Short term sentiment remains downward The price reacted to the horizontal resistance area at 1.6300
Recommendation: Trade: Short EURAUD at market price Target: 1.6250, 1.6233 Stop: 1.6330
Opinion: Looking at the EURAUD chart from a short-term perspective, we can see that the price bounced off the key resistance today. The area at 1.6300 is marked with previous price reactions. According to the classic technical analysis, the further downward move looks to be the base case scenario. In addition the price sits below the 100-period moving average from the H1 interval. We recommend going short EURAUD at market price with two targets: 1.6250 and 1.6233. We also recommend placing stop loss at 1.6330. Source: xStation5
USD/CAD lacks a firm intraday directional bias on Tuesday amid a combination of diverging forces.
Rising oil prices underpin the Loonie, while hawkish Fed bets provide a goodish lift to the USD.
The technical setup favors bearish traders and backs the case for a further near-term depreciation.
The USD/CAD pair struggles to capitalize on the overnight bounce from its lowest level since June 3, around the 1.3845 zone, also representing the 200-day Simple Moving Average (SMA) support, and oscillates in a narrow band on Tuesday. Spot prices extend the range-bound price action through the early European session and currently trade around the 1.3870-1.3875 region, unchanged for the day amid mixed cues.
Crude oil prices climb to an over two-week high amid the US-Iran standoff over the Strait of Hormuz. This, along with Monday’s hot Canadian consumer inflation figures, continues to underpin the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair. The downside, however, remains cushioned amid a strong follow-through US Dollar (USD) recovery from a two-month low, bolstered by bets for at least one rate hike by the US Federal Reserve (Fed) on the back of oil-driven inflation risks.
Meanwhile, momentum indicators suggest that bearish sentiment dominates even as spot prices stabilize above the longer-term trend support. In fact, the Relative Strength Index (14) sits in oversold territory near 29, hinting at stretched downside conditions, while the Moving Average Convergence Divergence (MACD) indicator remains below zero with negative readings. Moreover, the USD/CAD pair has found acceptance below the 50% Fibonacci retracement level of the April-June rally, validating the negative outlook.
However, a convincing break below the 200-day SMA at 1.3848 is needed to back the case for deeper losses to the 61.8% Fibo. level at 1.3822. Some follow-through selling would expose the 78.6% level at 1.3708, before the USD/CAD pair extends the fall toward the structural floor near 1.3562.
On the topside, initial resistance is located at the 50.0% retracement at 1.3902, followed by the 38.2% level at 1.3982 and then the 23.6% retracement at 1.4081, with the cycle high anchor around 1.4242 acting as a more distant barrier.
Swiss Franc ticks lower against the US Dollar as the latter rebounds.
Higher oil prices could force traders to raise hawkish Fed bets again.
Investors await FOMC Minutes of the July policy meeting.
The Swiss Franc (CHF) trades marginally lower against the US Dollar (USD) in the early European trading session on Tuesday, with the USD/CHF pair edging up to near 0.8116. The Swiss Franc pair rises as the US Dollar bounces back amid fears that surging oil prices could re-ignite hawkish Federal Reserve (Fed) interest rate expectations.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades slightly higher to near 99.65. The USD Index recovered on Monday after posting a fresh two-month low at 99.29.
The WTI Oil price has hit a fresh two-week high near $84.50 as United States (US) President Donald Trump confirmed no renewal of the US-Iran ceasefire.
In the last few weeks, traders have pared Fed interest rate hike expectations due to soft US economic data for July.
Fed hike bets fade as HSBC sees September hold risk rising
Analysts at HSBC Asset Management highlight that “market pricing for a September Federal Reserve rate hike has fallen to its lowest level since mid-June,” as investors reassess the policy outlook. They note that expectations have been squeezed lower, “wedged between Warsh’s comments and the benign CPI print,” while “a softer labour report has also weighed on rate expectations.” HSBC adds that “if August inflation and employment data show more of the same, the Fed is likely to stay on hold in September,” underscoring the importance of upcoming US data in shaping the near-term rate path.
Going forward, investors will focus on the US Federal Open Market Committee (FOMC) minutes of the July policy meeting, which will be released on Wednesday.
Meanwhile, the price action in the Swiss Franc is expected to be driven by geopolitical headlines, as the Switzerland economic calendar has nothing much to offer this week.
