USD/CAD Drops as Trump Threatens Trade Action, Powell in Crosshairs

Economic

Summary:

The U.S. Dollar extended its decline against the Canadian Dollar for a third straight session Tuesday, slipping toward 10-day lows near 1.3670. Tariff concerns,

SELL USDCAD

Close Time

CLOSED

1.36800

Entry Price

1.35600

1.37800

1.38206 +0.00059 +0.04%

100.0

Pips

Loss

1.35600

1.37800

Exit Price

1.36800

Entry Price

1.37800

The U.S. Dollar continued its downward drift against the Canadian Dollar on Tuesday, with the pair slipping toward 10-day lows near the 1.3670 mark as the Greenback endured its third consecutive session of declines. The selling pressure on the Dollar comes amid broad-based weakness fueled by intensifying concerns over trade policy, as markets brace for potentially disruptive tariff actions by the U.S. administration.

The move comes at a time when investor confidence in the U.S. outlook is being tested from multiple fronts — politically, economically, and technically. With just days remaining before the self-imposed August 1 trade deadline, President Donald Trump has yet to announce meaningful breakthroughs in trade negotiations with major partners, including the European Union and Japan. The absence of progress is weighing heavily on risk sentiment and casting doubt on the resilience of the American economy, should tariffs be enacted unilaterally.

Tuesday’s decline in the Dollar has less to do with hard data — the U.S. economic calendar is light — and more to do with the growing discomfort around the White House’s unpredictable trade policy. Investors are pricing in the increasing possibility that Trump may follow through with a new round of tariffs if his demands for concessions from key trading partners go unmet. Market sentiment has turned risk-averse, with equities showing signs of hesitation and Treasury yields holding near recent lows.

While trade-related headwinds are nothing new for the market, what’s becoming more damaging is the convergence of those concerns with an erosion in confidence surrounding the U.S. Federal Reserve. At the center of the latest political storm is Fed Chair Jerome Powell, who is scheduled to speak later in the day at an economic event in Washington. Though Powell is unlikely to discuss monetary policy directly due to the central bank’s blackout period ahead of its upcoming rate decision, the market will be watching closely for any indirect message on the Fed’s independence — especially amid continued pressure from the Trump administration.

Rumors of Powell’s possible dismissal — once dismissed as improbable — flared up again last week after President Trump publicly called for his resignation and questioned the legitimacy of the Fed’s renovation budget, even hinting at fraud. Although White House sources have since downplayed the likelihood of firing the Fed Chair, the narrative has left a mark on investor psychology.

The broader concern isn’t just about Powell himself, but the precedent such actions would set. A politically compromised central bank would severely undercut the Dollar’s role as the global reserve currency and could lead to repricing of risk assets across the board. While markets are not pricing in a Fed shake-up just yet, the credibility overhang is real — and it is now quietly contributing to Dollar weakness.

Against this backdrop, the Canadian Dollar has capitalized on the Dollar’s vulnerability, but its own upside potential appears constrained by softening crude oil prices. Canada’s economy is deeply tied to energy exports, and WTI crude is currently hovering near 1.5-month lows, weighed down by mounting concerns over global demand. With trade tensions threatening to restrict economic activity worldwide, oil’s recovery remains uncertain, and by extension, the Loonie’s recent strength may prove fragile.

Nevertheless, for now, USD/CAD is responding more to Dollar-specific flows than Canadian fundamentals. Unless oil prices stage a deeper correction, the Loonie could continue to attract interest from investors seeking alternatives to the Greenback during periods of geopolitical strain.

Technical Analysis

Technically, the USD/CAD pair remains under notable pressure. Price action has decisively broken below a key bullish correctional trendline on the short-term chart, signaling a potential trend shift. The Relative Strength Index has entered oversold territory, which has prompted a modest intraday bounce. However, this appears to be more of a technical correction than a change in direction.

We are eyeing the 1.3560 level as the next significant downside target, particularly if Dollar weakness accelerates. The pair’s inability to reclaim resistance around 1.3730 reinforces the view that momentum has shifted in favor of the bears, and any short-term rallies could be seen as opportunities to reload shorts rather than a true reversal.

As long as USD/CAD remains below the 50-day moving average and continues to generate lower highs on the hourly and daily charts, the path of least resistance remains to the downside. A clean break below 1.3670 would likely confirm the pair’s bearish trajectory, opening the door for further losses.

