terms​

From shorter-terms, there has remained a dip-buying mentality as buyers came into support 153.00. This has led to a degree of derision on social media, pointing to Treasury Secretary Scott Bessent’s ‘you can bet against me if you want’ comments and alluding to some degree of failure.

Traders should be careful with that, as Bessent has more tools at his disposal to accomplish his aims. So, perhaps there could be a bounce to work with on support, but perhaps more enticing is the prospect of fading bullish breakouts – in effort of aligning with US and Japanese policymakers in the direction that they want the pair to go.

So far we’ve seen 155.00 defended. But from the four-hour chart below there’s a case to be made for support around prior resistance, from around the 153.73 area. The challenge on the long side is the risk of a comment or some form of intervention, so while there could still be justification for support the larger question is for how long to work with the position.

For shorts, however, perhaps the more attractive path forward – in the event that buyers do protect the higher-low, is to see if there’s some degree of exhaustion after a 155.00 test, with 155.44 looming just above the big figure, or perhaps 156.68 which was support turned resistance, above that.

USD/JPY Four-Hour Chart​

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro

https://www.forex.com/en-us/news-and-analysis/usd-jpy-has-buy-the-dip-turned-into-sell-the-rip/

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

GBP/USD Teases Support Ahead of UK CPI and Fed Decision​

GBP/USD Teases Support Ahead of UK CPI and Fed Decision

By : Matt Simpson, Market Analyst

GBP/USD is showing signs of stabilising near support as traders prepare for a potentially volatile combination of UK inflation data and the Federal Reserve decision. Rising expectations for a BoE hike later this year could support sterling, particularly if UK CPI surprises higher or the Fed falls short of increasingly hawkish market expectations.



View related analysis:

• Crude Oil Rally Running Low on Gas?
• USD/JPY Grinds Higher ahead of FOMC, AUD/JPY Clings to Support
• GBP/USD Rebounds on GDP, but US CPI Could Decide the Next Move
• Yen Bears Finally Flip, Can US Dollar Bulls Regain Ground? | COT Report

GBP/USD Holds Near Support as UK CPI and Fed Risks Loom​

BoE Rate Hike Expectations Shift Towards November and December​

Expectations are for the Bank of England (BoE) to hold its interest rate at 3.75% this week, although the odds of a hike have risen sharply from 15.6% a week ago to 43.2%, according to overnight index swaps (OIS). While December is currently favoured with a 90.8% probability of a hike, November remains a live meeting at 66.4%.

Yesterday’s labour market report cast some doubt over a November hike, with claimant counts jumping to a two-year high and private-sector wage growth slowing to a near six-year low of 2.9%. This reduces concerns that the energy shock will feed into a renewed wage-price spiral.

Moreover, three MPC members voted to hike in July, with Pill, Greene and Mann all in favour of a 25bp move. Any further shift towards the hawkish camp could strengthen the case for a November hike, although today’s CPI figures may provide an early indication of whether such a shift is likely.

With energy prices elevated and inflation risks rising, a hike this year increasingly looks likely. The bigger question is whether it arrives in November or December — and today’s inflation figures could go a long way towards answering that.

Source: Bank of England (BOE), LSEG

Will the Fed Deliver, or Fall Short of Hawkish Expectations?​

Of course, we also need to factor in today’s FOMC meeting. With money markets pricing close to a 90% probability of a 25bp hike and the vast majority of economists expecting the same, attention shifts to whether the Fed signals another hike in December and how much further tightening officials expect in 2027.

The FOMC will update its Summary of Economic Projections (SEP), with the dot plot and median interest-rate projections quickly revealing how hawkish policymakers are heading into next year. This could prove particularly important under Kevin Warsh, who has so far provided less forward guidance than markets had become accustomed to under previous Fed leadership.

