Elevated Core Inflation Suggests the Bank of Canada Is Unlikely to Initiate a Rate Cut Cycle

Forex

Central Bank

Summary:

The USDCAD advanced beyond 1.3830 as weaker inflation data weighed on the Canadian dollar. The Bank of Canada is unlikely to react solely on the July figures, citing persistent service inflation and tariff pass-through risks.

SELL USDCAD

Close Time

CLOSED

1.38946

Entry Price

1.34740

1.40600

1.37700 0.00000 0.00%

53.0

Pips

Profit

1.34740

1.38416

Exit Price

1.38946

Entry Price

1.40600

Fundamentals

In July, Canada's overall CPI year-over-year increase decelerated to 1.7%, down from 1.9% and below expectations. This decline was primarily driven by a significant 16.1% year-over-year decrease in gasoline prices, a larger drop than the 13.4% decrease observed in June. Excluding gasoline, the CPI year-over-year increase remained stable at 2.5%, consistent with the previous two months. On a month-over-month basis, the CPI rose by 0.3%, in line with forecasts.

Key indicators presented a mixed picture. The CPI median increased by 3.1% year-over-year, meeting expectations, while the CPI trimmed remained at 3.0% year-over-year. The CPI average rose by 2.6% year-over-year, slightly below the anticipated 2.7%. Overall, the data suggest that inflation has not accelerated, but underlying pressures persist.

The data reinforces the view that while headline inflation is cooling, core inflation remains elevated, suggesting the Bank of Canada is not yet in a position to consider interest rate cuts. Headline inflation eased to 1.7% in July, primarily due to lower energy prices, reflecting the removal of the Canadian consumer carbon tax. However, this trend was offset by increases in food, shelter, and durable goods prices. The rise in durable goods may be linked to tariffs.

Both headline and core inflation, which currently exceeds 3%, are expected to trend higher in the near term as the costs associated with U.S.-Canada tariff disputes are gradually passed on to retail prices. We anticipate the Bank of Canada will hold the policy interest rate steady at 2.75% on September 17.

Elevated Core Inflation Suggests the Bank of Canada Is Unlikely to Initiate a Rate Cut Cycle_1

Technical Analysis

Following a "bottoming" pattern at 1.3535, the USDCAD has further consolidated its upward momentum, surpassing both the multi-month trendline and the 50-day SMA. With the MACD indicator returning to positive territory and immediate support at 1.3700, the asset is poised to test higher levels at 1.3910.

A sustained break of 1.3910 would target the cluster resistance at 1.4014 (38.2% Fibonacci retracement of the 1.4791-1.3538 range, located at 1.4017). If this resistance reasserts selling pressure, a corrective rebound is anticipated, resuming the downward trend.

On the downside, a break below the minor support at 1.3830 would initially shift the intraday bias to neutral.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3910

Target Price: 1.3474

Stop Loss: 1.4060

Valid Until: September 5, 2025 23:55:00

Support: 1.3830, 1.3798, 1.3722

Resistance: 1.3910, 1.3947, 1.4017

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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Gerik

Economic

Forex

Summary:

As of August 21, 2025, CAD/CHF is trading around 0.5800, approaching a critical support level at 0.5785. A failure to break below this level could lead to a rebound toward 0.5830, while a break below may signal a continuation of the bearish trend....

SELL CADCHF

Close Time

CLOSED

0.58100

Entry Price

0.57350

0.58300

0.57782 +0.00029 +0.05%

3.5

Pips

Loss

0.57350

0.58135

Exit Price

0.58100

Entry Price

0.58300

Overview

CAD/CHF has been under pressure, with the pair closing below the 0.6020 resistance level, activating negative momentum. The price is now testing the support at 0.5785, and a break below this level could lead to further declines toward 0.5735 and 0.5655.

Market Sentiment

The market sentiment remains bearish, with CAD/CHF trading below its 50-day, 100-day, and 200-day moving averages, indicating a negative setup in the near, medium, and long-term.

Technical Analysis

CAD/CHF tests support at 0.5785—bearish continuation likely if trendline holds_1

On the chart, CAD/CHF is trading within a bearish channel, with the price approaching the lower boundary. The Relative Strength Index (RSI) is showing negative momentum, supporting the bearish outlook.

Trade Recommendation

Entry: 0.58100

TP: 0.5735

SL: 0.5830

Risk Warnings and Disclaimers

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Gerik

Economic

Forex

Summary:

As of August 21, 2025, EUR/USD is trading around 1.1620, approaching a critical support level at 1.1600. A rebound from this level could signal a bullish reversal, while a break below may lead to further declines...