TRADE RECOMMENDATION

SELL USDCAD

ENTRY PRICE: 1.3680

STOP LOSS: 1.3780

TAKE PROFIT: 1.3560

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Eva Chen

Economic

Commodity

Summary:

Since the beginning of the week, there has been a notable increase in gold trading activity, with prices decisively breaking through the narrow trading range that had been in place since early July. Various uncertainties have prompted investors to shift towards defensive assets, leading to a rise in gold prices.

SELL XAUUSD

Close Time

CLOSED

3400.09

Entry Price

3296.00

3430.00

4204.51 +6.60 +0.16%

299.1

Pips

Loss

3296.00

3430.12

Exit Price

3400.09

Entry Price

3430.00

Fundamentals

Despite a slight pullback on Tuesday, gold prices have largely maintained their position near a one-month high. Concerns regarding potential new U.S. tariffs on the EU, effective August 1st, triggered risk-averse sentiment, bolstering gold's upward trajectory on Monday. The ongoing uncertainty surrounding U.S.-EU trade negotiations continues to underpin demand for the precious metal.

Geopolitically, the EU's reduction of the price cap on Russian crude oil exports has amplified market anxieties regarding potential disruptions to global energy supplies and inflationary pressures. Furthermore, the domestic political landscape in Japan has intensified market unease. Declining political support for Prime Minister Shigeru Ishiba complicates the outlook for U.S.-Japan trade negotiations, further fueling safe-haven demand.

In summary, trade disputes, political instability, and inflation expectations are collectively driving capital inflows into the gold market, suggesting continued upside potential in the short term.

Triangle Consolidation Is Nearing Completion, with the Bulls Poised for an Upward Breakout_1

Technical Analysis

Following a failed attempt to decisively breach the US$3,400 level last week, gold prices initiated an upward movement this Monday. Despite the absence of consecutive gains since April, the price has consistently found support at the rising moving averages. Robust buying activity during multiple pullbacks has effectively countered the bearish momentum, indicating a stable bullish structure.

Currently, the price is approaching the apex of a large symmetrical triangle consolidation pattern. As the pattern nears completion, the market is anticipated to make a more definitive directional move. However, further consolidation may occur before a breakout. The initial test of the US$3,400 level at the beginning of the week was likely driven by institutional activity, and its sustainability remains uncertain.

The key support level is situated at the 5-day SMA of US$3,365. A breach of this level would weaken short-term upward momentum, potentially leading to a retest of the lower boundary of the triangle, approximately US$3,326 (near the 50-day SMA). A further breakdown could target the demand zone at US$3,296.

Trading Recommendations

Trading Direction: Sell

Entry Price: 3396

Target Price: 3296

Stop Loss: 3430

Valid Until: August 6, 2025 23:55:00

Support: 3383, 3365, 3338

Resistance: 3393, 3400, 3406

Risk Warnings and Disclaimers

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Tank

Forex

Economic

Summary:

The uncertainty surrounding trade policies, concerns over the Federal Reserve's independence, and dovish monetary policy signals continue to exert downward pressure on the US dollar. Today's focus is on Federal Reserve Chair Powell's speech, which, amidst ongoing tariff negotiations and political pressures, may offer crucial guidance on the central bank's policy trajectory.

BUY EURUSD

EXP

EXPIRED

1.16500

Entry Price

1.17100

1.16000

1.16526 +0.00100 +0.09%

Pips

EXPIRED

1.16000

1.17523

Exit Price

1.16500

Entry Price

1.17100

Fundamentals

As the threat of a 30% tariff on EU imports intensifies, the EU appears poised to deploy its "counter-coercion measures" - a so-called "nuclear option" aimed at deterring trade disputes. Ahead of Thursday's European Central Bank (ECB) meeting and potential U.S. tariff implementations, the euro is expected to remain stable. This week is critical for the euro, as markets brace for possible policy pauses by the ECB and the trade risks posed by imminent U.S. tariffs. Due to export uncertainties, weak domestic data, and cautious signals from central banks, the euro continues to fluctuate within a narrow range.

