Post-Rally Reckoning: USDJPY Faces Potential Pullback!

Economic

Forex

Summary:

The Fed held interest rates steady, with Chair Jerome Powell refraining from signaling imminent rate cuts, bolstering market confidence in the U.S. dollar. The DXY (U.S. Dollar Index) surged past 99.9, marking a multi-week high.

SELL USDJPY

Close Time

CLOSED

149.300

Entry Price

148.400

149.600

155.825 +0.480 +0.31%

30.0

Pips

Loss

148.400

149.600

Exit Price

149.300

Entry Price

149.600

Fundamentals

The DXY extended its rally for a fifth consecutive session, breaching 99.9 and posting a monthly gain exceeding 3% —its highest level in over five weeks. This momentum stems from the Fed's latest policy decision: despite market hopes for dovish cues, the central bank maintained rates while Powell emphasized a cautious approach to easing, withholding a clear timeline. The resulting uncertainty has reinforced the dollar's appeal.

Meanwhile, the Bank of Japan (BoJ) is expected to revise its 2025 fiscal year inflation forecast upward to 2.5% (unchanged from prior 2.5%) in its quarterly outlook report, while retaining projections of 1.7% and 1.9% for 2026 and 2027, respectively.

Market participants anticipate the BoJ may signal a 25bps rate hike by late 2025 , but such a move could exacerbate the yen's recent weakness, given its already subdued momentum.

Technical Analysis

Weekly Chart: USDJPY remains in a corrective rebound phase, with the MACD golden cross converging toward the zero line, suggesting further upside potential. The RSI at 53 (neutral) and progressively higher lows support the bullish bias. Key resistance levels locate at 152.2 (weekly Bollinger upper band) and the 155 trendline extension.

4-Hour Chart: Price retreated after failing to sustain above 149, indicating near-term pressure. The MACD histogram shows weakening momentum, while the RSI's double-top pattern hints at a pullback risk.

Critical supports: 148.3 (4-hour Bollinger midline) and 146.6 (EMA200). A hold above 148.3 may revive bullish attempts toward 150; a break below targets 146.6.

Given the technical overextension and bearish divergences, shorting on rallies is favored for today's session.

Trading Recommendations

Trading Direction: Sell

Entry Price: 149.3

Target Price: 148.4

Stop Loss: 149.6

Support: 148.3/147.96/146.7

Resistance: 149.6/150/152.2

Risk Warnings and Disclaimers

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Manuel

Commodity

Central Bank

Summary:

A strong bullish reaction from that level could initiate a fresh upward leg, continuing the broader bullish trend.

BUY XAUUSD

EXP

EXPIRED

3270.00

Entry Price

3390.00

3230.00

4190.70 -7.21 -0.17%

Pips

EXPIRED

3230.00

3369.70

Exit Price

3270.00

Entry Price

3390.00

U.S. Federal Reserve Chair Jerome Powell made it clear on Wednesday that the central bank will not take government financing needs into account when determining interest rate policy. During the press conference following the latest Federal Open Market Committee (FOMC) meeting, Powell emphasized that the Fed’s sole responsibility is fulfilling its dual mandate from Congress—maintaining price stability and supporting a strong labor market.

Under this legal obligation, Powell stressed, “We don't consider the fiscal needs of the federal government. No central bank in an advanced economy does that, and it would not be appropriate for us to do so.” He added that factoring in fiscal pressures would compromise the Fed’s credibility and its independence in pursuing monetary policy objectives.

Economists widely agree that any central bank that prioritizes keeping government borrowing costs low, rather than controlling inflation, risks losing its ability to act independently and effectively. Such a shift would likely erode confidence in the institution and undermine its capacity to anchor inflation expectations.

Powell’s remarks came after the Fed decided to keep its benchmark interest rate unchanged in a target range of 4.25% to 4.50%. Policymakers continue to assess how recent shifts in government trade policies and tax structures are influencing economic performance, as markets increasingly anticipate a potential rate cut in September.

