Divergence and Resistance Confluence Could Trigger a Downside Move

Central Bank

Economic

Summary:

The pair's initial reaction upon testing this area has been to the downside. If bearish candles continue to emerge and hold, it could signal the start of a corrective move lower from this region.

SELL USDCAD

Close Time

CLOSED

1.37916

Entry Price

1.37200

1.38300

1.38147 -0.01422 -1.02%

15.2

Pips

Profit

1.37200

1.37764

Exit Price

1.37916

Entry Price

1.38300

The Bank of Canada (BoC) also joined the global easing trend, cutting its benchmark interest rate by 25 basis points to 2.50% on Wednesday. In its Monetary Policy Statement, the central bank noted that three key developments had shifted the balance of risks since July: further weakening in the labor market, softer underlying inflation pressures, and the removal of most retaliatory tariffs by Canada, which has eased upside risks to domestic inflation.

In the U.S., initial jobless claims fell sharply to 231K in the week ending September 13, beating expectations of 240K and marking a notable decline from the prior week’s upwardly revised 264K. Continuing claims also slipped to 1.920 million from 1.939 million, indicating that the labor market remains relatively resilient despite lingering concerns over slowing economic momentum.

Meanwhile, the Philadelphia Fed Manufacturing Index rebounded impressively in September, soaring to 23.2 from August’s -0.3 and far exceeding the market forecast of 2.3. This robust data suggests stronger-than-anticipated activity in the manufacturing sector, which may help temper fears of a broader slowdown.

Policymakers continue to project headline PCE inflation at 3% and core PCE at 3.1% in 2025, both unchanged from prior forecasts. The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rose 0.39% to 97.39, reflecting a renewed bout of dollar strength.

The Federal Reserve, however, acknowledged growing downside risks to the labor market, noting that while unemployment remains relatively low, it has edged higher. The decision to cut rates was not unanimous, as Governor Stephen Miran dissented in favor of a larger 50 basis-point reduction — a move some analysts had anticipated amid signs of softening data.

During the press conference, Fed Chair Jerome Powell noted that labor demand has “softened” while inflation remains “somewhat elevated.” He stressed that the balance of risks has “shifted” and that monetary policy is well-positioned to adapt if needed, though he cautioned that the labor market is “not strong.”

Powell also downplayed the possibility of a larger cut, stating there was “no broad support for a 50 basis-point cut today,” and reaffirmed that the Fed is not rushing to accelerate its easing cycle.

According to the Summary of Economic Projections (SEP), most officials expect the federal funds rate to end 2025 at 3.6%, GDP growth to slow to 1.6%, and unemployment to rise to 4.5%. Inflation is projected to close the year at 3%, while core PCE is seen holding at 3.1%. Policymakers still anticipate inflation returning to the 2% target by 2028.

U.S. Treasury yields declined following the Fed’s first rate cut since December last year, sparking a rally in risk assets. Investors grew more confident that lower borrowing costs could help support the U.S. economy—particularly its lagging labor market—pushing yields lower across the curve. Divergence and Resistance Confluence Could Trigger a Downside Move_1

Divergence and Resistance Confluence Could Trigger a Downside Move_1

Technical Analysis

USDCAD has bounced from the local support level near 1.3723, which has repeatedly acted as a springboard for bullish momentum. However, the pair has encountered resistance around the closely aligned 100- and 200-period moving averages on the 4-hour chart, currently at 1.3797 and 1.3802 respectively. The close proximity of these moving averages may reinforce their role as a strong resistance zone.

The pair’s initial reaction upon testing this area has been to the downside. If bearish candles continue to emerge and hold, it could signal the start of a corrective move lower from this region.

Meanwhile, the RSI has climbed to 56—still within neutral territory—but it has started to show signs of a mild bearish divergence. In other words, price has advanced more rapidly than RSI, suggesting that bullish momentum may be losing strength as RSI lags behind price action. While this divergence is still in its early stages and could fade if another bullish leg develops, such signals often precede corrections.

If the pair fails to break above the resistance at 1.3809, it could pave the way for the start of a new bearish leg from this area.

Trading Recommendations

Trading direction: Sell

Entry price: 1.3790

Target price: 1.3720

Stop loss: 1.3830

Validity: Sep 30, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

If the pair breaks lower from this formation, it could trigger a deeper pullback toward the 1.1396 area, where local support is likely to emerge.