Source: BOE, Federal Reserve, Office for National Statistics (ONS), LSEG

GBP/USD Could Benefit if the Fed Falls Short​

I cannot help but wonder whether the Fed will deliver the hawkish confirmation markets are pricing in. If it falls short, that leaves room for a pullback in a US dollar that is already bid ahead of the event. And if that is combined with a hot UK CPI report and increased odds of a November BoE hike, it could bode well for GBP/USD over the near term, which conveniently sits around key support levels.

GBP/USD Technical Analysis: British Pound vs US Dollar​

It has been nice to see GBP/USD move lower in line with my near-term bearish bias outlined on Friday. Though already, it’s showing signs it wants to base out ahead of my ~1.3450 target near the 200-day SMA and high-volume node (HVN).

But with an FOMC meeting and UK inflation report incoming, there is scope for this tight support area to be tested or even broken if the data and policy expectations land the right way.

Given that the daily RSI (2) is near oversold heading into support, alongside my hunch that the Fed won’t quite deliver the level of hawkishness being priced in and the potential for a hot UK CPI print, my bias is for a near-term bounce on GBP/USD. Ideally, that support line currently holding prices gives way first before the real move unfolds.

Note that the 1-week implied volatility band has blown out to over 180 pips, implying a move of around 83 pips in either direction with approximately 65% probability.

Source: ICE, TradingView

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EUR/GBP Technical Analysis: Euro vs British Pound​

A descending triangle breakout on the weekly chart remains in play, though prices have been retracing against the original breakout from late June. However, momentum is now turning lower around the 200-week SMA, while the daily chart shows bears have regained control. Note the lower high ahead of the two-day selloff, while Tuesday’s small bullish inside day shows bulls struggling to regain control.

Bears could seek to fade into moves within Friday to Monday’s bearish range, with 0.8500 as an interim downside target. If the triangle target is met, EUR/GBP could be headed for 0.8438.

Source: ICE, TradingView

https://www.forex.com/en-us/news-an...ses-support-ahead-of-uk-cpi-and-fed-decision/

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

Gold Analysis: XAU/USD Remains Under Pressure After Fed Rate Decision​

Gold continues to face challenging conditions in the short term, with the precious metal already recording three consecutive losing sessions and posting a decline of nearly 2.3%. This price action continues to highlight a bearish bias that has become increasingly relevant within the market.

By : Julian Pineda CFA, CMT, Market Analyst

Gold continues to face challenging conditions in the short term, with the precious metal already recording three consecutive losing sessions and posting a decline of nearly 2.3%. This price action continues to highlight a bearish bias that has become increasingly relevant within the market. The downside pressure seen over recent sessions has maintained its intensity even after the Federal Reserve meeting, a factor that continues to limit gold's recovery potential in an environment of elevated interest rates. For now, this remains the market's main catalyst and could keep selling pressure around XAU/USD in place over the coming sessions.

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Is the Fed Limiting Confidence in Gold?​

Today's trading session has been particularly important for broader market sentiment following the latest decision from the Federal Reserve. As widely expected, the central bank raised interest rates to 4.00%, up from the previous 3.75% benchmark rate. This decision marks the Fed's first rate increase of 2026 and received unanimous support from policymakers. In its official statement, the central bank emphasized that economic activity remains resilient, the labor market continues to show strength, and inflationary pressures remain elevated, factors that ultimately supported the rate increase.

However, the most significant development came after the decision itself. During the press conference, Federal Reserve Chair Kevin Warsh reiterated that inflation remains too high and persistent, noting that recent economic data has failed to show a clear and sustained slowdown. He also highlighted that inflation continues to run above the 3.00% area, still well above the Fed's 2.00% target. While he stopped short of committing to a specific rate path, his comments reinforced the perception that the Federal Reserve has adopted a more restrictive stance than many other central banks.

Market expectations have already begun to reflect this shift. Investors are increasingly pricing in a more aggressive Federal Reserve over the coming months, something that is becoming evident in the implied probabilities for future monetary policy meetings. For the October 28 meeting, markets currently assign a probability above 50% that interest rates could rise further toward the 4.25% level. Those probabilities increased following the Fed decision, reinforcing expectations that policymakers may remain hawkish in the months ahead.