On the macroeconomic front, the U.S. economy posted a strong rebound in the second quarter of 2025, growing at an annualized pace of 3%, after contracting by 0.5% in Q1. The result exceeded expectations of a 2.4% expansion, signaling renewed momentum.

Meanwhile, the preliminary Core Personal Consumption Expenditures (PCE) Price Index rose 2.5% from the previous quarter, slightly above the projected 2.4%, though still lower than the 3.5% recorded in Q1. The broader PCE inflation measure declined to 2.1% from 3.7%, and the GDP Price Index eased to 2.0%, below the estimated 2.4%, suggesting continued disinflationary trends.

Labor market data also surprised to the upside. The ADP employment report for July revealed that the U.S. private sector added 104,000 jobs, well above expectations of 78,000 and a sharp rebound from June’s revised decline of 33,000.

In bond markets, the U.S. 10-year Treasury yield held near 4.33% on Wednesday, consolidating after a steep drop in the prior session. The 30-year yield (US30Y) hovered around 4.86%, as investors turned cautious ahead of the Fed’s policy statement. Could Gold Repeat Its Bullish Rebound from Support?_1

Could Gold Repeat Its Bullish Rebound from Support?_1

Technical Analysis

XAUUSD dipped intraday, briefly touching a low near $3,270, approaching the 200-period moving average on the 12-hour chart, currently sitting at $3,264. The 100-period moving average remains higher at $3,342. If gold manages to rebound from this zone, which has previously triggered two significant upward moves, a similar bullish reaction could emerge. Should this support level hold, the price may aim for the next resistance near $3,393.

The RSI has dropped to 35.3, rapidly approaching oversold territory but not quite there yet. This suggests there could be room for one final downward leg to test the 200-period MA. A strong bullish reaction from that level could initiate a fresh upward leg, continuing the broader bullish trend. However, a decisive break below the support would likely lead to deeper losses for XAUUSD.

Trading Recommendations

Trading direction: Buy

Entry price: 3270

Target price: 3390

Stop loss: 3230

Validity: Aug 08, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Forex

Economic

Summary:

This divergence adds weight to the case for a trend reversal, increasing the likelihood of a recovery from current levels.

BUY EURGBP

Close Time

CLOSED

0.86309

Entry Price

0.86950

0.85850

0.87295 -0.00021 -0.02%

64.1

Pips

Profit

0.85850

0.86953

Exit Price

0.86309

Entry Price

0.86950

Economic data from the euro area showed that the region’s GDP expanded by 1.4% year-over-year in Q2 2025, slightly below the 1.5% growth seen in the first quarter. In Germany, quarterly GDP rose from 0% to 0.4%, suggesting a modest pickup in Europe’s largest economy.

German retail sales for June also provided some upside surprise, increasing by 1.0% month-on-month after a sharp decline of -1.6% in May, and beating market expectations for a 0.5% rise. Meanwhile, the European Central Bank’s latest Consumer Expectations Survey indicated that inflation in the eurozone is projected to continue its downward trajectory over the next 12 months.

In terms of international trade, the U.S. and the European Commission, led by President Ursula von der Leyen, reached a landmark agreement. Under the new deal, the U.S. will impose a fixed 15% tariff on a broad range of EU exports—including automobiles, machinery, and consumer goods. This marks a significant increase from the 1.2% average tariff rate seen in 2024.

In return, the EU has pledged to purchase $750 billion worth of U.S. liquefied natural gas (LNG) over the next three years and to invest $600 billion in key American sectors such as energy, defense, and manufacturing. According to EU Trade Commissioner Maroš Šefčovič and sources from the European Commission speaking to Politico, the $600 billion investment will be entirely funded by private companies, with no direct financial involvement from the EU government.

On the UK side, shifting interest rate expectations have offered some support to the British Pound. While markets are still pricing in a 25-basis-point rate cut from the Bank of England on August 7, expectations for further easing by year-end have softened slightly, with forecasts retreating by around five basis points over the past week.