Trade policy uncertainties, concerns over the Federal Reserve's independence, and dovish monetary policy signals continue to weigh on the U.S. dollar. Today's focus is on Federal Reserve Chair Powell's speech, which, amid ongoing tariff negotiations and political pressures, could provide vital guidance on the central bank's policy trajectory. In the short term, the dollar appears temporarily oversold and may experience a slight rebound, especially if the Fed adopts a more hawkish tone or U.S. economic data unexpectedly improve. However, broad policy and trade uncertainties, along with risks surrounding the Fed leadership, warrant a cautious outlook. Overall, the EURUSD is likely to maintain a sideways upward trend.

Technical Analysis

The EURUSD has successfully broken through the consolidation zone in the 15-minute timeframe, accompanied by a bullish MACD crossover and increasing bullish momentum bars. The RSI remains in the mid-range, and the formation of a large bullish candlestick indicates strong short-term upward momentum. There is a high probability of further upward movement toward the previous resistance level at 1.171. In the 1M timeframe, the price has broken above the descending trendline, with the MACD histogram bars gradually diminishing, and no new lows being formed, signaling a bullish divergence. Both short-term and medium-term trends are upward, suggesting a strategy of going long at the lows.

Will the EU Retaliate? How Should We Navigate the Coexistence of Risks and Opportunities?_1

Will the EU Retaliate? How Should We Navigate the Coexistence of Risks and Opportunities?_2

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.165

Target Price: 1.171

Stop Loss: 1.16

Support: 1.166, 1.164, 1.16

Resistance: 1.171, 1.184, 1.2

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

Both the IEA and OPEC have downgraded their forecasts for oil demand growth this year. Meanwhile, OPEC plans to increase production again in August, which may lead to a continued decline in oil prices.

SELL WTI

Close Time

CLOSED

65.118

Entry Price

60.700

66.500

59.325 -0.484 -0.81%

138.2

Pips

Loss

60.700

66.531

Exit Price

65.118

Entry Price

66.500

Fundamentals

Currently, the global crude oil demand outlook remains under pressure due to the "cautiously optimistic" expectations. Both the International Energy Agency (IEA) and OPEC have downgraded their forecasts for oil demand growth this year. The IEA expects demand to grow by only 700,000 b/d in 2025, the lowest increase since 2009. However, imports in the Asia-Pacific region, especially in China and India, were strong in the first half of the year, with a YoY increase of 510,000 b/d, indicating that the impetus for inventory replenishment and consumption remains considerable in a low-oil-price environment.

In the US, the EIA data last week showed an unexpected and significant drawdown of 3.859 million barrels in crude oil inventories, far exceeding the market expectation of 552,000 barrels, which proves the strong demand for gasoline during the summer driving season. However, the OPEC+ meeting decided to increase production by 548,000 b/d in August, exceeding previous expectations, which intensified the supply pressure and had a slightly bearish impact on oil prices.

Coupled with geopolitical factors, although the US has maintained the intensity of sanctions against Iran recently, there has been no escalation. The easing of geopolitical factors has weakened the support for crude oil prices.

Technical Analysis

From the 4-hour chart, WTI crude oil has been continuously constrained by the MA144 recently. As the high points of the K-line gradually decline, the possibility of a short-term downward trend is gradually accumulating. At the same time, the MA10 has crossed below the MA20, showing a death-cross trend, indicating that short-term bears are in the dominant position.

Meanwhile, the moving average system is in a bearish arrangement, further increasing the possibility that the short-term trend will remain downward.

It is recommended that traders mainly adopt a strategy of shorting at high prices.

Trading Recommendations

Trading Direction: Sell

Entry Price: 65.20

Target Price: 60.70

Stop Loss: 66.50

Valid Until: August 5, 2025, 23:00:00

Support: 64.43/63.70

Resistance: 65.94/67.47

Risk Warnings and Disclaimers

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Tank

Forex

Economic

Summary:

The British pound remains under pressure due to uncertainty surrounding the Bank of England's monetary policy. Recent UK macroeconomic data, including weak GDP growth and slowing inflation, has led investors to reassess expectations for further interest rate hikes. Yesterday, market concerns over the economic impact of dovish remarks from the Fed were raised. Coupled with escalating trade tensions, the British pound saw a slight rebound. Reports suggest that President Trump may impose tariffs of 15% to 20% on EU goods, with an August 1 deadline. However, strong economic data will likely continue to support the US Dollar Index, meaning the GBP/USD pair may remain in a volatile downtrend. Key focus this week will be on UK PMI data, as well as the highly anticipated US Q2 GDP and PCE preliminary readings.

