Gold surges to successive record highs as three mutually-reinforcing drivers stack up.

Firstly, market participants have increasingly interpreted the recent softening in U.S. labor data and lingering inflation uncertainty as raising the probability of a faster Fed easing cycle. The resulting pivot in rate-path expectations has pushed both nominal and real Treasury yields lower, cutting the opportunity cost of holding non-interest-bearing bullion and magnifying gold's allure—a key mechanism behind the metal’s repeated record highs.

Second, continued size-based accumulation of physical gold and ETFs by institutions and central banks is anchoring the metal's price. World Gold Council data show bullion-backed ETFs posting another month of robust inflows, a structural bid that converts any fleeting safe-haven demand into durable price support.

Finally, the synchronized decline in the DXY and across the U.S. yield curve—both at the long and short ends—has amplified gold's upward momentum. A softer dollar coupled with falling 10-year Treasury yields narrows the opportunity cost of holding non-yielding bullion, prompting investors to rotate into gold as both a hedge and a yield-enhancing alternative. Consequently, short-term flows find it easier to extend the rally.

On the daily chart, gold has been printing consecutive record highs and is now trading just below the 1.0 Fibonacci-extension level at 1,668. Momentum may cool in the short term, yet a high-volume break-and-retest of that handle would open the technical runway toward 2,000.

The RSI has pushed deep into overbought territory, raising the probability of a near-term pullback. With underlying bullish impulse still intact, however, any correction is expected to be shallow. It is recommended to use the 4-hour MA10/MA20 zone as dynamic support and implement buy-the-dip tactics.

Trading Direction: Buy

Entry Price: 3625.00

Target Price: 3790.00

Stop Loss: 3570.00

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

Support: 3623.00/3600.00

Resistance: 3659.14/3800.00

The number of unemployed individuals approached 1.6 million, a notable increase from the previous month. Analysts originally forecasted a gain of 10,000 jobs in August and only a slight rise in the unemployment rate to 7%, but the actual data came in significantly worse than expected. Statistics Canada noted that the layoff rate climbed to 1% in August, up from 0.9% the previous year, signaling increased pressure in the labor market. While the Canadian economy had previously shown resilience in the face of U.S. tariffs on steel, aluminum, and automobiles, the latest data suggests that these tariffs are now impacting a broader range of sectors, undermining business hiring and investment confidence. The Canadian overnight index swap market is now pricing in a 90% probability of a Bank of Canada rate cut in September, up from 75% before the latest employment data release. According to a research report published by Bank of America on Monday, the Bank of Canada is expected to cut interest rates by 25 basis points in September, with a cumulative 75-basis-point reduction by the end of 2026 anticipated. The institution suggested that these three anticipated rate cuts could all occur by the end of 2025—25 basis points each in October and December—bringing the policy rate down to 2.00% by year-end. Bank of America analysis pointed out that Canada is currently facing a negative output gap, with the unemployment rate higher than the country's natural rate and inflation below the central bank's target. The report stated that inflation expectations remain stable at around 2.0%. These economic conditions lead the bank to predict that the Bank of Canada will quickly adjust its policy rate into an "expansionary territory" to stimulate economic growth. The expectation of rate cuts is weighing on the Canadian dollar, becoming a key bullish factor for the USD/CAD exchange rate.

Since July 28th, the U.S. dollar has hit new lows amid expectations that the Federal Reserve will adopt more aggressive easing policies. In fact, following the disappointing U.S. nonfarm payrolls report, traders began pricing in the possibility of a significant rate cut at the upcoming Federal Open Market Committee (FOMC) meeting next week. This ongoing bearish sentiment continues to pressure the U.S. dollar and weigh on the USD/CAD pair. Additionally, upbeat market sentiment is seen as another factor eroding the U.S. dollar's relative safe-haven appeal. This, in turn, is prompting investors to remain cautious before any meaningful upside in USD/CAD. Traders also appear hesitant and may choose to wait for the release of the U.S. Producer Price Index (PPI) on Wednesday and the Consumer Price Index (CPI) on Thursday.

Based on the weekly chart, USD/CAD is trading within a range between the Bollinger Middle Band and the EMA200. The MACD line and the signal line are pulling back toward the zero axis but still have some distance to go, while the RSI stands at 47. The Bollinger Bands are narrowing, and the moving averages are flattening, indicating a market in consolidation mode where a breakout could happen at any time. Overall, the rebound continues, and there is a high probability of a surge toward the previous high or the Bollinger Upper Band, around 1.392 and 1.42, respectively. The 1H chart shows that USD/CAD is oscillating between the Bollinger Upper and Lower Bands. The MACD bullish histogram is gradually weakening, the RSI is at 40, and recent highs are getting lower, signaling strong bearish sentiment in the market. Key support levels are at 1.375 and 1.372. Thus, it is recommended to sell now and buy later.

