Forex - Currency Hedger

Currency Hedger August 17, 2026 No Comments

Canadian Dollar edges higher as Fed rate hike bets recede, CPI data looms

USD/CAD declines to near 1.3860 in Monday’s early European session.
Lower Fed rate hike expectations weigh on the US Dollar.
Major financial institutions expect the BoC to remain on hold for the remainder of 2026.

The USD/CAD pair edges lower to around 1.3860 during the early European session on Monday. The US Dollar (USD) extends the decline against the Canadian Dollar (CAD) as traders pare bets on the US Federal Reserve (Fed) rate hikes. Canada’s Consumer Price Index (CPI) inflation data for July will take center stage later on Friday.

The pair declines to the lowest since June 3 after a soft run of US economic data, including an unexpected drop in Retail Sales. Signs of easing inflation in the US have prompted the market to give up bets for an imminent rate hike from the US central bank. A rate hike next month is now priced at 30%, down sharply from about 40% a week earlier, according to the CME FedWatch tool.

“This points to a material slowdown in real consumer spending growth in the third quarter,” said Sal Guatieri, a senior economist at BMO Capital Markets. “This, together with a weaker jobs report and subdued core CPI inflation, raises the odds of the FOMC staying patient again in September,” Guatieri added.

The Bank of Canada (BoC) left its key overnight interest rate unchanged at 2.25% during its July policy meeting, marking the sixth consecutive hold. BoC Governor Tiff Macklem emphasized that while the Canadian central bank is looking through near-term energy shocks, it “will not let higher energy prices become persistent inflation.”

The BoC will hold the next policy meeting on September 2. RBC Economics and CIBC expect that the central bank will remain on hold for the remainder of 2026 to fully monitor economic conditions.

Canada inflation seen contained as BoC pause expectations firm

Strategists at Brown Brothers Harriman expect the upcoming Canada July CPI report to underscore subdued underlying price pressures and support an extended BoC pause. They look for headline CPI to edge up to “2.9% y/y vs. 2.8% in June,” while stressing that “underlying inflation [is] contained under 2%.” BBH forecasts “core CPI (ex. food & energy) … at 1.8% y/y vs. 1.8% in June,” with “core CPI (average of trim and median) … projected at 1.85% for a second straight month,” reinforcing the view that core inflation remains firmly anchored below the BoC’s 2% threshold.

Technical Analysis: USD/CAD

In the daily chart, USD/CAD remains under pressure, holding beneath the 100-day simple moving average (SMA) and the Bollinger middle band, which keeps the near-term bias bearish despite a modest rebound off the lower band. Price is hovering just above the Bollinger lower band, while the Relative Strength Index (14) sits in oversold territory around 28, hinting that downside momentum is stretched but not yet reversed.

On the topside, initial resistance is located at the 100-day SMA around 1.3920, with a stronger cap at the Bollinger middle band near 1.4010; a daily close above these levels would be needed to ease the current downside bias, with the upper band at 1.4170 acting as a subsequent barrier. On the downside, immediate support is aligned with the Bollinger lower band at 1.3855; a clear break below this floor would open the way to further weakness, while holding above it would signal an attempt to consolidate after the recent slide.

Currency Hedger August 17, 2026 No Comments

EUR/JPY Price Tests rising wedge bottom near 184.00

EUR/JPY tests the lower boundary of the rising wedge around 184.10.
The 14-day Relative Strength Index at 50 indicates neutral momentum.
The initial resistance lies at its 50-day EMA near 184.49.

EUR/JPY depreciates after two days of gains, trading around 184.20 during the Asian hours on Monday. The technical analysis of a daily chart indicates that the spot remains within a rising wedge, signaling that the upward trend is losing momentum and that the wedge typically acts as a bearish reversal.

The EUR/JPY cross retains a constructive near-term tone as it holds above the nine-period Exponential Moving Average (EMA), keeping price supported despite last week’s pullback from the highs. The 14-day Relative Strength Index (RSI) around 50 suggests neutral momentum after the prior correction, hinting that directional conviction is still tentative while the broader uptrend structure remains intact.