Recent CFTC data showed a reduction in bullish positioning, as the previously net-long GBP position of $2.4 billion has now flattened, reflecting a more neutral market stance. Divergence and Oversold RSI May Invite Buyers Back_1

Divergence and Oversold RSI May Invite Buyers Back_1

Technical Analysis

EUR/GBP has recently pulled back toward the 200-period moving average on the 4-hour chart, currently located at 0.8613. This level coincides with a key support zone near 0.8600, and a firm hold above this area could pave the way for a potential rebound. If bullish momentum builds from this base, price action may target the next resistance at 0.8697, with the 100-period moving average at 0.8662 serving as an intermediate hurdle. A close above the latter would likely accelerate the move higher.

Notably, the RSI has dropped to 30, a level traditionally associated with oversold conditions. This suggests that bearish pressure may be fading. Furthermore, the RSI is forming a bullish divergence relative to price, as it reaches oversold levels not seen since the pair began its previous upward leg. This divergence adds weight to the case for a trend reversal, increasing the likelihood of a recovery from current levels.

Should bullish signals hold, long positions from the current support zone could be favored. However, a decisive break below 0.8580 would negate the bullish setup and could open the door to deeper losses.

Trading Recommendations

Trading direction: Buy

Entry price: 0.8628

Target price: 0.8585

Stop loss: 0.8695

Validity: Aug 08, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

The USDCAD extended its gains for the fourth consecutive day on Wednesday, surpassing 1.3790 in early European trading and reaching a one-and-a-half-week high. Market consensus anticipates the Bank of Canada to hold the overnight rate steady at 2.75% during the upcoming meeting, reflecting a cautious stance on the current economic conditions.

SELL USDCAD

Close Time

CLOSED

1.38088

Entry Price

1.34010

1.39700

1.38483 +0.00336 +0.24%

32.4

Pips

Profit

1.34010

1.37764

Exit Price

1.38088

Entry Price

1.39700

Fundamentals

The USDCAD extended its gains on Wednesday, marking a fourth consecutive day of increases, and briefly surpassed 1.3790 in early European trading, reaching a high not seen in approximately one and a half weeks, driven by sustained buying pressure on the U.S. dollar.

Market consensus anticipates that the Bank of Canada (BOC) will hold the overnight rate steady at 2.75% during today's meeting. This would represent the third pause in its easing cycle, reflecting a more cautious approach to policy-making. The unemployment rate dipped to 6.9% in June, indicating a slight improvement in the labor market, which allows the BOC to maintain its current stance.

Despite this, underlying inflationary pressures persist, with the CPI remaining stable around 2.6%, well above the central bank's comfort zone. Given that the current interest rate level is already in a neutral territory, the BOC is likely to maintain a wait-and-see approach, particularly amid ongoing global trade uncertainties and the unresolved status of U.S.-Canada negotiations.

A Reuters survey revealed that roughly two-thirds of economists predict the BOC will implement a 15-basis-point rate cut in September, followed by another cut before year-end. If these forecasts materialize, the policy rate would fall to 2.25%, aligning with weak demand and potential deflationary risks. In this context, market bets on further easing could intensify, increasing the pressure on the Canadian dollar.

Canadian Dollar Could Be Pressured by Policy Expectations and Trade Uncertainty_1

Technical Analysis

From a technical perspective, the USDCAD breached its 55-day SMA this week, with the daily MACD exhibiting a bullish divergence, supporting the view of a corrective rebound from the 1.3538 low.

The near-term target may be 1.4017 (corresponding to a 38.2% retracement of the 1.4791 to 1.3538 decline), although this level will likely present strong resistance. Failure to decisively break above this level could limit the pair's upside potential.

It is important to note that the current USDCAD movement is still part of a corrective rebound following the downtrend from the multi-year high established in February. While the head and shoulders top pattern is not yet complete, the overall structure leans bearish. Therefore, even if the short-term rebound continues, a strategy of going short at the highs is recommended if resistance is encountered, awaiting a price re-entry into the downward trend.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3850

Target Price: 1.3401

Stop Loss: 1.3970

Valid Until: August 14, 2025 23:55:00

Support: 1.3683, 1.3631, 1.3577

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

The Loonie slumps for a fifth consecutive session as the BoC signals caution, while USD/CAD breaks higher amid growing policy divergence and strong US data.