Trading direction: Sell

Entry price: 1.38

Target price: 1.372

Stop loss: 1.388

Support: 1.378/1.37/1.357

Resistance: 1.393/1.4/1.401

Canada’s labor market delivered a major disappointment in August, with employment falling by 65.5K—the sharpest monthly drop since January 2022—following a 40.8K decline the previous month. The reading came in far worse than expectations for a modest 7.5K increase. The Unemployment Rate also climbed to 7.1% from 6.9%, while the Participation Rate edged down to 65.1%, suggesting a deepening imbalance in the labor market. However, Average Hourly Wages showed a modest acceleration, rising 3.6% year-on-year compared with 3.5% previously. The weak jobs report strengthened market bets that the Bank of Canada (BoC) will move ahead with a rate cut at its September 17 meeting, weighing heavily on the Canadian dollar.

In fixed income markets, Canadian government bond yields fell sharply as investors increased wagers on monetary easing. The 10-year yield slid to 3.26%, its lowest level since June 24, reflecting the growing conviction that the BoC will provide relief to counter slowing economic momentum.

Across the border, U.S. economic data provided a mixed set of signals. The New York Federal Reserve reported that consumer inflation expectations rose once again, while sentiment regarding future employment prospects deteriorated. Although the indicators remain broadly aligned with short-term averages, the persistent anxiety among households underlines how the Trump administration’s aggressive stance on trade and business continues to weigh on domestic economic conditions.

The U.S. labor market backdrop also came under scrutiny. The ADP Employment Report showed private payrolls increasing by only 54K in August, falling short of the 65K forecast and significantly weaker than July’s upwardly revised 106K. Weekly Initial Jobless Claims rose to 237K from 229K, signaling a modest uptick in layoffs. On a more positive note, Nonfarm Productivity for Q2 was revised up to 3.3% from 2.4%, while Unit Labor Costs eased to 1.0%, below the 1.6% consensus, pointing to reduced wage pressures.

Meanwhile, business activity data provided a more upbeat tone. The S&P Global Composite PMI slipped slightly to 54.6 from 55.4, but the ISM Services PMI improved to 52, exceeding expectations of 51 and rebounding from 50.1 in July. Within the details, New Orders accelerated to 56, suggesting resilient demand, while the Employment Index softened to 46.5, highlighting a cooling labor market. Prices Paid remained elevated at 69.2, reflecting persistent inflationary pressures despite easing wage costs.

Market expectations for Federal Reserve policy have shifted considerably. According to the CME FedWatch tool, investors now price in a 10% chance of a 50-basis-point rate cut to the 3.75%–4.00% range, while the majority expect a 25-basis-point cut. This represents a notable turnaround from a week earlier, when nearly 15% of market participants were still anticipating no change in policy rates.

USD/CAD remains in an overall uptrend, with price action recently finding bullish momentum around the 100-period and 200-period moving averages, which currently sit at 1.3815 and 1.3786. These levels also align closely with the ascending trendline, reinforcing their importance as a key area of support. If the pair begins to show signs of bullish reaction from this zone, a fresh leg higher could unfold, potentially targeting the local high near 1.3925, where the next resistance level awaits.

On the downside, initial support lies at 1.3723. A break beneath the trendline could expose the pair to deeper losses if this support fails to hold. Meanwhile, the RSI hovers near 47, still within neutral territory, suggesting that while a pullback remains possible, the broader bullish structure remains intact.

Trading direction: Buy

Entry price: 1.3760

Target price: 1.3920

Stop loss: 1.3680

Validity: Sep 19, 2025 15:00:00

According to the Federal Reserve Bank of New York, consumer inflation expectations ticked higher once again, while sentiment around future employment prospects deteriorated further. Although the surveyed metrics remain broadly in line with short-term averages, a growing sense of unease continues to weigh on households overall. This highlights how the Trump administration’s aggressive policy approach—particularly in matters of trade and business—has been exerting a dampening effect on the domestic U.S. economy.