The EUR/JPY cross tests the immediate support at the lower boundary of the rising wedge around 184.10, followed by the nine-day EMA of 183.78. A decisive break below this confluence support zone would revive the bearish bias, potentially pressing the currency cross down toward its eight-month low of 179.37, recorded on August 3. If downward momentum continues, the next key technical target lies at the nine-month low of 175.70.

On the upside, the primary resistance lies at its 50-day EMA near 184.49, followed by the upper boundary of the rising wedge around 185.80. A sustained break above the wedge could signal a broader bullish resurgence, opening the path for the currency cross to retest the area surrounding its all-time peak of 187.95 set on April 17.

Currency Hedger August 17, 2026 No Comments

AUD/JPY Edges higher above 113.00, bullish bias prevails above 100-day SMA

AUD/JPY gathers strength to around 113.00 in Monday’s early European session.
Japan’s economy expanded annually by 1.1% in Q2, weaker than expected.
The cross holds a constructive bullish bias while holding above the 100-day SMA.
The first downside target emerges at 112.21; the immediate resistance level is seen at 113.88.

The AUD/JPY cross trades in positive territory near 113.00 during the early European session on Monday. The Japanese Yen (JPY) softens against the Australian Dollar (AUD) amid weaker-than-expected Japanese Gross Domestic Product (GDP) data.

Japanese GDP for the second quarter (Q2) expanded at an annualised 1.1%, according to the Cabinet Office on Monday. This figure came in below the market consensus of 2.0% and the first quarter’s reading of 1.8% growth, compared to a 0.5% growth recorded in Q1 and missed market expectations of a 0.5% expansion.

“The details were a mixed bag,” Capital Economics analysts wrote in a research note. “GDP expanded at a decent pace in Q2, and with the government still limiting the pass-through from higher energy prices,” they wrote, while a jump in government consumption “suggests that Takaichi’s expansionary fiscal policies are starting to have an impact.”

Traders await the release of the Australian July employment report on Thursday ahead of Japan’s National Consumer Price Index (CPI) inflation data. Economists expect the Unemployment Rate in Australia to rise to 4.5% in July from 4.4% in June. If the report shows a stronger-than-expected outcome, this could lift the Aussie against the JPY.

Japan data in focus as Deutsche Bank flags solid Q2 growth and firmer inflation

Economists at Deutsche Bank highlight a busy week for Japan, with “key economic data” due including Q2 GDP on Monday and the national CPI on Friday. For GDP, the bank notes that its Chief Japan Economist expects “real GDP to grow at +1.6% QoQ,” while on prices he “forecasts core CPI ex. fresh food to rise to 1.8% YoY from 1.6% in June and core-core inflation ex. fresh food and energy to increase to 1.8% (1.7%).” The bank directs clients to “see more in his full week-ahead” for additional detail.

Technical Analysis: AUD/JPY keeps a mildly positive momentum tone in the near term

In the daily chart, AUD/JPY holds a constructive bullish bias as it sits above the Bollinger middle band and the 100-day simple moving average. The clustering of these supports just beneath spot suggests dips are being absorbed, while the 14-day Relative Strength Index around 54 keeps a mildly positive momentum tone without yet signalling overbought conditions.

On the downside, initial support is seen at the July 8 low of 112.21, followed by the August 10 low of 111.63. The next contention level is seen at the lower Bollinger band near 110.00, which acting as a deeper bearish target if selling accelerates.

On the topside, the immediate resistance to watch is the July 16 high of 113.88, en route to the July 27 high of 114.67. A clear break would open the door to the upper Bollinger band at 115.35.

Currency Hedger August 17, 2026 No Comments

Euro rallies to two-month high, eyes 1.1600 as USD struggles amid receding Fed hike bets

EUR/USD scales higher for the third day as receding Fed hike bets keep the USD depressed.
Geopolitical risks and inflation fears stemming from volatile oil prices could limit USD losses.
Traders now look forward to FOMC Minutes on Wednesday for some meaningful impetus.

