The Canadian dollar strengthened sharply against its U.S. counterpart during the North American trading session on Tuesday, after Federal Reserve Chair Jerome Powell signaled a more cautious policy stance at Jackson Hole while domestic retail data came in stronger than expected. The move pushed the USD/CAD pair down by nearly half a percent, erasing earlier gains and highlighting shifting sentiment on monetary policy divergence between the two economies.

At the time of writing, USD/CAD was last trading at 1.3835, a notable pullback from its intraday peak of 1.3924. The decline marked one of the steepest single-day drops in the pair this month, underscoring how sensitive markets remain to U.S. monetary policy expectations and Canada’s consumer-driven data.

In his highly anticipated remarks at the Jackson Hole Symposium, Chair Jerome Powell acknowledged the Fed’s ongoing challenge of balancing inflation and employment risks. While reiterating the central bank’s dual mandate, Powell highlighted that “risks to inflation are tilted to the upside, and risks to the employment to the downside—a challenging situation.”

Notably, Powell emphasized that tariffs could exert a “one-time” upward effect on inflation, but he also suggested the labor market may be weakening faster than previously thought. His comments marked a notable shift from earlier communications that leaned more heavily on inflationary risks, instead opening the door for policy easing should labor conditions deteriorate further.

The dovish undertone was enough to jolt rate expectations. Markets quickly priced in 50 basis points of cuts by year-end, while the probability of a 25-basis-point cut in September surged from 75% to 90% during Powell’s speech. Traders interpreted the remarks as a signal that the Fed could soon pivot toward supporting growth, even if inflation remains slightly above target.

Powell was careful, however, not to commit to a defined path, stressing that “the stability of the unemployment rate and other labor market measures allows us to proceed carefully.” Still, the market response was clear: the dollar lost momentum across the board, and USD/CAD became one of the most reactive pairs given Canada’s concurrent release of strong economic data.

Adding fuel to the loonie’s rally, Canadian retail sales jumped 1.5% month-over-month in June, rebounding sharply from May’s contraction of -1.2%. Excluding autos, sales were even more impressive, rising 1.9%, handily beating market forecasts of 1.1%.

The report reinforced the view that Canadian consumers remain resilient despite elevated borrowing costs and a cooling housing market. Analysts suggested that sustained spending momentum could reduce the Bank of Canada’s urgency to cut rates aggressively, especially as inflation has shown signs of stabilizing near target.

This divergence—dovish signals from the Fed versus resilient Canadian data—created the perfect storm for USD/CAD, sending the pair lower as traders reassessed relative growth and interest rate trajectories.

From a technical perspective, the broader uptrend in USD/CAD remains intact, but the latest decline has placed critical support zones into play. The pair faces immediate downside pressure around the 20-day simple moving average (SMA) at 1.3801, with further support at the 100-day SMA near 1.3784. A decisive break below these levels could expose the August 7 low of 1.3721, a critical threshold for determining whether the bullish structure remains valid.

Momentum indicators suggest that USD/CAD may continue to retreat in the near term. The pair is reacting from a pivot point at 1.3913, which has served as a pullback resistance. This zone aligns with the 61.8% Fibonacci projection and sits just below the 127.2% Fibonacci extension, making it a formidable barrier for bulls to reclaim.

Should bearish momentum persist, traders will look toward the 50% Fibonacci retracement support as the next potential downside target. On the topside, immediate resistance lies at 1.3988, with a break above that level required to revive bullish momentum.

SELL USDCAD

ENTRY PRICE: 1.3835

STOP LOSS: 1.3930

TAKE PROFIT: 1.3721

Gold (XAU/USD) extended its decline in early European trading on Friday, slipping back toward the overnight lows around $3,326–$3,325 as the U.S. dollar climbed to its strongest level in nearly two weeks. The move underscores persistent headwinds for the non-yielding metal as investors recalibrate expectations for the Federal Reserve’s policy path ahead of Chair Jerome Powell’s remarks at the Jackson Hole Symposium later in the day.

The U.S. dollar has been in demand throughout the week, buoyed by a shift in market sentiment that suggests the Fed may not move as aggressively in cutting rates as previously expected. The greenback reached its highest level since August 5, reflecting reduced odds of large-scale policy easing. This, in turn, has drawn flows away from gold, which tends to lose appeal when yields and the dollar strengthen.

“Gold is struggling to attract safe-haven demand even in the face of broader market caution,” said one London-based commodities strategist. “Powell’s speech is pivotal—if he leans more hawkish, the downside risks for gold could accelerate.”