Labor market data in the U.S. painted a mixed picture. The ADP Employment Report showed private payrolls rising by just 54K in August, falling short of expectations of 65K and sharply below July’s upwardly revised figure of 106K, suggesting that hiring momentum has slowed. Weekly Initial Jobless Claims also rose modestly, climbing to 237K from 229K, hinting at a mild increase in layoffs. On the brighter side, Nonfarm Productivity for Q2 was revised higher to 3.3% from 2.4%, while Unit Labor Costs dropped to 1.0% versus the 1.6% forecast, indicating some easing of wage-driven inflation pressures.

Fresh PMI data added more nuance to the outlook. The S&P Global Composite PMI slipped to 54.6 from 55.4, showing slight moderation, but the ISM Services PMI improved to 52, surpassing expectations of 51 and recovering from July’s 50.1 reading. Breaking down the components, New Orders strengthened to 56, signaling solid demand, while the Employment Index softened to 46.5, pointing to slower hiring. Meanwhile, Prices Paid held elevated at 69.2, underscoring persistent cost pressures despite signs of cooling in the labor market.

Market expectations for monetary policy have shifted notably. According to the CME FedWatch tool, traders now assign a 10% probability that the Federal Reserve will cut rates by 50 basis points to a range of 3.75%–4.00%, while the overwhelming majority anticipate a 25-basis-point reduction. This represents a sharp pivot from just a week ago, when markets still assigned nearly a 15% probability that the Fed would leave rates unchanged.

Across the Atlantic, U.K. retail sales growth outperformed expectations in July. Total retail volumes rose 0.6% month-over-month, compared with consensus estimates of 0.2%, following a downwardly revised 0.3% increase in June (originally reported at 0.9%). Excluding motor fuel, retail sales volumes increased 0.5% versus forecasts of 0.3%, supported by stronger performance from non-store retailers and clothing stores.

Despite this positive surprise, fiscal credibility concerns continue to cast a shadow over the British pound. Long-dated gilt yields eased on Thursday after touching their highest levels since 1998 earlier in the week, with the 30-year yield retreating to around 5.6% and the 10-year yield pulling back toward 4.7%. Even with the decline, yields remain historically elevated, reflecting investor unease about rising borrowing costs and the government’s fiscal stance. Bank of England Governor Andrew Bailey attempted to play down the moves, attributing them to a broader global bond selloff, though he acknowledged uncertainty around the pace of monetary easing.

GBP/USD is once again testing a familiar resistance zone between 1.3535 and 1.3564, an area that has repeatedly triggered bearish reversals in recent sessions. Should this pattern repeat, the pair could face renewed downside momentum from this level. On the 2-hour chart, the 100-period and 200-period moving averages sit at 1.3477 and 1.3481, respectively. The prolonged clustering of these averages suggests that price action may continue oscillating within this range, reinforcing the likelihood of a corrective move lower from resistance.

Meanwhile, the RSI recently peaked at 73 as price reached the resistance area, before rejecting the level. If another rejection unfolds, GBP/USD could slide toward the 1.3450 zone, which coincides with the 50% Fibonacci retracement—an area often tested during corrective pullbacks. Conversely, a decisive breakout above resistance would clear the way for further gains, shifting momentum back in favor of the bulls.

Trading direction: Sell

Entry price: 1.3535

Target price: 1.3450

Stop loss: 1.3590

Validity: Sep 19, 2025 15:00:00

During early trading, GBPJPY attempted to appreciate. However, selling interest emerged around 200.30, triggering a 0.15% pullback that pushed the cross into the mid-199.00 region.

At the start of the week Japanese equities surged. The Nikkei 225 jumped more than 800 points in the morning session and held firm, leaving the index within striking distance of an all-time high. The risk-on sentiment spilled over into FX, prompting a sharp broad-based sell-off in the yen. If the upbeat mood persists, the JPY remains vulnerable to additional downside pressure.

The catalyst was Prime Minister Shigeru Ishiba's unexpected resignation over the weekend. Ishiba stated that the timing had been “carefully considered,” noting that he had just secured the formal reduction of U.S. auto tariffs from 27.5% to 15%. “With the negotiations on U.S. tariff measures now concluded, I believe this is the appropriate moment to step down,” he told reporters. His departure brings an abrupt end to a tenure that began less than a year ago and was derailed after his ruling coalition lost its majority in the Lower House.