The EUR/USD pair builds on last week’s bounce from the vicinity of the 1.1500 psychological mark and attracts follow-through buyers for the third straight day. The momentum lifts spot prices to a two-month high during the Asian session, with bulls now awaiting a move beyond the 1.1600 round figure before placing fresh bets amid a broadly weaker US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, languishes near the lower end of the monthly range as Friday’s weak US data further tempered bets for an immediate rate hike by the Federal Reserve (Fed). In fact, the US Census Bureau reported that Retail Sales fell 0.6% in July, marking the biggest monthly fall since May last year and pointing to a slowdown in consumer spending. This comes on top of signs of moderating price pressures, which gives the US central bank headroom to keep interest rates steady.

Strategists at Scotiabank highlight that the “steepening US 2/30s yield curve, which has reached 108bps, reflects simmering investor concern about the Fed policy outlook alongside weak US fiscal dynamics.” They argue that this “steepening yield curve represents a further headwind for the USD generally,” reinforcing their view that “near-term risks are geared towards the DXY slipping back to the mid-98 area.”

The shared currency, on the other hand, draws support from growing acceptance that the European Central Bank (ECB) will deliver one final 25-basis-point (bps) rate hike at its September meeting as inflation remains above the 2% target. Meanwhile, the US-Iran standoff keeps the geopolitical risk premium in play. Apart from this, inflation fears stemming from volatile oil prices might hold back traders from placing aggressive bearish bets on the USD. This, in turn, might cap any further near-term appreciating move for the EUR/USD pair.

The market focus now shifts to the release of FOMC Minutes, due on Wednesday, which will be looked upon for more cues about the Fed’s future policy path. The outlook will play a key role in influencing the USD price dynamics and producing short-term trading opportunities around the EUR/USD pair. In the meantime, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside. Hence, any corrective pullback is more likely to be bought into and remain limited.

EUR/USD daily chart

Technical Analysis

The EUR/USD pair holds just above the 50% Fibonacci retracement of the April-June downfall but the broader tone remains capped beneath the 200-day Simple Moving Average (SMA) at 1.1630. This is followed by the 61.8% Fibo. retracement at 1.1645. A daily close above this cluster should open the way toward 1.1732 and 1.1843. On the downside, initial support is aligned with the 50% retracement at 1.1584 and a break below there would expose the 38.2% level at 1.1522, ahead of deeper support at 1.1447 and 1.1324.

Currency Hedger August 17, 2026 No Comments

USD/JPY Price Struggles near 159.00; seems vulnerable below 50% Fibo.

USD/JPY trades with a negative bias for the second straight day, though it lacks follow-through.
Japan’s weak GDP print complicates BoJ’s rate-hike path, capping the JPY and limiting losses.
The technical setup warrants some caution before positioning for any meaningful appreciation.

The USD/JPY pair attracts some sellers at the start of a new week, though it lacks bearish conviction and shows some resilience below the 159.00 mark during the Asian session. Moreover, spot prices remain close to a two-week top, touched last Thursday, warranting some caution amid mixed fundamental cues.

The US Dollar (USD) remains depressed amid receding Federal Reserve (Fed) rate hike expectations, which, in turn, is seen as a key factor acting as a headwind for the USD/JPY pair. However, Japan’s soft Q2 GDP print complicates the Bank of Japan’s (BoJ) policy normalization path and holds back traders from placing aggressive bullish bets on the Japanese Yen (JPY). This should lend support to the currency pair and warrants some caution before positioning for deeper losses.

From a technical perspective, the recent recovery from the 155.25-155.20 area, or the lowest since early May, stalled near the 50% Fibonacci retracement level of the intervention-led slump from a four-decade peak. Moreover, the Relative Strength Index (14) sits near a neutral 48, while the Moving Average Convergence Divergence (MACD) has slipped into negative territory, hinting that upside momentum is fading as the USD/JPY pair consolidates below these clustered resistance levels.

That said, some follow-through selling below the 38.2% Fibo. retracement support at 158.58 is needed to back the case for deeper losses to the Fibonacci floor at 157.30 and the broader structural low around 155.24, where buyers would be expected to show more conviction.

On the topside, immediate resistance is located at the 50% Fibo. retracement at 159.61, followed by the 100-period Exponential Moving Average (EMA) on the 4-hour chart at 159.77. Sustained strength above these would open the way toward the 61.8% retracement at 160.64 and then the recent cycle high near 163.98.