Comments from Fed officials this week have reinforced the case for caution. Kansas City Fed President Jeffrey Schmid described current policy as “modestly restrictive” and warned against premature easing. Cleveland Fed President Beth Hammack echoed this sentiment, stressing that inflation remains “too high and trending in the wrong direction.” Both remarks added weight to expectations that the central bank will avoid a hasty policy pivot.

Meanwhile, Chicago Fed President Austan Goolsbee acknowledged that recent inflation data has given him “some pause” about immediate cuts, though he noted September remains “live” for action. In contrast, Boston Fed President Susan Collins signaled openness to a rate cut as soon as next month, citing concerns about weaker employment and potential tariff-driven price pressures.

The market has taken a middle ground. According to CME’s FedWatch Tool, traders are pricing in a 75% probability of a 25-basis-point cut in September, with at least two reductions expected by year-end. This view was reinforced by Thursday’s labor data, which showed initial jobless claims jumping by the most in three months, while continuing claims reached their highest in nearly four years—raising questions about the durability of the labor market.

With Fed officials sending mixed signals, investors are bracing for Powell’s keynote address at Jackson Hole. His remarks will likely be scrutinized for clues on whether the central bank is leaning toward a cautious “wait-and-see” stance or willing to act quickly to support growth.

“Powell holds the market’s attention today. A dovish tilt could relieve some pressure on gold, but if he doubles down on inflation concerns, the dollar rally could extend further,” said a New York-based analyst.

From a technical perspective, gold remains under selling pressure. The metal has repeatedly tested the $3,330 level this week without sustaining a recovery, suggesting that bulls lack momentum. Prices are also trading below the 50-day Exponential Moving Average (EMA), reinforcing the bearish trend.

The Relative Strength Index (RSI) has turned negative, signaling a lack of upside conviction. A decisive break below the $3,318–$3,320 zone could open the door to further declines toward $3,300–$3,308. A stronger bearish breakout could push gold toward the $3,280–$3,260 region, which represents a critical support band for medium-term direction.

Unless gold can reclaim levels above $3,350 in the near term, the path of least resistance remains lower.

SELL GOLD

ENTRY PRICE: 3325

STOP LOSS: 3350

TAKE PROFIT: 3260

Today, WTI crude oil fluctuated around $63 per barrel, with market sentiment driven by three main factors.

Firstly, the peace talks between Russia and Ukraine have remained stagnant. The ongoing regional military actions and the uncertainty of sanctions have strengthened the support for oil in physical form and futures, resulting in a temporary rebound in oil prices even after the news negatively impacted the market.

Secondly, the latest weekly US inventory data showed an unexpected decline - the API/EIA report indicated a significant drop in US commercial crude oil inventories in the past week. This signal of short-term tightening on the supply side was interpreted by traders as a positive stimulus for prices.

Thirdly, although OPEC+ has maintained its production increase recently, it continues to emphasize market stability. The expectation that the supply-side upstream capacity release pace will be faster than the growth of demand in the long term remains unchanged. This means that without sustained inventory drawdowns or more severe geopolitical shocks, oil prices are more likely to fluctuate within a range driven by fundamental news rather than a single-sided surge.

Furthermore, macroeconomic and capital market factors also play a key role: the direction of the USD index and US Treasury yields, as well as the market's expectations regarding the upcoming Jackson Hole Global Central Bank Conference speeches on the economy and interest rates, will amplify or suppress short-term oil price fluctuations through the chain of risk appetite and demand expectations. Currently, the USD remains relatively stable and has not shown any obvious signs of weakness, which puts pressure on commodities priced in USD.

From the daily chart, WTI crude oil has begun to rebound upward as expected. The level of 64.00 has formed a clear resistance level in the near term. If the price can hold firm and pull back to confirm during a significant increase in trading volume, the short-term is expected to open up a potential upward movement to 65-66 dollars. Otherwise, the bulls may face repeated resistance and could test the level of 60 dollars and lower structural support levels.