BUY USDCAD

Close Time

CLOSED

1.38099

Entry Price

1.39000

1.37000

1.38483 +0.00336 +0.24%

26.1

Pips

Profit

1.37000

1.38360

Exit Price

1.38099

Entry Price

1.39000

The Canadian Dollar continued its downward slide on Wednesday, falling for the fifth straight session against the US Dollar as the Greenback's rally shows no signs of slowing. By mid-session, USD/CAD had climbed above 1.3810, its highest level since May 30, driven by a combination of firm US macroeconomic data and a cautious monetary policy stance from the Bank of Canada. The pair is now up more than 0.70% so far this week, solidifying the momentum behind the recent breakout.

At the heart of the Loonie’s struggles was the Bank of Canada’s decision to leave its benchmark interest rate unchanged at 2.75%, a move that had been broadly expected by markets. But beyond the rate hold, the central bank’s policy statement struck a notably cautious tone. While acknowledging signs of economic moderation, the BoC remained focused on lingering inflationary risks, especially in core prices, which continue to hover above 3%—well beyond the central bank’s 2% target.

The BoC emphasized that inflation remains stubborn due to resilient consumer spending and ongoing wage growth, both of which are keeping price pressures elevated. The bank’s messaging suggests that any policy easing is unlikely in the immediate term, with officials preferring to assess incoming data before making their next move. This data-dependent posture has left market participants speculating that the BoC may delay rate cuts until later this year, despite growing evidence of a domestic economic slowdown.

Notably, the central bank also highlighted external risks, including growing uncertainty around trade relations with the United States. The BoC pointed to a lack of clarity in US trade policy, warning that while some elements have become more defined, negotiations remain fluid and the threat of new sector-specific tariffs persists. The statement underscored the unpredictability of US trade actions and their potential impact on Canadian exports and broader economic confidence.

Despite the BoC’s cautious rhetoric, it did not entirely rule out the possibility of future rate cuts. According to a Reuters poll conducted ahead of the decision, 18 out of 28 economists forecast that the BoC would begin lowering rates in September, with an expected 25 basis point reduction to 2.50%. The poll also revealed that over 60% of respondents believe at least two more cuts could follow in 2025, with a handful projecting as many as three additional reductions before the end of next year. This outlook keeps alive expectations of a gradual easing cycle, even as policymakers stress the need for prudence.

In contrast, the US Federal Reserve continues to benefit from a spate of strong economic indicators that have reinforced the market’s confidence in the resilience of the US economy. Recent data, including stronger-than-anticipated job creation and persistent consumer demand, has cast doubt on the likelihood of near-term rate cuts by the Fed. Although the US central bank is expected to leave rates unchanged later on Wednesday, all eyes will be on Fed Chair Jerome Powell’s press conference and the updated Summary of Economic Projections, which could offer fresh insights into the Fed’s inflation and growth forecasts.

The divergence in policy trajectories between the BoC and the Fed has created a fertile backdrop for USD/CAD gains. As investors adjust to the growing likelihood that US interest rates will remain elevated for longer, capital continues to flow into the Dollar, amplifying downside pressure on currencies like the Canadian Dollar, which are closely linked to commodity exports and global trade sentiment.

Technical Analysis

From a technical standpoint, the USD/CAD pair has delivered a significant bullish breakout, pushing decisively above the psychologically important 1.3800 level. The move confirmed the resolution of a multi-session triangle formation that had constrained price action since late May. The breakout was bolstered by prior bullish divergence on momentum indicators, signaling a shift in market structure and confirming that buyers have taken control.

The confirmation of this technical breakout opens the door to further gains, with the next upside target seen near 1.3900. Should the pair retest the 1.3800 zone—a level that now acts as key support—it may offer another buying opportunity for traders seeking to join the bullish trend. Momentum continues to favor the upside, particularly in light of the macroeconomic narrative that remains firmly supportive of Dollar strength.