Technical Analysis
In the daily chart, USD/CHF trades at 0.8115, holding marginally above the 20-day exponential moving average (EMA) at 0.8111, which lends a mild bullish bias in the near term. The Relative Strength Index (RSI) at 51.89 sits just above the neutral 50 line, suggesting steady but unspectacular upside momentum as the pair consolidates after its recent recovery from the 0.8050 area.
On the downside, immediate support is located at the 20-day EMA at 0.8111, and a close below this level would hint at fading bullish pressure and a deeper pullback toward recent lows. As long as the pair holds above this moving average, dip-buying interest is likely to persist, keeping the short-term structure constructive while traders watch for a stronger momentum pickup to extend gains.
GBP/USD dips to levels near 1.3520 on Tuesday following rejection at 1.3570.
UK Unemployment Rate remained steady at 4.9% in the three months to June, against expectations of a decline to 4.8%.
Risk aversion is buoying the US Dollar, as the MoU between the US and Iran draws to an end.
The British Pound (GBP) extends its reversal against the US Dollar (USD) on Tuesday as June’s UK unemployment data fails to convince investors in an already risk-off market, as tensions in the Middle East rise. The GBP/USD trades at 1.3522 at the time of writing, following rejection at the 1.3570 area on Monday.
UK ILO Unemployment remained steady at 4.9% in the three months to June, against expectations of a decline to 4.8%, according to data released by National Statistics on Tuesday. Employment increased by 83K, well below the 147K rise posted in May. On the positive side, unemployment claims declined by 11K, against expectations of a 11.2K rise following a downwardly revised 6.4K decline in the previous month
Wage inflation accelerated, with Average Earnings Excluding Bonus increasing by a 3.5% yearly rate in the three months to June, from 3.4% in the previous months, suggesting that salaries will keep pushing inflationary pressures higher.
Rising geopolitical tensions support the US Dollar
The US Dollar is also drawing some support from risk-off markets, as the Memorandum of Understanding between the US and Iran signed in June ended on Monday, with the peace process stalled and Washington and Tehran ramping up their rhetoric.
US President Donald Trump threatened to bomb Oman, an ally, if it “gets in the way” over the Iran deal, and an Iranian military official said that the country’s armed forces will shift to a “fully offensive” stance.
USD rallies, however, remain limited as the Greenback deals with weaknesses of its own. Strategists at Scotiabank note that “soft US data reports are dampening Fed tightening expectations” while “clear signs of market angst about US fiscal dynamics” are emerging, reflected in “the steepening US yield curve.”
Looking ahead, Scotiabank sees the Greenback biased lower in the near-term: “The retreat in Fed tightening expectations and steeper yield curve are enough to put the USD under pressure in the near-term and drive the DXY back to the 97.5/98.5 range.”
EUR/USD softens to near 1.1575 in Tuesday’s early Asian session.
Trump said he’s not looking to extend the ceasefire deal with Iran.
Traders walked back expectations of near-term Fed monetary tightening.
The EUR/USD pair loses traction to around 1.1575, snapping the three-day winning streak during the early European session on Tuesday. The Euro (EUR) edges lower against the US Dollar (USD) as traders remain cautious about the US-Iran conflict and the closure of the Strait of Hormuz.
Reuters reported on Tuesday that the UK Maritime Trade Operations (UKMTO) said that it has received a report of an incident in the critical waterway. UKMTO said that a company security officer has reported that the vessel was struck by an unknown projectile while conducting an outbound transit of the strait.
On Monday, US President Donald Trump said that he is not interested in renewing the expiring agreement with Iran. Meanwhile, Iran’s Foreign Ministry spokesman Esmail Baghaei stated that a deal has been elusive due to security complexities and the “obstructionist behavior of destructive elements,” adding that the US must remove its blockade.
Ongoing tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for EUR/USD in the near term. However, lower bets for a September Federal Reserve (Fed) rate hike following soft US economic data might weigh on the USD.
Data showed last week that US Retail Sales dropped in July for the first time in nine months, following unexpected job losses last month and tame inflation figures. Traders expect a 35% odds of a rate hike at the Fed’s September meeting, compared to 47% a month earlier, according to the CME FedWatch tool.
Euro support underpinned by Eurozone resilience and narrowing US yield gap
Strategists at Scotiabank highlight that the recent “firming trend in the EUR reflects economic resilience in the Eurozone despite headwinds from energy and drought conditions as well as the narrowing yield spreads between the Eurozone and the US.” They note that this combination of solid underlying activity and a reduced rate disadvantage versus the US is helping to sustain demand for the single currency.