Trading direction: Sell

Entry price: 63.40

Target price: 59.80

Stop loss: 65.10

Expiration date: 2025-09-05 23:00:00

Support: 61.34, 60.00

Resistance: 63.70, 64.0

On August 21st, the White House released a joint statement with the EU announcing that the two sides had agreed on the framework of a trade agreement. The EU also issued a corresponding joint statement shortly afterward. The agreement followed intensive negotiations between Maroš Šefčovič, the European Commission's Executive Vice-President for Trade and Economic Security, U.S. Commerce Secretary Howard Lutnick, and U.S. Trade Representative Jamieson Greer. European Commission President von der Leyen stated that cooperation with the U.S. will continue to finalize further tariff reductions and identify additional areas of collaboration. According to reports, the trade agreement framework includes 19 key points covering a wide range of issues such as agricultural products, automobiles, aircraft and other industrial goods, semiconductors and chips, energy, EU investment in the U.S., relaxation of environmental regulatory restrictions, cybersecurity agreements, and digital trade barriers. The EU is set to eliminate all tariffs on U.S. industrial goods and provide preferential market access for U.S. agricultural products. Eurozone economic data shows signs of moderate recovery. The Eurozone Composite PMI rose to 51.1 (previous 50.9), hitting a 15-month high, with new orders growing for the first time since May. The Manufacturing PMI entered expansion territory for the first time in three years (50.5), marking the fastest output growth in three and a half years. The Services PMI dipped slightly to 50.7 but remained in expansion. Employment has risen for six consecutive months, with the fastest job growth since June. However, manufacturing continues to shed jobs, contrasting with hiring in the services sector. Positive developments in both trade and economic data are highly likely to drive the euro higher.

The USDX remained firm and sustained recent gains, supported by strong U.S. PMI data that included hawkish commentary. Additionally, recent remarks from Fed officials such as Beth Hammack and Jeffrey R. Schmid reflected a tough stance on inflation and signaled that there is no urgency to cut interest rates. Austan Goolsbee pointed out that the upcoming September FOMC meeting is live, but when asked about a potential rate cut in September, he responded that he didn't want to be pinned down. Currently, all eyes are on Fed Chair Jerome Powell's speech at the Jackson Hole Symposium.

Based on the EURUSD daily chart, a death cross (the MACD line crosses the signal line) emerges with the RSI showing lower highs. The price failed to make new highs, forming a head-and-shoulders top pattern, also signaling a bearish divergence. Thus, EURUSD is more likely to descend with oscillations. Currently, the price is supported by the daily EMA50, and holding above this level could sustain the uptrend. However, a break below could lead to further declines toward the Bollinger Lower Band and EMA200, around 1.146 and 1.121, respectively. Regarding the 15-minute chart, Bollinger Bands are expanding downward, and the RSI stays at 40, suggesting a short-term decline pattern. However, the MACD has formed a bullish crossover below the zero line (bullish divergence underwater), with decreasing bearish momentum and a new price low. This is another sign of bearish divergence, suggesting a potential bounce. Yet, even if a bounce occurs, it is unlikely to reverse the overall downtrend. Therefore, the short-term trading strategy remains focused on selling at highs.

Trading direction: Sell

Entry price: 1.161

Target price: 1.14

Stop loss: 1.17

Support: 1.159/1.145/1.14

Resistance: 1.17/1.183/1.19

The upside potential for the USD/CAD may be limited, as the Bank of Canada has less room for additional interest rate cuts, which could provide support for the CAD. Canada's industrial product prices rose 0.7% month-on-month in July, up from 0.5% in June and exceeding market expectations of 0.3%. The Prime Minister's Office of Canada issued a statement on Thursday saying that Prime Minister Justin Trudeau had a phone conversation with US President Donald Trump, during which they engaged in a broad and productive exchange on trade challenges and other issues. This was the first phone call between the two leaders since June 30, amid ongoing trade friction between Canada and the US. The call was initiated by Trudeau, and the two leaders discussed not only trade issues but also the situation in Ukraine and the conflict in Gaza. They agreed to hold another meeting soon, but no specific arrangements were announced.

As the likelihood of the Federal Reserve cutting interest rates in September has decreased, the USD has strengthened, and the USD/CAD exchange rate has also appreciated. Traders are awaiting Federal Reserve Chair Jerome Powell's remarks at the Jackson Hole Symposium in Wyoming, which may provide new clues about the policy outlook for September. Federal Fund futures traders currently estimate a 75% probability of a rate cut in September, down from 82% on Wednesday. The likelihood of a rate cut has decreased due to strong US Purchasing Managers' Index (PMI) data and rising initial jobless claims. The preliminary August S&P Global US Composite PMI rose slightly to 55.4 from 55.1 in the previous month. Meanwhile, the preliminary US manufacturing PMI rose to 53.3 from the previous reading of 49.8, exceeding the market expectation of 49.5. The preliminary services PMI fell to 55.4 from the previous reading of 55.7, but remained stronger than the expected 54.2. Following the release of these data, the USD index rebounded and rose.