TRADE RECOMMENDATION

BUY USDCAD

ENTRY PRICE: 1.3810

STOP LOSS: 1.3700

TAKE PROFIT: 1.3900

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Traders' Opinions

Summary:

EUR/GBP fell over 0.15% as robust U.S. growth data and a hawkish Fed outlook weighed on the euro, even with UK data weakening and BoE rate cuts expected. Technical signals point to further downside in the pair.

SELL EURGBP

Close Time

CLOSED

0.86400

Entry Price

0.85000

0.87000

0.87295 -0.00021 -0.02%

60.0

Pips

Loss

0.85000

0.87002

Exit Price

0.86400

Entry Price

0.87000

The EUR/GBP currency cross continued its downward trajectory on Monday, shedding more than 0.15% and falling to 0.8636, after briefly testing intraday highs of 0.8659. The shared currency remains under pressure as investors recalibrate positions ahead of a crucial week for monetary policy, particularly with the Federal Reserve’s interest rate decision looming and market attention divided between diverging growth narratives in the U.S., eurozone, and the U.K.

The sharp pullback in EUR/GBP is rooted not only in regional dynamics but also in a robust macroeconomic backdrop in the United States. Freshly released second-quarter GDP figures from the U.S. revealed a stronger-than-expected economic performance, with annualized growth accelerating to 3%, well above the previous estimate and reaffirming the resilience of the American consumer and labor market.

This upbeat growth reading bolsters the case for the Federal Reserve to maintain a hawkish tilt or at least delay any easing decisions, even as inflation shows signs of moderation. With the Fed’s policy announcement due later on Monday at 18:00 GMT, traders have rushed to reprice interest rate expectations, leading to a stronger U.S. dollar broadly — and contributing to risk-off flows that favor the pound over the euro.

On the European side, economic data has been mixed, offering little support to the euro. Eurozone GDP expanded by just 1.4% year-over-year in Q2 2025, a slight deceleration from the previous quarter’s 1.5%. Germany — the bloc’s largest economy — did show some encouraging signs, with its GDP rising 0.4% quarter-on-quarter, up from a stagnant 0.0% reading in Q1.

German retail sales also surprised to the upside, increasing by 1% in June compared to a sharp -1.6% contraction in May and outpacing market forecasts for 0.5% growth. While this offered a modest tailwind for the euro, it has so far failed to materially alter sentiment toward the single currency, especially given lingering concerns about the sustainability of growth across the euro area.

The euro’s weakness can also be attributed to market skepticism over whether the European Central Bank will be in any position to hike further, or even hold steady, should disinflation trends persist into Q3.

Meanwhile, in the U.K., traders continue to wrestle with mixed signals. Last week’s GDP and retail sales data failed to inspire confidence, with the economy appearing increasingly sluggish. Yet, the British pound has remained somewhat resilient, as traders now question how aggressively the Bank of England (BoE) can pursue rate cuts.

Money markets previously priced in up to 50 basis points of easing by the BoE by year-end, but sticky inflation data has complicated this picture. Inflation remains well above target, and internal divisions among policymakers regarding the economic outlook have added a layer of unpredictability to the BoE’s next steps.

This backdrop has created an odd divergence: while expectations for a rate cut next week are intact, sterling has been buoyed by doubts over how much further the BoE can go. That skepticism has provided relative support for the pound — at least against a softer euro.

Technical Analysis

From a technical standpoint, the EUR/GBP has broken below a key rising support trendline, with the recent price action confirming a bearish bias.

Between July 11 and July 24, the pair traded within a tight consolidation range — a classic signal of accumulation or distribution. The breakout to the upside initially suggested bullish accumulation, but the rapid reversal and rejection from a key supply zone point toward a potential bull trap.

This failure to sustain momentum higher has shifted focus to the downside. Price is now approaching a well-defined Reversal Zone, and the institutional footprint suggests that market makers may have completed their distribution phase. The recent impulsive leg down confirms that bears are in control for now, and further downside toward the 0.8500 level or lower is likely if the current trend holds.