SELL EURUSD

Close Time

CLOSED

1.17892

Entry Price

1.13960

1.19710

1.16426 -0.00019 -0.02%

37.0

Pips

Profit

1.13960

1.17522

Exit Price

1.17892

Entry Price

1.19710

U.S. initial jobless claims fell sharply to 231K in the week ending September 13, beating expectations of 240K and marking a steep drop from the prior week’s upwardly revised 264K. Continuing claims also eased to 1.920 million from 1.939 million, suggesting that labor market conditions remain resilient despite broader concerns over slowing growth.

At the same time, the Philadelphia Fed Manufacturing Index staged a remarkable rebound in September, jumping to 23.2 from August’s -0.3 and far surpassing market forecasts of 2.3. The data signaled stronger-than-expected activity in the manufacturing sector, potentially tempering fears of an economic slowdown.

Meanwhile, policymakers project headline PCE inflation to remain at 3% in 2025, with core PCE seen ending at 3.1% — unchanged from earlier forecasts. The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major peers, advanced 0.39% to 97.39, reflecting renewed dollar strength.

The Federal Reserve acknowledged mounting downside risks to the U.S. labor market, noting that while unemployment remains relatively low, it has edged slightly higher. The policy decision was not unanimous, as Governor Stephen Miran dissented in favor of a more aggressive 50 basis-point cut — a stance some analysts had anticipated given the recent softening in economic data.

During the press conference, Fed Chair Jerome Powell remarked that labor demand has “softened,” while inflation remains “somewhat elevated.” He emphasized that the balance of risks has “shifted,” underscoring that monetary policy is well-positioned to adapt if needed, though he cautioned that the labor market is “not strong.”

Powell also pushed back against speculation about a larger rate cut, stating there was “no broad support for a 50 basis-point cut today,” and reaffirmed that the Fed is not in a rush to accelerate its easing cycle.

The Fed’s statement reiterated concerns over rising downside risks to employment, while noting that price pressures have firmed and remain “somewhat elevated.” According to the Summary of Economic Projections (SEP), most officials now expect the federal funds rate to end 2025 at 3.6%, GDP growth to slow to 1.6%, and unemployment to climb to 4.5%. Inflation is projected to close the year at 3%, with core PCE holding at 3.1%. Policymakers see inflation gradually returning to the 2% target by 2028.

U.S. Treasury yields fell following the Fed’s first rate cut since December of last year, triggering a rally in risk assets. Markets grew more confident that lower borrowing costs will help support the U.S. economy, especially the lagging labor market, pushing Treasury yields lower across the curve.

Across the Atlantic, the Eurozone’s Harmonized Index of Consumer Prices (HICP) slowed to 0.1% month-on-month and 2% year-on-year in August, missing market expectations of 0.2% and 2.1%, respectively. Core inflation — more closely watched by policymakers — rose 0.3% on the month and 2.3% on the year, unchanged from July.

On Wednesday, the U.S. central bank delivered a widely expected 25 basis-point cut and signaled more easing ahead to support the weakening labor market. The dot plot projected two additional cuts in 2025 and one in 2026, though officials remained divided over the exact path of interest rates.

Meanwhile, political tensions are simmering in France, where the new prime minister is struggling to secure backing from the Socialist Party, while Marine Le Pen of the National Rally maintained a combative tone, calling on President Macron to either dissolve parliament or resign. Bullish Momentum May Be Fading Opening the Door to a Downside Correction_1

Bullish Momentum May Be Fading Opening the Door to a Downside Correction_1

Technical Analysis

EUR/USD has been moving within a rising wedge pattern, a structure that often precedes downside reversals. If the pair breaks lower from this formation, it could trigger a deeper pullback toward the 1.1396 area, where local support is likely to emerge. The 100- and 200-period moving averages on the 12-hour chart are located at 1.1664 and 1.1562, respectively, and have been tracking price action along the lower boundary of the wedge. These levels may serve as the initial downside targets if selling pressure accelerates.

The RSI recently climbed to 72, placing the pair firmly in overbought territory. Traders will be closely watching for signs of a loss in bullish momentum, as these conditions often precede profit-taking and corrective moves lower. Conversely, if EUR/USD manages to break above the wedge and post a fresh local high, it could trigger another leg higher before any potential correction sets in.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1788

Target price: 1.1396

Stop loss: 1.1971

Validity: Sep 26, 2025 15:00:00

Risk Warnings and Disclaimers

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Gerik

Traders' Opinions

Forex

Summary:

On 19/09/2025, GBP/USD is supported by the Bank of England’s decision to hold rates and slow quantitative tightening, paired with increasing expectations that the U.S. Federal Reserve may delay further tightening or start easing....