SELL GBPUSD

Close Time

CLOSED

1.35500

Entry Price

1.33700

1.35800

1.33274 -0.00038 -0.03%

18.8

Pips

Loss

1.33700

1.35688

Exit Price

1.35500

Entry Price

1.35800

Fundamentals

Technical Analysis

Based on the 15-minute chart, the pound has been oscillating since its intraday high yesterday, trading between the middle and lower Bollinger Bands. The MACD line and the signal line just crossed below the 0-axis, indicating a short-term bearish bias. Support levels are at the 200 EMA and key psychological levels of 1.345 and 1.34. Regarding the daily chart, while prices have rebounded after breaking below the uptrend line, this rebound appears to be confirming whether the breakdown was valid. Additionally, the daily MACD shows a death cross, and the RSI is at a neutral 58, all revealing that this level is merely a consolidation with a bearish trend. Thus, caution is advised-yesterday's rebound could be a bull trap. Selling at highs is preferred.

Beware of Scams: The Pound's Rebound Hides a Major Trap_1

Trading Recommendations

Trading direction: Sell

Entry price: 1.355

Target price: 1.337

Stop loss: 1.358

Support: 1.345/1.34/1.337

Resistance: 1.351/1.355/1.356

Risk Warnings and Disclaimers

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Manuel

Economic

Forex

Summary:

The fact that both moving averages converge at this level increases the likelihood of a bullish rebound.

BUY USDCAD

Close Time

CLOSED

1.36833

Entry Price

1.38300

1.36400

1.38206 +0.00059 +0.04%

43.3

Pips

Loss

1.36400

Exit Price

1.36833

Entry Price

1.38300

U.S. President Donald Trump recently reignited trade tensions by threatening to impose a 35% tariff on Canadian imports. In a strategic move to defuse the situation, Canadian Prime Minister Mark Carney dispatched a trade envoy to Washington for last-minute negotiations before the looming August 1st deadline on tariffs targeting steel and aluminum. This diplomatic outreach has injected a dose of optimism into the markets, raising hopes that these critical industrial inputs may still escape the looming tax burden.

Meanwhile, U.S. Commerce Secretary Howard Lutnick added fuel to the fire by criticizing the notion of free trade between the two nations, calling it “foolish.” He pointed out that a substantial volume of Canadian goods enters the U.S. duty-free under the current North American Free Trade Agreement, challenging its fairness and sustainability.

At the same time, political scrutiny surrounding the Federal Reserve intensified after U.S. Treasury Secretary Scott Bessent delivered a scathing critique of the institution. Calling for a full-scale reassessment of the Fed’s operations and questioning its effectiveness, Bessent's remarks have stirred concerns about political interference and the potential erosion of the Fed’s independence. His claims that the central bank is “fearmongering with tariffs” and overstating inflation risks further cast doubt on the Fed’s current policy stance. Bessent maintained that inflation remains under control, undermining the rationale behind recent monetary tightening efforts.

The pressure escalated dramatically when Representative Anna Paulina Luna (R-Fla.) referred Fed Chair Jerome Powell to the Department of Justice, alleging he committed perjury during his testimony related to the $2.5 billion renovation of the Fed's headquarters. Although legal consequences are still uncertain, the move has intensified investor unease, injecting a new layer of political risk into an already fragile market environment.

This political storm comes at a particularly delicate moment, as markets remain on edge over conflicting signals from Fed officials regarding a potential rate cut in July. There is growing uncertainty over the Fed’s ability to maintain autonomy as political narratives increasingly shape monetary expectations.

Adding to the complexity, Fed Governor Christopher Waller stated late Thursday that while the overall labor market remains solid, private sector employment is showing signs of weakness. Waller argued in favor of cutting the interest rate target at the Fed's July meeting, citing growing economic risks. Market participants now anticipate rate cuts beginning in September, with at least two more reductions expected later this year. Bullish Potential Builds Amid Divergence and Political Uncertainty_1

Bullish Potential Builds Amid Divergence and Political Uncertainty_1

Technical Analysis

The USDCAD pair has pulled back to retest the closely aligned 100- and 200-period moving averages, currently situated around 1.3680. These levels represent the average price over the past 100 and 200 candles, respectively, and often serve as dynamic areas of support or resistance. The fact that both moving averages converge at this level increases the likelihood of a bullish rebound.