TRADE RECOMMENDATION

SELL EURGBP

ENTRY PRICE: 0.8640

STOP LOSS: 0.8700

TAKE PROFIT: 0.8500

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

Very short summary: USD/JPY surged to a two-week high near 149.00 on Wednesday, boosted by upbeat U.S. employment and GDP data, with markets now closely eyeing the Fed's policy guidance amid growing rate cut speculation.

BUY USDJPY

Close Time

CLOSED

149.000

Entry Price

151.500

147.500

155.825 +0.480 +0.31%

84.9

Pips

Profit

147.500

149.849

Exit Price

149.000

Entry Price

151.500

The USD/JPY currency pair staged a decisive rebound in the American session on Wednesday, erasing earlier losses to trade at a fresh two-week high around the 149.00 handle. This renewed strength in the greenback came on the back of stronger-than-expected U.S. economic data, which fueled market optimism about the resilience of the American economy and tempered some of the recent dovish speculation surrounding the Federal Reserve's next policy moves.

At the time of writing, the U.S. Dollar Index (DXY), which tracks the performance of the greenback against a basket of major peers, was up 0.63% on the day at 99.52—marking its highest level since late May. The rally in the dollar helped push USD/JPY through a key resistance level at 148.20, with bulls now eyeing a sustained breakout above the psychologically significant 149.00 threshold.

Wednesday’s data releases provided a notable catalyst for dollar bulls. The U.S. private sector added 104,000 jobs in July, according to ADP, sharply rebounding from June’s surprising 23,000 decline and beating the consensus forecast of 78,000. While the headline number was not stellar by historical standards, the positive turnaround helped reassure investors about the labor market's underlying strength—particularly ahead of Friday’s more comprehensive nonfarm payrolls report.

Complementing the upbeat employment figures, the U.S. Bureau of Economic Analysis reported that GDP expanded at an annualized rate of 3.0% in the second quarter—well above expectations of a 2.4% increase. The robust growth print reinforced the narrative that the U.S. economy continues to outperform global peers despite higher interest rates and persistent inflationary pressures.

In my view, this data underscores the Federal Reserve's balancing act: while inflation has been cooling, the economy has yet to show significant signs of deterioration. This complicates the central bank's efforts to engineer a soft landing without overtightening policy.

Markets are now keenly awaiting the Federal Reserve’s policy statement due later in the session. The central bank is widely expected to leave interest rates unchanged following its July meeting, but traders are bracing for potential shifts in forward guidance—especially in Chairman Jerome Powell’s press conference.

According to the CME FedWatch Tool, market participants are pricing in a roughly 60% probability of a 25 basis-point rate cut at the Fed’s next meeting in September. However, today’s strong macro data may challenge that pricing, particularly if Powell strikes a more data-dependent or hawkish tone.

As a financial reporter, I find this dynamic particularly compelling. The Fed’s challenge is no longer just about inflation—it’s about managing expectations. The soft landing narrative depends not only on economic fundamentals but also on how effectively the Fed can communicate its path forward. In this sense, Powell’s tone today could carry more weight than the rate decision itself.

Technical Analysis

From a technical standpoint, USD/JPY's bounce reflects a resumption of the broader uptrend that has been in place since early 2023. After a brief intraday dip triggered by overbought signals on the Relative Strength Index (RSI), the pair found fresh buying interest near the ascending support trendline and the 50-period Exponential Moving Average (EMA50), reinforcing the bullish setup.

The pair decisively broke through the 148.20 resistance level, a key barrier that had previously capped upside attempts. If USD/JPY can sustain momentum above 149.00, the next upside targets lie at 149.50 and the psychological round number of 151.00, which has historically acted as a line in the sand for Japanese policymakers concerned about yen weakness.

TRADE RECOMMENDATION

BUY USDJPY

ENTRY PRICE: 149.00

STOP LOSS: 147.50

TAKE PROFIT: 151.50

Risk Warnings and Disclaimers

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