Technical Analysis: EUR/USD keeps a bullish vibe above the key SMA
In the daily chart, EUR/USD holds a modest bullish near-term bias as spot consolidates around the daily opening pivot at 1.1573 while remaining supported by the 100-day simple moving average (SMA) just below. Price also stands above the 20-day Bollinger middle band near 1.1498, reinforcing a constructive tone, while the Relative Strength Index (14) at 62 suggests firm but not extreme upside momentum.
On the topside, initial resistance is located at the 20-day Bollinger upper band around 1.1642, where buying pressure could start to fade. On the downside, immediate support is seen at the 100-day SMA at 1.1570, followed by the Bollinger middle band near 1.1500 and the lower band around 1.1355, which together define a broader demand zone if a deeper pullback unfolds.
Is this the end of the U.S. dollar’s relative strength❓ On Monday, the EUR/USD exchange rate broke through an important technical barrier marked by the 200-day exponential moving average, also briefly breaching the 1.16 zone and reaching levels not seen for almost two months. Maintaining this momentum and closing the intraday candle above this level could seal a reversal of the long-term trend towards a more bullish one. The sell-off in the US currency is continuing despite ongoing tensions in the Middle East. Although the lack of progress in US-Iran negotiations is keeping Brent crude prices around $89 a barrel, the dollar – traditionally regarded as a safe haven and supported by the US’s position as a net exporter of crude – is failing to gain ground. Weak data are causing a reassessment of expectations regarding the Fed
The current weakness of the US currency is primarily due to disappointing macroeconomic data. This has prompted the markets to significantly revise their expectations regarding the Federal Reserve’s (Fed) future moves. Market pricing of the interest rate path has cooled dramatically compared with the situation four weeks ago. According to the latest data, investors are no longer pricing in a rate rise at either the September or October meetings. The probability of a rate rise at the final meeting in December has fallen to around 85 per cent. Source: XTB The key factor tempering the Fed’s ambitions is the state of the economy. The US labour market has entered a ‘low fire-low hire’ phase, as indicated by weaker NFP figures, even though the unemployment rate and weekly jobless claims continue to hover around multi-year lows. A marked slowdown is evident in consumption – Friday’s figures revealed the first fall in retail sales in nine months (-0.6 per cent m/m), which concerned analysts all the more as the negative result persisted even after excluding sales of cars and fuel. Meanwhile, last week’s CPI (in line with expectations) and PPI (lower than forecast) inflation figures allayed market fears of a resurgence of sharp price pressures. Markets currently assess the likelihood of so-called second-round inflationary effects as low, which buys the Federal Open Market Committee (FOMC) time to assess the impact of the energy shock on the economy. Politics casts a shadow over the central bank’s independence The dollar’s depreciation is also accompanied by growing concerns about the Federal Reserve’s own independence. Speculation has intensified following reports of renewed attempts by the former president to dismiss one of the FOMC’s decision-makers, Lisa Cook. Political pressure is causing the bond yield curve to steepen. Yields on short-term bonds are falling in line with dovish expectations, whilst yields on long-term, 30-year bonds remain close to 25-year highs. In the coming days, market attention will focus on Friday’s release of the US PMI figures. However, the key event of the month for the dollar and future interest rate expectations remains the annual symposium in Jackson Hole, scheduled for 27–29 August, during which markets will be looking for the Fed to make a clear statement on the weakening economic outlook.
On Monday, EURUSD broke through an important technical barrier marked by the 200-day exponential moving average, also breaching the 1.16 zone (although some of the upward momentum was subsequently reversed) and reaching levels not seen for almost two months. The RSI remains elevated on a 14-day average, but has yet to breach the textbook 70-point level, which is sometimes regarded by parts of the market as a potential overbought zone. Source: xStation
GBP/USD drifts higher to near 1.3550 in Tuesday’s early Asian session.
Traders expect just a 35% chance of a rate increase at the Fed’s September meeting.
The UK jobs data will take center stage later on Tuesday.
The GBP/USD pair gains momentum to around 1.3550 during the early Asian trading hours on Tuesday. The US Dollar (USD) softens against the British Pound (GBP) as cooler US inflation data have prompted traders to reduce bets on a US Federal Reserve (Fed) rate hike. The UK employment report will be in the spotlight later on Tuesday.
The weak US Retail Sales, along with softer-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) inflation data last week, have tempered expectations that the US central bank will raise rates at its September 15-16 policy meeting. Traders are now pricing in just a 35% probability of a September hike, alongside a 69% odds of a rate increase by December, according to the CME FedWatch tool.