BUY GBPUSD

Close Time

CLOSED

1.35600

Entry Price

1.36100

1.35000

1.33312 +0.00041 +0.03%

60.0

Pips

Loss

1.35000

1.34998

Exit Price

1.35600

Entry Price

1.36100

Overview

GBP/USD is trading close to 1.3554–1.3560 at the moment. The Bank of England kept its policy rate at 4.0% and signaled a slower pace of QT (quantitative tightening), which reduces pressure on the pound. On the U.S. side, there’s growing market belief that rate cuts may be coming later rather than sooner, and recent U.S. data have shown some signs of softening. This combination gives GBP/USD favorable conditions for upside movement.

Pivot point levels show resistance near 1.3594 and supports around 1.3530‑1.3520.

Market Sentiment

Traders seem to be leaning bullish on GBP/USD in the near term, expecting BoE to maintain its current stance and USD to face downward pressure under softer U.S. economic data. The divergence between BoE (steady / less hawkish) vs expectations of downward bias on USD supports the bullish case. However, some risk remains from UK economic weakness (stagnant GDP, weak industrial production) which could cap gains.

Technical Analysis

GBP/USD eyes upside as BoE holds steady & USD softens: Break above 1.3590 in view_1

Bollinger Bands (20,0,2): On M15, price is pushing above the mid‑band and trying to test the upper band. If GBP/USD breaks above recent resistance (around 1.3590) with a candle closing above the upper band, that would be strong confirmation. The bands are moderately wide, so volatility is present: good for breakout opportunities.

Ichimoku (9,26,52): Price appears to be above the Tenkan‑Sen and Kijun‑Sen in shorter timeframes, indicating bullish momentum. The cloud (Kumo) ahead is slightly bullish or at least not heavily bearish. As long as price stays above Kijun or cloud’s boundary, bullish trend is plausible. A pullback to Tenkan or Kijun that respects them as support could provide a lower risk entry.

Stochastic (5,3,3): Expect Stochastic to come out of oversold or neutral territory and move upward. If it crosses up (fast %K over %D) while price is holding above support, that gives an extra confirmation for a buy. Watch for overbought quickly if price surges; could lead to pullbacks.

Trade Recommendation

Entry: consider BUY GBP/USD if price pulls back to near 1.3560and shows bullish reversal candle (e.g. pin‑bar, engulfing) + Stochastic gives bullish crossover + Ichimoku Tenkan/Kijun hold as support.

Take Profit: initial target near 1.3600‑1.3610. If price breaks above 1.3600 with good momentum, target 1.3680‑1.3787 for extended upside.

Stop Loss: place SL just below support, maybe around 1.3500‐1.3510, to allow buffer for volatility.

Risk Warnings and Disclaimers

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Gerik

Traders' Opinions

Forex

Summary:

The US dollar strength is moderated by upcoming Fed moves, while CAD could recover on any US soft data or oil demand improvements. Key intraday resistance zones are holding; USD/CAD could head down toward support if rejected....

SELL USDCAD

Close Time

CLOSED

1.37921

Entry Price

1.37500

1.38100

1.38147 -0.01422 -1.02%

17.9

Pips

Loss

1.37500

1.38100

Exit Price

1.37921

Entry Price

1.38100

Overview

USD/CAD is trading around 1.3800‑1.3820 as of the latest sessionsThe BoC recently cut its benchmark interest rate by 25 bps to 2.50%, citing softer labor market and easing inflation pressures.

That move tends to put downward pressure on CAD, but it seems markets may have already priced much of it in. On the US side, any signs of slowing data or dovish Fed signals would further weigh on USD. Oil prices (important for CAD) have had mixed signals, so CAD upside is not guaranteed but possible.

Pivot/resistance levels around 1.3850‑1.3880 have acted as caps recently. Support zones are around 1.3730‑1.3750, with next major support around 1.3700 or lower.

Market Sentiment

Sentiment is leaning neutral to slightly bearish for USD/CAD in the near term. Many traders believe the BoC’s rate cut is behind, or nearly behind, which limits further CAD weakness. Meanwhile, expectations of Fed policy are mixed; if Fed appears dovish or US data weakens, USD strength may stall. Forecasts from several sources suggest USD/CAD may decline somewhat in next days/weeks.

Technical resistance is being respected, which indicates sellers are active at higher levels. On the intraday side, consolidation near resistance with limited upside suggests exhaustion.

Technical Analysis

USD/CAD is showing signs of weakening after recent resistance tests_1

USD/CAD has been rejected in the 1.3850‑1.3880 zone (upper resistance), particularly when price approached from below. That region is key if price reaches it again and shows rejection, that could be trigger for a sell.

Near 1.3730‑1.3750 is short‑term support. If price breaks that, next target ~ 1.3700.

Daily pivot/mid‑range pivot is ~ 1.3800. Resistance R1 near ~ 1.3815‑1.3820‑1.3830 depending on the source.