BUY EURUSD

Close Time

CLOSED

1.16050

Entry Price

1.16500

1.15800

1.17394 +0.00011 +0.01%

45.0

Pips

Profit

1.15800

1.16502

Exit Price

1.16050

Entry Price

1.16500

Overview

EUR/USD is currently trading at 1.1620, experiencing a slight decline of 0.27% from the previous day. The pair has been consolidating within a range between 1.1600 and 1.1730. The recent dip brings the pair closer to the lower end of this range, testing the 1.1600 support level.

Market Sentiment

Investor sentiment is cautious ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium. The outcome of this speech could influence the US dollar's strength and, consequently, the EUR/USD pair.

Technical Analysis

EUR/USD tests key support at 1.1620—bullish reversal possible if trendline holds_1

On the 15-minute chart, EUR/USD is testing the 1.1620 support level. A break below 1.1600 could lead to further declines, while a rebound from this level may indicate a bullish reversal. Key resistance levels to watch are at 1.1650 and 1.1680.

Trade Recommendation

Entry: 1.16050

TP: 1.1650

SL: 1.1580

Risk Warnings and Disclaimers

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Gerik

Commodity

Economic

Summary:

As of August 21, 2025, silver (XAG/USD) is trading around $38.00, encountering resistance at a descending trendline. A failure to break above this level could lead to a decline toward $37.00, with further support at $36.65....

SELL XAGUSD

Close Time

CLOSED

38.000

Entry Price

37.500

38.200

61.927 -1.614 -2.54%

20.0

Pips

Loss

37.500

38.210

Exit Price

38.000

Entry Price

38.200

Overview

Silver prices have been consolidating within a symmetrical triangle pattern, with support around $37.50 and resistance near $38.20. The recent rebound from the $37.50 level indicates buying interest; however, the inability to surpass the $38.00 resistance suggests a potential bearish reversal.

Market Sentiment

Investor sentiment remains cautious ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium. The outcome of this speech could influence the US dollar's strength and, consequently, silver prices.

Technical Analysis

Silver stalls at $38.00—bearish reversal likely if trendline resistance holds_1

On the chart, silver is testing the $38.00 trendline resistance. A failure to break above this level could lead to a decline toward the $37.00 support zone, with further downside potential to $36.65.

Trade Recommendation

Entry: 38

TP: 37.5

SL: 38.2

Risk Warnings and Disclaimers

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Gerik

Economic

Forex

Summary:

As of August 21, 2025, AUD/USD is trading around 0.6420, approaching a critical support level at 0.6415. A rebound from this level could signal a bullish reversal, while a break below may lead to further declines...

BUY AUDUSD

Close Time

CLOSED

0.64201

Entry Price

0.64500

0.64000

0.66520 -0.00118 -0.18%

29.9

Pips

Profit

0.64000

0.64513

Exit Price

0.64201

Entry Price

0.64500

Overview

AUD/USD is currently trading at 0.6420, near its lowest point in two months. The pair has experienced a 1.75% decline over the past five trading days, influenced by a stronger US dollar and risk-off sentiment in the market. Despite this, Australian business activity has shown improvement, providing some support to the Aussie dollar ahead of upcoming US economic data releases.

Market Sentiment

The market sentiment remains cautious, with traders awaiting Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium. The outcome of this speech could significantly impact the US dollar's strength and, consequently, the AUD/USD pair.

Technical Analysis

AUD/USD tests key support at 0.6420—bullish reversal possible if 0.6415 holds_1

On the 15-minute chart, AUD/USD is testing the 0.6420 support level. A break below 0.6415 could lead to further declines, while a rebound from this level may indicate a bullish reversal. Key resistance levels to watch are at 0.6450 and 0.6470.

Trade Recommendation

Entry: 0.6420

TP: 0.6450

SL: 0.6400

Risk Warnings and Disclaimers

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Gerik

Cryptocurrency

Summary:

As of August 21, 2025, Bitcoin (BTC) is trading around $113,000, facing downward pressure due to ETF outflows and risk-off sentiment. The $112,000 level serves as a critical support zone; a rebound here could pave the way for a move toward $118,000...