Source: CMEGROUP

The key issue for gold is that this environment is not particularly favorable. The reason lies in gold's closest alternative within the safe-haven space: the bond market. Both bonds and gold are traditionally viewed as defensive assets, and periods when one becomes more attractive can often reduce demand for the other. This appears to be one of the main factors weighing on the precious metal right now. Unlike bonds, gold does not generate yield, which means it tends to lose relative appeal when fixed-income returns increase.

That is precisely what has been unfolding recently. Even after the Fed decision, U.S. Treasury yields have continued to move higher, with the 10-year Treasury yield remaining above the 5.00% mark, a level not seen in years. This reflects the market's growing preference for fixed-income instruments, supported by expectations of a more aggressive Federal Reserve. As a result, part of the available capital flow may continue favoring the bond market over gold.

Source: TradingEconomics

Taking all of this into account, the outlook for gold demand remains challenging. As long as bond yields stay elevated, capital may continue flowing toward fixed-income markets, reducing the appeal of gold and making a sustained recovery more difficult. In broad terms, the Federal Reserve's decision has not been particularly supportive for gold and, while the bond market remains strong, selling pressure could continue to play a relevant role in XAU/USD price action.

Gold Technical Forecast​

Source: StoneX, Tradingview

• Bullish trendline begins to lose momentum: Although an upward trendline remained the dominant technical structure on the daily chart until just a few sessions ago, recent price action has strengthened the case for a meaningful bearish move. If selling momentum continues to gain traction in the short term, it could not only mark the end of the bullish trend observed in recent weeks but also open the door to a more established bearish structure in the weeks ahead.
• RSI: The RSI is now trading below the 50 neutral level, a reading that reflects growing downside momentum across the chart. As long as this dynamic remains intact, the bearish bias could continue strengthening in the near term.
• TRIX: The TRIX indicator remains above its neutral level but continues to develop along a clear downward slope. This suggests a meaningful slowdown in the strength of longer-term exponential moving averages, reflecting exhaustion in the buying momentum accumulated over previous weeks and leaving room for more sustained weakness across the chart.

Key Levels to Watch:

• $4,480 – Critical resistance: A key barrier for bullish price action that aligns with recent highs and partially coincides with the 200-period simple moving average. A move back toward this level could begin to restore relevance to a bullish bias and revive the upward trendline seen in previous weeks.
• $4,330 – Near-term barrier: The main equilibrium zone on the chart and a level that was respected multiple times throughout last week. As long as prices continue to trade near this area, a sense of neutrality may persist and a more evident consolidation phase could begin to develop.
• $4,170 – Critical support: This level coincides with an important retracement zone observed months ago and sits just below the chart's main moving averages and bullish trendline. Price action moving back toward this area could reaffirm the dominance of the current bearish bias and potentially open the door to a more consistent bearish structure over the coming weeks.

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25

https://www.forex.com/en-us/news-an...mains-under-pressure-after-fed-rate-decision/

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/CAD forecast: Breakout gathers pace as US rates take over​

US front-end rates have taken over as the dominant short-term driver for USD/CAD, with the price now testing a level that may determine whether the bullish breakout has legs.

By : David Scutt, Market Analyst

• USD/CAD sensitivity to US two-year yields has surged
• 1.3991 in focus on Friday
• US data surprises improve as Canadian outperformance starts reversing
• BOJ and Fed speak could amplify dollar volatility

USD/CAD breakout runs into Fib test​

Of all the G10 FX pairs, few trend better than USD/CAD, and one look at the chart below suggests that is once again the case now. A bullish break of the downtrend established in early July has resulted in nearly a fortnight of gains, taking the pair above each of its key medium- and long-term moving averages before stalling at the 50% retracement of the June-August bear move, a level the price has respected on several occasions over recent months.

As such, it now looms as the key level to watch when assessing possible setups in USD/CAD as we head towards the weekend.