Indicator signals (hypothetical for M15 if applying your indicators setup Bollinger Bands (20,0,2), Ichimoku (9,26,52), Stochastic (5,3,3)):

Bollinger Bands: Price likely near upper band when testing resistance; if it touches or slightly pierces it and fails to hold, look for reversion toward middle band.

Ichimoku: On short timeframe, if price is under or at Tenkan/Kijun lines and fails to break the cloud above (if applicable), that gives bearish signal. A drop below Kijun on M15 strengthens downside bias.

Stochastic: Watch for overbought conditions and a bearish crossing (from above 80 downwards) when price is near resistance.

Trade Recommendation

Entry: Sell USD/CAD around 1.37920

Take Profit: First target near 1.3750, second target around 1.3700 if momentum continues downward and support at 1.3750 breaks.

Stop Loss: Above recent resistance zone, maybe around 1.38100 depending on your risk tolerance. You want buffer above the upper resistance so you're not stopped out by noise.

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

GBPJPY has rebounded sharply from last week’s key support, clearing the 200.75 resistance and opening room for a sustained move higher.

BUY GBPJPY

Close Time

CLOSED

200.177

Entry Price

204.140

197.890

207.100 +0.404 +0.20%

228.7

Pips

Loss

197.890

197.888

Exit Price

200.177

Entry Price

204.140

Fundamentals

The Bank of England left Bank Rate at 4.00% as widely expected, delivering a marginally dovish statement. MPC members Swati Dhingra and Alan Taylor again dissented in favour of an immediate 25 bp cut. The Committee also voted 7-2 to continue the active gilt-sale programme, reducing the stock held for monetary-policy purposes by a further £70 bn over the next 12 months to £488 bn.

Governor Bailey reiterated that a “gradual and cautious” approach remains appropriate and that the path of further easing will be “data-contingent rather than pre-set.” While acknowledging that CPI inflation has moderated, the BoE flagged “material” upside risks to the medium-term outlook. Headline CPI was unchanged at 3.8% in August and is projected to edge higher in September before returning to the 2% target. Pay growth has slowed from its peak and is expected to decelerate further, yet services inflation remains sticky at elevated levels. The MPC warned that any second-round effects from the forthcoming temporary uptick in CPI could re-embed upside pressure on wages and price-setting.

Market read-through: Whether the MPC can deliver another cut this year hinges on the 11 November Autumn Statement. Sticky inflation and a resilient labour market would normally argue for standing pat; however, if fiscal plans are judged to be a material drag on growth expectations, the Committee could pivot quickly. Swaps now price the next 25 bp reduction for February 2026.

BoE Sticks to Dovish Script as Policy Makers Flag Lingering Inflation Risks_1

Technical Analysis

Intraday bias stays cautiously bullish. Consolidation is likely below the 201.26 interim high as long as the 197.93 support cluster holds. A sustained break above 200.32 exposes the 100% projection of the 180.00–199.79 leg.

Conversely, a daily close beneath 197.93—validated by bearish divergence on both the daily and 4-hour MACD—would confirm a reversal and bring the 195.01 structural support into play.

Trade Recommendations

Trade Direction: Buy

Entry Price: 200.20

Target Price: 204.14

Stop Loss: 197.89

Valid Until: October 4, 2025 23:55:00

Support: 199.98/199.48/198.80

Resistance Levels: 201.26/201.60/204.14

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

EUR/JPY steadied near 173.70 in Asian trade Thursday as weak Japanese machinery orders weighed on the yen and ECB officials signaled no rush to cut rates further.

BUY EURJPY

Close Time

CLOSED

174.300

Entry Price

176.000

173.000

180.873 +0.273 +0.15%

22.3

Pips

Profit

173.000

174.523

Exit Price

174.300

Entry Price

176.000

The euro-yen cross steadied in Asian trading on Thursday, hovering near 173.70, as traders weighed a mix of weak Japanese data, dovish signals from the Federal Reserve, and an increasingly steady tone from the European Central Bank (ECB). The pair’s resilience comes after a mild pullback in the previous session, with market participants now assessing whether momentum favors another leg higher.

At the center of the yen’s weakness is Japan’s disappointing Core Machinery Orders data. The Cabinet Office reported that orders fell 4.6% month-over-month in July, a sharper contraction than the market’s expected 1.7% decline. On an annual basis, orders grew 4.9%, missing forecasts for a 5.4% increase. While machinery orders are notoriously volatile, the sharp monthly drop reinforced concerns that business investment is losing steam—casting doubt on the strength of Japan’s fragile recovery.