USD/JPY 4-hour chart

Currency Hedger August 17, 2026 No Comments

GBP gathers strength above 1.3550 as softer US data cools Fed hike bets

GBP/USD gains ground to around 1.3555 in Monday’s early European session.
Softer US Retail Sales data have tempered expectations that the Fed will raise rates in September.
BoE’s Pill said UK growth supports case for higher interest rates.

The GBP/USD pair gains traction to near 1.3555 during the early European trading hours on Monday. The US Dollar (USD) weakens against the British Pound (GBP) as bets for a US Federal Reserve (Fed) rate hike come down. Traders will keep an eye on the UK employment and inflation reports, which are due later this week.

US Retail Sales fell in July for the first time in nine months as the boost from big tax refunds faded, the US Census Bureau reported on Friday. Signs of tame US inflation data added to unexpected job losses last month in bolstering financial market expectations that the Fed would not raise interest rates at its September 15-16 policy meeting.

Markets are now pricing a 31% probability ‌of a Fed rate hike at the upcoming policy meeting, down from 35% immediately after the US Retail Sales report, according to the CME FedWatch Tool.

Bank of England (BoE) Chief Economist Huw Pill stated ‌that stronger-than-expected UK economic growth readings reinforced the case for higher borrowing costs to bring inflation back to target. Pill said that data showing the UK economy grew 0.4% in the second quarter suggested the country was ‌not heading into a sharp downturn.

Pound support underpinned as BoE tone stays hawkish

According to strategists at Scotiabank, the broader data calendar has offered little fresh direction, but policy messaging remains a key pillar of support for the Pound. They note that while “fundamental releases have been limited,” recent BoE communication has “remained hawkish,” with comments from Chief Economist Huw Pill that have “reaffirmed a call for higher rates.” This persistent tightening bias from the BoE is helping to sustain the constructive tone around GBP despite the quieter flow of new economic information.

Technical Analysis: GBP/USD keeps a positive tone above the key 100-day SMA

In the daily chart, GBP/USD maintains a bullish near-term bias as spot holds above the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, keeping the recent uptrend technically supported. Price is edging toward the upper Bollinger band, while the 14-day Relative Strength Index at 64 stays in positive territory but shy of overbought, suggesting firm yet not extreme upside momentum.

On the topside, immediate resistance is located at the Bollinger upper band around 1.3595, where a clear break would open the door to the May 8 high of 1.3637. On the downside, initial support is seen at the Bollinger middle band near 1.3435, followed by the 100-day SMA at 1.3415; a deeper pullback could extend toward the lower Bollinger band around 1.3273, where buyers would be expected to re-emerge.

Currency Hedger August 17, 2026 No Comments

Indian Rupee steadies as US Dollar declines on reducing Fed rate hike bets

Indian Rupee may face challenges following the RBI’s decision to end its FCNR deposit FX swap early.
USD/INR is projected to trade between 95.00 and 95.50 this week amid expected pre-August 31 FCNR deposit demand.
The US Dollar declines as weaker-than-expected US economic data fade Fed rate hike odds.

The Indian Rupee (INR) trades stronger against the US Dollar (USD) on Monday after two days of losses, with the USD/INR pair trading around 95.50 at the time of writing. However, the Indian Rupee (INR) may struggle in the coming period, potentially driving the pair higher, following the Reserve Bank of India’s (RBI) announcement to shut its FX swap facility for FCNR deposits a month ahead of schedule. Data released alongside the decision highlighted that the central bank’s policy measures, including the deposit swap window, successfully attracted nearly $57 billion.

Market traders expect the USD/INR pair to fluctuate between 95.00 and 95.50 this week. Some anticipate a short-term rush among overseas clients aiming to secure FX deposits before the facility officially closes on August 31, while foreign portfolio flows and routine hedging activity will further direct currency movement.

Investors will closely monitor the release of the minutes from the RBI’s August policy meeting, during which interest rates were kept unchanged. Looking ahead, most analysts project that the RBI will either initiate a shallow rate-hiking cycle starting in December or maintain its pause across the remainder of 2026.