Bank of England (BoE) Chief Economist Huw Pill said last week that stronger-than-expected UK economic growth readings reinforced the case for higher borrowing costs to bring inflation back to target.
Financial markets have priced in at least one interest rate increase by the Bank of England (BoE) this year, according to data compiled by LSEG.
Traders will closely watch the UK jobs and inflation data later this week, which could offer some hints about the BoE interest rate path. The UK Unemployment Rate is projected to fall to 4.8% in June from 4.9% in May. Better-than-expected outcomes could lift the GBP against the USD in the near term.
Uk data barrage keeps Pound traders on edge
Strategists at Scotiabank highlight a cautious tone in the market, noting that “markets are perhaps a little cautious ahead of this week’s barrage of UK data—wages, jobs, CPI, Retail Sales etc..” They suggest that the upcoming releases are encouraging investors to tread carefully around the Pound, even as it trades near recent highs against the USD.
Technical Analysis: The positive outlook of GBP/USD prevails above the 100-day SMA
In the daily chart, GBP/USD maintains a bullish near-term bias as spot holds above both the 100-day simple moving average (SMA) and the Bollinger middle band. The pair is advancing toward the Bollinger upper band, which caps the topside for now, while the Relative Strength Index (14) around 64 stays in positive territory but shy of overbought, hinting that bullish momentum is constructive yet not overstretched.
On the downside, initial demand is seen at the Bollinger middle band at 1.3440, followed by the 100-day SMA at 1.3420 as a deeper but still supportive layer, with the Bollinger lower band near 1.3275 marking a more distant structural floor. On the topside, a clear break above the Bollinger upper band at 1.3605 would open the door for further gains, while failure to overcome this barrier could trigger consolidation or a corrective pullback toward the clustered support zone in the mid-1.34s.
USD/CAD struggles to gain any meaningful traction amid a combination of diverging forces.
Monday’s hotter Canadian inflation figures and rising crude oil prices underpin the Loonie.
Geopolitical risks and inflation jitters lend support to the safe-haven USD and spot prices.
The USD/CAD pair struggles to build on the overnight bounce from the 200-day Simple Moving Average (SMA) support near the 1.3845 region, or the lowest level since June 3, and is seen consolidating during the Asian session on Tuesday. Spot prices currently trade around the 1.3870 zone, unchanged for the day, amid a combination of diverging forces.
Monday’s hotter Canadian consumer inflation figures and rising crude oil prices continue to underpin the commodity-linked Loonie, which, in turn, acts as a headwind for the USD/CAD pair. Meanwhile, inflation risks stemming from higher oil prices, along with the US-Iran standoff, help revive demand for the safe-haven US Dollar (USD). This holds back traders from placing fresh bearish bets on the currency pair and limits the downside.
Statistics Canada reported that Canada’s headline Consumer Price Index (CPI) increased 0.5% in July and the yearly rate rose to 3%, above the 2.9% market forecast and up from 2.8% in June. Adding to this, the Bank of Canada’s (BoC) core CPI measure rose 2.3% YoY, up from 2.1%, while the monthly reading increased 0.2% following a 0.1% rise previously. However, the BoC is likely to keep its key policy rate on hold for the rest of this year.
On the geopolitical front, President Donald Trump repeated his idea of declaring the critical Strait of Hormuz as a US territory and threatened to bomb Oman if it gets in the way. Trump added that the US is not seeking an extension of the Memorandum of Understanding (MoU) with Iran, which expired on Monday, keeping the geopolitical risk premium in play. This, along with inflation risks stemming from higher oil prices, supports the USD.
Investors remain worried that volatile energy prices would rekindle price pressures and force the US Federal Reserve (Fed) to adopt a more hawkish stance. Hence, FOMC Minutes, due for release on Wednesday, will be looked upon for more cues about the Fed’s future policy path, which will drive the USD. Apart from this, the incoming geopolitical headlines and oil price dynamics should provide some impetus to the USD/CAD pair.
USD/CAD daily chart
Technical Analysis
The USD/CAD pair defends the 200-day SMA at 1.3848, which keeps the broader bias modestly bullish. Although downside attempts are being absorbed near the said support, a clean break beneath would be seen as a key trigger for bearish traders and open the door to a deeper correction. However, holding above it would keep the path of least resistance tilted higher in the near term.
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