Nevertheless, Shigeru Ishiba’s withdrawal has opened the door to a new leader, with the hope that a fresh face can re-energize both the party and the electorate. Shinjiro Koizumi, the Minister of Agriculture, Forestry and Fisheries and son of former Prime Minister Junichiro Koizumi, is widely regarded as the front-runner; his youth and broad popularity resonate with the market. Sanae Takaichi, long viewed as close to the late Shinzo Abe, is also expected to be a formidable contender. The upcoming leadership race is likely to fuel speculation over policy continuity and to catalyze fresh fiscal initiatives.

Given that the LDP-led ruling coalition still commands only a minority in the Diet, investors are betting that the new administration will prioritize expansionary fiscal measures to secure opposition cooperation. This expectation has further buoyed equity markets and reinforced the risk-on pressure facing the yen.

GBPJPY is consolidating below the 200.30 resistance, yet the underlying uptrend remains intact. Over the past week, both the swing highs and the swing lows have been successively higher. As long as the 197.93 support holds, a further advance is anticipated.

A sustained break above the 200.26 resistance would revive the up-move that started from 184.35 and open the 100% projection of the 180.00-199.79 segment at 204.14.

On the downside, a clear break below 197.93 would shift the bias to the bear side and expose the next significant support at 195.01.

Trading Direction: Buy

Entry Price: 199.20

Target Price: 204.14

Stop Loss: 197.80

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

Support: 198.65/197.93/197.38

Resistance: 200.30/201.61/204.14

The euro retreated slightly against the U.S. dollar in early Asian trading on Monday, giving back some of last week’s strong advance as the greenback staged a modest recovery. The EUR/USD pair was last seen trading near 1.1710, slipping after registering gains of more than 0.5% in the previous session, with traders recalibrating expectations around Federal Reserve policy in light of another disappointing U.S. jobs report.

Friday’s U.S. Nonfarm Payrolls data confirmed that the American labor market is slowing more abruptly than policymakers may have anticipated. According to the Bureau of Labor Statistics, payrolls expanded by just 22,000 in August, well below consensus forecasts for a 75,000 increase. The July figure was also revised higher to 79,000, but the broader trend points to a loss of momentum in hiring. At the same time, the unemployment rate edged up to 4.3% from 4.2%, its highest level since 2021, while wage growth rose in line with expectations at 0.3% month-on-month.

The report reinforced the narrative that the Fed may soon need to act more decisively to prevent a sharper slowdown. According to the CME FedWatch Tool, markets are now pricing in a 92% probability of a 25 basis-point rate cut at the Fed’s September policy meeting, up from 86% a week earlier. Notably, bets on an outsized 50 basis-point move have also increased, reflecting mounting concern that the U.S. economy may not withstand higher-for-longer rates much longer.

Even so, the policy outlook remains nuanced. Chicago Fed President Austan Goolsbee struck a cautious tone in a Bloomberg interview on Friday, suggesting he remains uncertain whether September is the right moment for easing. He noted that while jobs data is softening, sticky inflation remains a challenge, and the central bank will be reluctant to move aggressively until price stability is more secure. His comments highlight a growing divide within the Fed between those prioritizing growth risks and those still worried about lingering inflationary pressures.

Meanwhile, attention is quickly shifting to the European Central Bank’s meeting scheduled for Thursday. Policymakers in Frankfurt are widely expected to leave rates unchanged for a second consecutive gathering. Inflation in the euro area is running close to the ECB’s 2% target, and growth data has stabilized, giving the Governing Council cover to adopt a wait-and-see stance. Markets will be parsing President Christine Lagarde’s remarks for hints on whether rate cuts could be on the table later this year if external risks—including slowing U.S. demand—start to weigh more heavily on the eurozone.

From a technical perspective, EUR/USD remains supported by its broader uptrend despite Monday’s modest pullback. The pair’s recent attempt to breach the stubborn 1.1730 resistance underscores the strength of underlying buying interest. Price action is still holding above the 50-day exponential moving average, while the presence of a supportive trend line suggests that dips may continue to attract buyers.

Momentum indicators are painting a constructive picture as well. The Relative Strength Index (RSI) has eased from overbought conditions, offering scope for fresh bullish entries. Some analysts argue the pair could be shaping either a bullish flag or a reverse head-and-shoulders formation, both of which would imply further upside once the consolidation phase resolves. Crucially, as long as the 1.1700 support zone holds, the path toward the psychologically important 1.2000 level remains open over the medium term.

BUY EURUSD

ENTRY PRICE: 1.1750

STOP LOSS: 1.1660

TAKE PROFIT: 1.2000