India inflation uptick supports RBI’s steady policy stance

Analysts at Societe Generale highlight that India’s inflation backdrop remains broadly contained, noting that headline CPI “edged up modestly to 4.45% yoy in July from 4.38% in June,” a move they say “reinforc[es] the latest decision by the RBI to keep policy on hold.”

The USD/INR pair holds losses as the US Dollar (USD) declines amid weaker-than-expected US economic data and shifting central bank expectations. The US Census Bureau reported on Friday that Retail Sales fell by 0.6% month-over-month in July, following a 0.2% rise in June, coming in below the market consensus of 0.1% growth. On an annual basis, Retail Sales rose 5.0% in July compared to 6.8% in the previous month.

Traders have reduced their bets on Federal Reserve rate hikes following a slew of softer US data, including CPI, PPI, and Retail Sales. Markets are now pricing in a 33.1% chance of a rate hike next month, down from 44% last week according to the CME FedWatch tool.

Fed seen keeping hawks in check as disinflation evidence builds

Strategists at Scotiabank argue that last week’s data have likely provided sufficient reassurance on the inflation front to justify a more patient stance from policymakers. They highlight that “there is likely to have been enough evidence of disinflation in last week’s data (along with signs of slowing in the labour market) to allow Fed Chairman Warsh to keep the inflation hawks at bay,” reinforcing expectations that the Fed can resist pressure for an early shift back toward a more aggressive tightening bias.

Technical Analysis: USD/INR remains above moving averages within ascending channel

USD/INR holds losses after two days of gains, trading around 95.50 at the time of writing. The technical analysis of the daily chart indicates that the pair is remaining within the ascending channel, suggesting a prevailing bullish bias.

Additionally, the USD/INR pair holds a slight constructive bias as spot remains above both the nine-period Exponential Moving Average (EMA) at 95.4418 and the 50-period EMA at 95.3913, suggesting near-term dips are being cushioned by dynamic support.

The 14-day Relative Strength Index (RSI) hovers just below the 50 mark at 49.2, hinting at broadly balanced momentum after the recent pullback, while the latest FXS Fed Sentiment Index reading around 134.6 adds a modestly supportive macro backdrop without yet translating into a clear directional breakout on the chart.

Currency Hedger August 15, 2026 No Comments

Japanese Yen held as soft US data meets a weak Yen

USD/JPY is little changed in the low-159s on Friday, holding its ground after a volatile stretch.
US Consumer Sentiment fell sharply in August, missing forecasts and adding to a soft week of US data.
A weaker Yen is offsetting the softer Dollar, keeping the pair pinned near current levels.

USD/JPY is holding near 159.40 at the time of writing, with little change on the day. A weak United States (US) Consumer Sentiment reading nudged the Dollar lower, but the pair has stayed close to where it started.

The University of Michigan’s preliminary Consumer Sentiment Index dropped to 51 in August from 55.2, well below the 54.5 that markets expected. The Expectations component fell to 50.6. It is the latest soft US number in a week that also brought cooler inflation and a weak Retail Sales report.

Taken together, that run of data has taken some steam out of the US Dollar (USD), with the Dollar Index (DXY) lower on the day. On its own, a softer Dollar would usually pull USD/JPY down with it.

The boost from the record joint US–Japan intervention in late July and early August has faded, and with no follow-up from Tokyo, speculators have gone back to selling the Japanese Yen (JPY). That leaves USD/JPY caught between a soft Dollar and a soft Yen, with neither side able to take control.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 159.38, maintaining a neutral near-term tone as it holds above the 20-period simple moving average (SMA) at 159.33 but remains capped beneath the 100-period SMA at 160.20. The pair is hovering just under the nearby horizontal barrier at 159.39, while the Relative Strength Index (14) around 56 suggests mildly constructive momentum without reaching overbought conditions.

On the topside, immediate resistance is located at 159.39, followed by the higher horizontal level at 159.58, before the more significant 100-period SMA at 160.20 comes into view as a broader cap. On the downside, initial support is clustered around the 20-period SMA at 159.33, ahead of the horizontal floors at 159.20 and 159.10, which together form a shallow demand band protecting the recent consolidation area.