BUY BTC-USDT

Close Time

CLOSED

113023.0

Entry Price

114000.0

112000.0

90266.0 +165.3 +0.18%

1023.0

Pips

Loss

112000.0

Exit Price

113023.0

Entry Price

114000.0

Overview

Bitcoin is currently trading at $113,051.50, experiencing a slight decline of 0.84% from the previous day. The intraday range has been between $112,460 and $114,723. This pullback follows a recent all-time high of $124,290.93 on August 14, 2025.

The market capitalization stands at approximately $2.26 trillion, with a circulating supply of 19,909,459 BTC. Despite the recent dip, Bitcoin remains above the psychological $100,000 level, supported by strong institutional interest and macroeconomic factors.

Market Sentiment

The current market sentiment is cautiously optimistic. Institutional demand has shown signs of slowing, with spot Bitcoin ETFs experiencing outflows exceeding $700 million this week. This shift has contributed to the recent price pullback. However, long-term bullish factors persist, including the establishment of the U.S. Strategic Bitcoin Reserve and increasing adoption among institutional investors.

Technical Analysis

Bitcoin tests $113K support amid ETF outflows—bullish reversal possible if $112K holds_1

On the chart, Bitcoin is testing the $113,000 support level. A break below $112,000 could lead to a further decline toward $110,000.

Conversely, a rebound from current levels could target the $118,000 resistance zone. The Ichimoku Cloud indicator suggests a bearish outlook unless the price reclaims and sustains above $115,000.

Trade Recommendation

Entry: 113000

TP: 114000

SL: 112000

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The U.S. dollar is extending gains against the yen ahead of Powell’s Jackson Hole speech, with traders avoiding shorts amid inflation concerns. U.S. PMI and jobless claims data are in focus, while Japan’s CPI could pressure the yen further.

BUY USDJPY

Close Time

CLOSED

148.301

Entry Price

151.500

147.100

155.814 +0.255 +0.16%

37.9

Pips

Profit

147.100

148.680

Exit Price

148.301

Entry Price

151.500

The U.S. dollar extended its advance against the Japanese yen on Friday, supported by investor caution ahead of Federal Reserve Chair Jerome Powell’s keynote address at the Jackson Hole Symposium. The USD/JPY pair, which earlier in the week dipped briefly below 146.90, has rebounded toward 147.75, with traders increasingly reluctant to position aggressively against the greenback before hearing Powell’s stance on monetary policy.

The move reflects both tactical caution and lingering concerns that the Fed remains far from declaring victory over inflation. While labor market data has shown signs of softening, investors are bracing for Powell to emphasize persistent inflationary risks, particularly given the potential price effects of tariffs and supply constraints. The U.S. central bank has repeatedly stressed its data-dependent approach, but markets have been quick to react when Powell leans even slightly more hawkish than anticipated.

Thursday’s U.S. session keeps traders focused on a batch of preliminary S&P Global PMI figures and weekly jobless claims. Both indicators serve as timely gauges of economic activity and labor market resilience. A stronger-than-expected outcome could further underpin the dollar by reinforcing the case that the U.S. economy remains resilient despite high rates. In the current environment, the greenback tends to react more positively to upbeat surprises, while weak data has had a relatively muted effect, as investors still expect U.S. growth to outperform its peers.

Japan, meanwhile, will release July consumer price index data that could add another layer of volatility to yen trading. Market consensus expects a slight moderation in inflation, but any downside surprise could weigh heavily on the Japanese currency. A softer CPI print would likely fuel doubts about the Bank of Japan’s willingness to move meaningfully away from its ultra-loose monetary stance, particularly after recent mixed signals from policymakers. For yen bulls, any sign that the BoJ is once again slipping into caution would be unwelcome, leaving the currency vulnerable to renewed selling pressure.

Technical Analysis

From a chart perspective, USD/JPY has broken higher from a recent consolidation range, with momentum favoring the bulls. The pair now trades comfortably above the 147.20–147.50 zone, an area that has acted as a robust support level in recent sessions. Buyers have stepped in repeatedly at this level, reinforcing its importance as a short-term floor.

The latest higher low formation and the sustained push above moving averages signal that the structure is tilting more decisively toward a bullish bias. Technical traders are closely watching the 148.50 level, where a confirmed breakout could pave the way toward the next significant resistance cluster between 151.00 and 151.50. That region has historically attracted heavy selling interest, making it a critical battleground should the rally extend.

Until then, the immediate trend remains constructive, with dips into the 147.20–147.50 support area likely to attract fresh buying interest. A decisive break below that zone would challenge the bullish setup and potentially shift momentum back toward a more neutral or even bearish tone.