From a 15-minute chart perspective, the MACD histogram for the USD/CAD shows gradually weakening bullish momentum, while the price has reached new highs. The RSI reading is 59, but its peaks are progressively declining, indicating a bearish divergence signal. This suggests a higher probability of a subsequent adjustment. Meanwhile, the Bollinger Bands are narrowing, the moving averages are flattening out, and the MACD has formed a death cross. If a bearish candle breaks below the moving averages, it would signal an ultra-short-term decline. The support levels below are the EMA200 and the previous low, at 1.388 and 1.387, respectively. On the weekly chart, the price is oscillating and rising between the upper Bollinger Band and the EMA12. The Bollinger Bands are expanding upward, and the moving averages are diverging upward, indicating that the bullish trend remains ongoing. The ultra-short-term RSI reading is 67, suggesting strong upward momentum, but caution is needed as it may approach overbought territory at any time. Meanwhile, the price is nearing the trend resistance line and the previous high, at 1.3925 and 1.401, respectively, and a pullback should be watched for. For the strategy, it is recommended to go short and then go long.

Trading direction: Sell

Entry price: 1.3914

Target price: 1.387

Stop loss: 1.395

Support: 1.387, 1.384, 1.38

Resistance: 1.395, 1.4, 1.401

Beth Hammack, President of the Cleveland Federal Reserve Bank, struck a notably hawkish tone in her remarks on Thursday, stressing the importance of keeping inflation firmly under control. She warned that the economic effects of recently imposed tariffs are only beginning to surface and could intensify throughout next year. While she acknowledged that the Fed is approaching a more neutral stance, Hammack dismissed the possibility of imminent rate cuts, arguing that premature easing could undermine progress in curbing inflation.

The Fed’s minutes released on Wednesday revealed that most policymakers viewed tariff-related inflation as a greater risk than a cooling labor market. Officials noted that the impact of reciprocal tariffs introduced by U.S. President Donald Trump may take time to filter through the economy, as many companies are expected to gradually pass higher costs onto consumers. Several participants also anticipated softer growth in the second half of the year, as declining household income pressures spending. Although a minority of members argued for earlier rate cuts, the majority favored keeping policy steady, with dissenting voices from Governors Christopher Waller and Michelle Bowman. Looking ahead, officials emphasized that the path of rate reductions will depend heavily on incoming data and the persistence of tariff-driven inflationary pressures.

Meanwhile, initial jobless claims rose to 235K last week, the highest level in eight weeks and above the consensus forecast of 225K. The increase suggests some signs of labor market softening, contrasting with stronger-than-expected PMI figures. This combination highlights the mixed picture the Fed faces as it attempts to balance rising inflationary risks against emerging signs of cooling employment conditions.

Across the Atlantic, the United States and the European Union introduced a long-awaited joint trade framework on Thursday, a significant step toward easing transatlantic frictions. The agreement caps most tariffs at 15%, alleviating fears of escalating protectionism. However, U.S. auto tariffs remain fixed at 27.5% until the EU enacts its own tariff reduction measures. Under the deal, the EU pledged to purchase $750 billion worth of U.S. energy supplies—including LNG, oil, and nuclear—by 2028, in addition to $40 billion in American AI chips, aimed at safeguarding Europe’s technological supply chains.

On the economic front, Eurozone manufacturing unexpectedly returned to expansion in August, while services activity slowed, according to HCOB’s latest PMI report. The manufacturing PMI rose to 50.5 in August from 49.8 in July, comfortably exceeding expectations of 49.5. In contrast, the services PMI slipped to 50.7 from 51, slightly below forecasts of 50.8 and hitting a two-month low. The composite PMI, however, edged higher to 51, outperforming both July’s 50.9 reading and the 50.7 anticipated by analysts.

Meanwhile, the Harmonised Index of Consumer Prices (HICP) is expected to remain steady at 2.0% year-on-year, matching June’s figure, while monthly inflation is projected to hold flat at 0.0%. Core inflation is anticipated to stay at 2.3% annually, unchanged from the prior month, though the 0.2% monthly decline suggests a modest easing in underlying price pressures.

EURUSD has recently extended its downward momentum, reaching 1.1598—a critical support level that previously triggered a strong bullish reversal toward 1.1730. This same area may once again serve as the foundation for a fresh upside move, potentially driving the pair back toward the descending trendline, which is closely tracked by the moving averages. On the 1-hour chart, the 100- and 200-period moving averages sit tightly together at 1.1662 and 1.1663, suggesting that in the event of a corrective bounce, price action may gravitate toward these levels.

The RSI has fallen to 31, approaching oversold territory, which indicates that bearish momentum may be weakening. Combined with recent high volatility, these conditions could open the door to a corrective rebound toward 1.1650, and if the descending trendline is broken decisively, the way could be cleared for a more extended bullish impulse. However, if support at 1.1598 fails to hold, a deeper correction to the downside should be anticipated.

Trading direction: Buy

Entry price: 1.1615

Target price: 1.1650

Stop loss: 1.1585

Validity: Aug 29, 2025 15:00:00