USD 3 - Currency Hedger

Currency Hedger August 18, 2026 No Comments

JPY remains near two-week low against US Dollar despite hawkish BoJ bets

The Japanese Yen holds onto two-week losses near 159.50 against the US Dollar.
The BoJ is highly anticipated to raise interest rates in the September policy meeting.
Investors await FOMC minutes, which will be released on Wednesday.

The Japanese Yen (JPY) trades close to its two-week low against the US Dollar (USD) in the Asian trading session on Tuesday at around 159.50. The USD/JPY pair is under pressure even as financial markets are confident about a Bank of Japan (BoJ) interest rate hike in the September meeting.

Yen outlook steadies as MUFG flags elevated BoJ hike odds

Analysts at MUFG highlight that market expectations for further BoJ tightening remain robust, with “the pricing for a 25bp hike at the next meeting in September remains elevated, implying around an 80% probability of a hike.” They argue that this firm rate-hike pricing, set against the backdrop of softer US data, should help limit renewed Yen selling in the near term despite Japan’s weaker-than-expected GDP.

In the latest BoJ Summary of Opinions (SoP), several board members favored further monetary tightening in the near term after leaving interest rates unchanged at 1%. One board member said that the central bank should increase the monetary tightening pace, citing upside inflation risks.

Meanwhile, Japan’s preliminary Q2 Gross Domestic Product (GDP) data has come in weaker-than-expected, an event that could act as headwind for firm BoJ hawkish bets.

Japan growth disappoints as net exports and government spending prop up GDP

Brown Brothers Harriman’s Elias Haddad notes that Japan’s Q2 performance was weaker than expected, with “real GDP rose 0.3% q/q (consensus: 0.5%) vs. 0.5% in Q1” and growth largely reliant on external and public sector support. He points out that the expansion was “driven by net exports (+0.5ppt), government consumption (+0.3ppt), and private inventories (+0.3ppt),” underscoring how net exports and fiscal spending are offsetting softer underlying domestic demand.

On the US Dollar front, the currency is expected to trade sideways as Federal Open Market Committee (FOMC) minutes of the July policy meeting takes the centre stage, which will be released on Wednesday.

In the policy meeting, the Fed left interest rates unchanged in the range of 3.50%-3.75%, as expected and didn’t deliver any forward-guidance on policy rates.

Investors will pay attention to FOMC minutes to get fresh cues regarding inflation and the economic outlook.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 159.51, holding below a dense Fibonacci retracement cluster that keeps the pair capped in the near term. Price sits under the 50.0% retracement at 159.64 and the 61.8% level at 160.67, suggesting topside attempts are vulnerable while these barriers remain intact.

The Relative Strength Index (14) at 44.70 is below the midline, hinting at waning bullish momentum and reinforcing a cautious, mildly bearish bias as the market consolidates after the recent pullback.

On the topside, immediate resistance is located at the 50.0% Fibonacci retracement at 159.64, followed by the 61.8% level at 160.67. Above there, the 78.6% retracement at 162.14 and the cycle high area marked by the 100.0% level at 164.01 define the next barriers. On the downside, initial support emerges at the 38.2% retracement at 158.61 ahead of the 23.6% level at 157.33, with deeper structural support anchored much lower by the extended Fibonacci projection near -46.01, which serves more as a distant reference than a practical downside target.

Currency Hedger August 18, 2026 No Comments

Trade of The Day – USD/CAD

Facts

USDCAD pulled back after Canada’s July CPI inflation data.
Gasoline prices in Canada rose by 25.7% year over year, compared with 20.5% in June.
CPI inflation increased by 3.0% versus a 2.9% forecast and 2.8% previously, while the monthly rate came in at 0.5% versus a 0.4% consensus.
The unemployment rate stood at 6.4%, while employment increased by 75.1 thousand.
Prices of travel tours rose by 15.2% year over year, while airfares increased by 12% year over year.
The preliminary GDP estimate points to annualized growth of 3.4% in Q2.

Recommendation Short position on USDCAD at the market price

Take Profit: 1.3582
Stop Loss: 1.3938

Opinion Against the backdrop of recent macroeconomic data, the balance of risks for USDCAD may gradually be shifting to the downside. U.S. CPI inflation came in line with expectations and the latest PPI report showed weaker price pressures, while Canada’s July CPI accelerated to 3.0% year over year and exceeded the consensus. Importantly, core inflation measures also came in above forecasts, which may limit the Bank of Canada’s room to pursue a more accommodative monetary policy. The pressure was not limited to fuel prices. CPI Core Trim rose to 1.9%, Core Median to 2.0%, and inflation excluding food and energy to 1.9% year over year. All three measures came in above consensus. At the same time, U.S. data did not provide a comparable inflationary impulse: CPI was in line with expectations, while PPI weakened.

This divergence may support the CAD if it begins to translate into relatively more hawkish expectations for the Bank of Canada compared with the Fed. The Canadian economy is also not currently sending unambiguous signals that would require rapid monetary easing: employment rose by 75.1 thousand, while the preliminary estimate points to annualized GDP growth of 3.4% in Q2. The market is pricing in the first possible BoC rate hike only in January, so a further series of stronger inflation readings could leave room for a shift in interest-rate expectations and additional support for the CAD. From a USDCAD perspective, this creates an argument for a possible further pullback, as the relative inflation path is beginning to look more favorable for the Canadian dollar. The key point is not the 3.0% CPI reading itself, as part of the increase came from fuel, transport and World Cup-related factors, but rather the fact that several core measures also exceeded expectations.

The Canadian dollar remains sensitive to oil prices, global risk sentiment and the condition of the U.S. economy, while a single CPI report does not determine a change in BoC policy. However, if subsequent data confirm more persistent inflation in Canada alongside further easing of price pressures in the U.S., relative expectations for the BoC and the Fed could increasingly favor the CAD, raising the risk of a further decline in USDCAD. Canada’s annual consumer inflation rate accelerated to 3.0% in July, exceeding market expectations of 2.9%. The renewed increase, following the slowdown to 2.8% in June, was driven primarily by sharp increases in fuel prices as well as higher travel and transport costs, supported by stronger activity around the football World Cup. Although inflation remains elevated, this does not automatically imply a return to hawkish expectations for rate hikes, so we recommend taking a short position in the pair with a relatively tight stop-loss level defined by the 200-period exponential moving average, EMA200, shown by the red line, and recent price reactions around 1.393, with a target level at 1.3582.

USDCAD chart (D1 interval)

Source: xStation5 Supporting graphics

Source: XTB Research

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

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.