Adding weight to the bullish argument, the RSI has fallen sharply—much more aggressively than price action itself—reaching a reading of 36 and approaching oversold territory. This divergence suggests that bearish momentum has faded quickly, setting the stage for a potential upside reversal. A confirmed close above the descending trendline could open the door for a push toward the 1.3834 level.

Additionally, the 1.3675 price zone has historically acted as a strong support level, often marking the beginning of upward movements. If price holds above this threshold once again, it could be interpreted as a bullish signal. However, a decisive break below this level may invalidate the upside scenario and pave the way for a deeper drop toward 1.3620.

Trading Recommendations

Trading direction: Buy

Entry price: 1.3682

Target price: 1.3830

Stop loss: 1.3640

Validity: Jul 31, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

If the pair reacts lower from this zone once again, a meaningful correction could take shape.

SELL EURUSD

Close Time

CLOSED

1.16938

Entry Price

1.16140

1.17350

1.16526 +0.00100 +0.09%

41.2

Pips

Loss

1.16140

1.17356

Exit Price

1.16938

Entry Price

1.17350

U.S. Treasury Secretary Scott Bessent issued a sharp rebuke of the Federal Reserve, calling for a comprehensive reassessment of the institution and questioning its overall effectiveness. “It’s time to examine the entire organization and whether it’s actually been successful,” Bessent stated, fueling mounting concerns over potential political interference and its implications for the Fed’s credibility. His remarks have only deepened market anxiety about the central bank’s independence and its future policy direction.

Bessent didn’t stop there. He dismissed the Fed’s inflation warnings as exaggerated, arguing that the central bank is “fearmongering with tariffs,” and emphasized that inflation remains well-contained. These statements challenge the Fed’s current policy narrative and add to a growing sense of discord among policymakers.

The situation escalated further when Representative Anna Paulina Luna (R-Fla.) officially referred Fed Chair Jerome Powell to the Department of Justice for alleged criminal conduct. She accused Powell of lying under oath during two specific instances related to his congressional testimony on the $2.5 billion renovation of the Federal Reserve headquarters. While the legal consequences remain unclear, the political pressure is clearly rattling investors, injecting fresh uncertainty into an already fragile market outlook.

The timing of this political turmoil is especially critical, as markets continue to grapple with mixed signals from Fed officials regarding a possible interest rate cut in July. Questions also linger about the central bank’s ability to operate independently amid a charged political environment.

Meanwhile, trade tensions between the United States and the European Union have resurfaced, adding another layer of volatility. A Friday report from the Financial Times revealed that former President Donald Trump is pushing to raise tariffs on EU imports from the current 10% to between 15% and 20%. Furthermore, he has floated the possibility of imposing a 30% tariff on European cars and pharmaceuticals if no trade agreement is reached by August 1.

This aggressive stance follows a warning issued by the Trump administration on July 12, which outlined plans for steep tariffs should the ongoing negotiations fail to yield results before the deadline. U.S. Commerce Secretary Howard Lutnick confirmed that August 1 remains a firm deadline for deals with the EU and other key economies. Speaking on CBS’s Face the Nation, Lutnick emphasized, “Nothing stops countries from talking to us after August 1, but they’ll start paying.” He clarified that while talks could continue beyond that date, tariffs would be enforced unless concrete agreements are finalized on time. Overbought Signals and Political Turmoil Weigh on EURUSD_1

Overbought Signals and Political Turmoil Weigh on EURUSD_1

Technical Analysis

The EURUSD pair has maintained bullish momentum, recently reaching 1.1715—a level that has acted as resistance on two prior occasions. If the pair reacts lower from this zone once again, a meaningful correction could take shape. Adding to the bearish potential is the 200-period moving average, which aligns with the same level where the last correction began, reinforcing the case for a possible pullback. On the 2-hour chart, the 100-period moving average is currently positioned at 1.1656, a zone that may serve as intermediate support.

The Relative Strength Index (RSI) has surged to 73, placing the pair well into overbought territory. This suggests that bearish traders could begin to step in once signs of weakening bullish momentum emerge. If selling pressure intensifies, EURUSD may revisit the 1.1614 support area, which stands as the next significant downside target. Conversely, a clean breakout above the 1.1715 resistance could trigger another bullish leg, potentially propelling the pair toward the 1.1800 region.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1693

Target price: 1.1614

Stop loss: 1.1735

Validity: Jul 31, 2025 15:00:00

Risk Warnings and Disclaimers

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