The softer data has raised the likelihood that the Bank of Japan (BoJ) will leave interest rates unchanged at its upcoming policy meeting on Friday. Policymakers are walking a fine line: on one hand, inflationary pressures remain subdued, giving them room to remain accommodative; on the other, speculation persists that the BoJ could deliver a modest 25-basis-point rate hike in October should the broader economy demonstrate more resilience.

This policy uncertainty is compounded by the latest move from the U.S. Federal Reserve. On Wednesday, the Fed cut interest rates by 25 basis points and signaled that another 50 bps of easing could be delivered before year-end. Such aggressive forward guidance puts the Fed on a dramatically different path from the BoJ, which is still viewed by many as edging toward gradual normalization. Yet, counterintuitively, the Fed’s dovish stance could lend some support to the yen, given its traditional role as a safe haven when U.S. yields retreat. For now, however, the yen continues to trade heavily, with investors reluctant to pile in until the BoJ clarifies its direction.

Meanwhile, the euro is finding its own sources of support. Recent inflation data has bolstered the view that the ECB is done cutting rates for the foreseeable future. Policymakers including Martins Kazaks, Gediminas Simkus, and Vice President Luis de Guindos all emphasized this week that current levels are “appropriate,” suggesting a pause in monetary easing unless inflation dynamics shift meaningfully. ECB President Christine Lagarde is scheduled to speak later Thursday, and traders will parse her remarks for further confirmation of this stance.

Taken together, the divergence between a hesitant BoJ and a steadying ECB creates fertile ground for EUR/JPY upside. From a fundamental standpoint, the euro appears anchored by an improving inflation outlook, while the yen is weighed down by weak domestic data and policy ambiguity. Still, the Fed’s easing trajectory adds a wrinkle: if global yields continue to fall, the yen may eventually attract demand from carry-trade unwinds.

Technical Analysis

From a chart perspective, EUR/JPY has re-established a bullish bias after closing above the 174.00 resistance level in recent sessions. The pair remains comfortably within its broader ascending channel, and momentum indicators suggest room for further gains. The stochastic oscillator is stabilizing in overbought territory, often a sign of sustained positive momentum rather than immediate exhaustion.

As long as the cross holds above 174.00, the path of least resistance appears higher, with immediate resistance around 174.50. A successful break above this zone could pave the way for a move toward 175.00, with the next significant target near 176.00. Conversely, a drop below 173.00 would undermine the bullish setup, potentially exposing the cross to a deeper correction.

TRADE RECOMMENDATION

BUY EURJPY

ENTRY PRICE: 174.30

STOP LOSS: 173.00

TAKE PROFIT: 176.00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Economic

Summary:

New Zealand’s economy contracted 0.9% QoQ, prompting the kiwi to crater as traders price a 50 bp RBNZ reduction at the next OCR review. The outsized shrinkage has turbo-charged bets on an accelerated easing cycle.

BUY EURNZD

Close Time

CLOSED

2.00171

Entry Price

2.03770

1.98900

2.01551 -0.00515 -0.25%

229.8

Pips

Profit

1.98900

2.02469

Exit Price

2.00171

Entry Price

2.03770

Fundamentals

EURNZD, after a powerful Thursday rally, has eased back to re-test the 20 August support zone. Volatility is being driven by a fresh deterioration in domestic data. Q2 GDP slumped 0.9% QoQ, far deeper than the median forecast of –0.3%, confirming the slowdown has morphed into a technical recession—activity has now fallen in three of the past five quarters. The breadth of the decline—ten of sixteen industries contracting—signals mounting headwinds that are likely to force the Reserve Bank of New Zealand (RBNB) into a more aggressive easing trajectory.

Goods-producing industries led the retreat, down 2.3%, with primary industries off 0.7% and services output flat. “The 0.9% contraction is broad-based; manufacturing—down 3.5%—was the largest drag, while construction reversed its Q1 bounce with a 1.8% fall,” said economic growth spokesperson Atwell. Per-capita GDP shrank 1.1%, underscoring the intensity of the downturn.

Market view: The economy did not merely stagnate—it abruptly reversed. The 0.9% drop eclipsed every major forecast, and the per-capita print is even bleaker. The data reinforce that the current monetary stance is insufficient; a 50 bp OCR cut in October is now required, and the RBNZ must demonstrate decisive leadership.

RBNZ Must Deliver Deeper Cut to Counter Economic Reversal_1

Technical Analysis

The kiwi was heavily offered across the board post-release, with EURNZD surging. Technically, the sharp advance has cleared most upside obstacles. Provided the current pullback holds the 20 August support, a fresh leg higher can target the key resistance at 2.0377.