Source: TradingView

US front-end rates take over​

While technicals largely explain the pair’s recent movements, you can’t dismiss fundamental factors as a contributing force behind USD/CAD’s rebound. The pair has become increasingly sensitive to shifts in US front-end rates, with that relationship particularly strong over the past week.

While there has been evidence of a relatively strong relationship between fluctuations in crude prices and movements in longer-dated US Treasury yields and the DXY, for this particular pair, it really is the front-end rate show that's helped underpin this move.

Source: LSEG

Over the past five sessions, the correlation between daily changes in USD/CAD and US two-year yields has risen to around +0.74, comfortably stronger than the relationship with longer-dated US yields. In contrast, its correlation with the US-Canada two-year spread over the same period has been effectively zero, suggesting the latest leg higher has been driven far more by developments on the US side of the ledger.

Source: LSEG

That differs from the broader picture. Over 20 and 60-day windows, movements in US-Canada front-end yield spreads have maintained a relatively strong relationship with USD/CAD, particularly at the two and five-year tenors.

US data surprises regain momentum​

While it may not be a major factor behind the widening in US-Canada yield spreads, USD/CAD’s rebound has also coincided with a relative improvement in US economic data compared with expectations versus that seen in Canada, as shown in the graphic below.

Source: LSEG

Data surprises in the United States have once again become more positive after a period of fewer upside shocks, the exact opposite of what has been seen in Canada over the same period. On an outright basis, economic data in both nations continues to come in above forecast overall, but the broader trend towards Canadian outperformance relative to the US has not only stalled but started to reverse.

BOJ decision adds to dollar risk​

With little in the way of top-tier US or Canadian data until later next week, the near-term focus will be on Fed speak, with Governor Michelle Bowman scheduled to speak later Friday and several other influential officials slated to be in action early next week. Given how sensitive USD/CAD has become to movements in US front-end rates, any remarks that differ from the hawkish message delivered at the September FOMC meeting could have a meaningful impact on the pair.

Nearer term, the US dollar continues to show a moderately strong relationship with crude fluctuations, making that another useful reference point for traders when assessing directional risk. Today’s Bank of Japan interest rate decision also carries the potential to generate significant volatility not only in USD/JPY, but the US dollar more broadly. Markets have more than three rate hikes priced in from the BOJ out to the middle of next year, meaning the statement and Governor Ueda’s press conference will need to be hawkish enough to justify those expectations, or risk the yen sliding and providing some support to the US dollar at the margin against other currencies.

Trade setup scenarios​

From a setup perspective, 1.3991 remains the focal point on Friday. The bullish breakout and move above the key moving averages shows bulls have the ascendancy right now, a message backed up by the oscillators, with RSI (14) trending higher above 60 while MACD has flipped positive, having already crossed the signal line from below earlier this month.

While that favours long setups over shorts, until we see a definitive move above the 50% retracement, I’m keeping an open mind when it comes to potential setups. If the pair was to extend the bullish move we’ve seen from early September, levels to watch on the topside include 1.4080, where the pair stalled briefly in early August, along with 1.4118, a breakdown zone from early July. The 78.6% Fib is another level of note, given the pair’s recent adherence to Fib levels, found at 1.4138.

If we see a reversal that pushes the pair towards the 38.2% Fib at 1.3930, that would provide an early warning to bulls that the current trend may be at risk of reversing, with the doji print on Thursday completing two out of three candles of a potential evening star pattern. So price action today will be important.

Underneath where the pair now trades, the confluence of the 50- and 100-day moving averages around 1.3947, the 38.2% Fib at 1.3930 and 1.3910 are the immediate levels to watch, with the 23.6% Fib at 1.3855 and 200-day moving average the next after that.

Depending on which direction the price deviates from the 50% retracement, the level can be used for trade construction, allowing for entry on one side with a stop on the other for protection should the trade move against you.

https://www.forex.com/en-us/news-an...-breakout-gathers-pace-as-us-rates-take-over/

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.