USD/CAD Confirms Bullish Breakout With BoC Inaction and Fed Focus Ahead

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

1.38202 +0.00055 +0.04%

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

0.87472 +0.00156 +0.18%

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

155.232 -0.113 -0.07%

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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Eva Chen

Economic

Forex

Summary:

Following a breach of the April high at 0.8737 on Monday, the EURGBP experienced a swift retracement. However, the current market behavior suggests that the short covering is not yet complete. The exchange rate may continue its downward trajectory, with a target range of 0.8520.

SELL EURGBP

Close Time

CLOSED

0.86248

Entry Price

0.85200

0.86930

0.87472 +0.00156 +0.18%

68.2

Pips

Loss

0.85200

0.86930

Exit Price

0.86248

Entry Price

0.86930

Fundamentals

The decline in the EURGBP on Wednesday aligned with market expectations. Post-hoc analysis suggests that the UK's performance in recent trade agreements has outperformed the EU, particularly given the widespread criticism within the EU regarding U.S.-EU trade deals, which the market interpreted as bearish for the euro.

However, a deeper driver may stem from market position adjustments. The divergent fiscal and monetary policy outlooks between the Eurozone and the UK made "long EURGBP" a favored trading strategy this summer.

The latest UK employment data indicates a continued cooling of the labor market, though it has not yet weakened to the extent that would prompt a significant adjustment to the Bank of England's interest rate trajectory. Despite Governor Bailey's statement that further rate cuts hinge on more pronounced economic weakness, the overall trend still leans towards gradual quarterly rate reductions.

Nevertheless, the weakening trend in the labor market persists, potentially exerting downward pressure on the British pound. Consequently, in the short term, short positions on the pound may still hold an advantage, particularly given the limited extent of the euro's weakness, which suggests a relatively constrained downside for the EURGBP. In the medium term, the exchange rate may still maintain a fluctuating upward trend. However, in the short term, market clearing is not yet complete, with technical indicators pointing to a downside target range of 0.8520.

Focus on the Strong Support at the 0.8520 Range as the Short Covering Has Not Concluded_1

Technical Analysis

The EURGBP experienced a significant retracement on Monday after breaching the 0.8737 level (April high). Technically, the completion of the inverse head and shoulders pattern has been confirmed, and the pair is currently undergoing a correction of the upward trend initiated from 0.8354.

The intraday trend leans bearish, with the critical support level currently situated around 0.8600, which aligns with the 38.2% Fibonacci retracement of the 0.8354 to 0.8752 advance. A sustained break below this level could see further downside, with the next target range at 0.8520.

A breach above the 0.8684 short-term resistance level would alleviate the current downward pressure and restore a neutral outlook.

From a broader perspective, the rebound from the 0.8221 low has not yet demonstrated sufficient strength to signal a reversal of the long-term downtrend from the 0.9267 high in 2022. However, even if this is a typical intermediate correction, the exchange rate could still test the 61.8% retracement level of the 0.9267 to 0.8221 decline, specifically at 0.8867. As long as the 55-week SMA (currently at 0.8486) is not decisively breached, the intermediate-term uptrend remains constructive.

Trading Recommendations

Trading Direction: Sell

Entry Price: 0.8646

Target Price: 0.8520

Stop Loss: 0.8693

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

Support: 0.8629, 0.8619, 0.8596

Resistance: 0.8658, 0.8684, 0.8698

Risk Warnings and Disclaimers

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Alan

Forex

Summary:

Recently, the dollar has continued to strengthen due to favorable trade agreements, which in turn weighed on the GBPUSD downside. The technical analysis shows a head and shoulders top pattern, increasing the possibility of short-term bearishness.

SELL GBPUSD

EXP

EXPIRED

1.33950

Entry Price

1.31300

1.35200

1.33334 +0.00022 +0.02%

Pips

EXPIRED

1.31300

1.33050

Exit Price

1.33950

Entry Price

1.35200

Fundamentals

In the UK, the latest data showed that food inflation climbed again to 4.0% in July, the sixth consecutive month of upward movement, mainly driven by disturbances in global supplies such as meat and tea. Headline retail price inflation remains moderate, but rising food costs are pressuring consumer purchasing. This phenomenon has made the market more cautious about the UK's growth prospects and has increased the Bank of England's monetary policy dilemma.

At last month's monetary policy meeting, the Bank of England decided to keep the benchmark interest rate at 4.25% by a majority of 6 votes to 3. Meanwhile, three members voted for a 25-basis-point rate cut, reflecting internal concerns about the economic slowdown and expectations of inflation easing. The market generally expects that the Bank of England may launch the first rate cut in August or September, but if structural price pressures such as food and energy are difficult to ease in the short term, the pace of rate cuts may be delayed. In the US, bullish factors have been repeatedly reported this week. The dollar index has remained strong, rising by over 2.2% this month, approaching the 99.00 mark. This is partly due to the favorable trade agreement between the US and Europe, and partly because of a series of trade agreements signed recently between the US and Asian-Pacific countries, boosting market demand for the dollar. At the same time, although some dovish officials in the Federal Reserve still expect an interest rate cut this year, the majority of hawkish officials prefer to maintain high interest rates to combat inflation. This has made the dollar's short-term strength difficult to change.

Technical Analysis

Is the Head and Shoulders Top Pattern Formed, and Has the Trend Reversed?_1

In the daily chart, GBPUSD has fallen through the 60-day SMA since falling back from the high of 1.3788. Meanwhile, the 10-day SMA and 20-day SMA are down through the 60-day SMA to form a dead cross, which is exerting pressure on the exchange rate.

At present, the candlestick in the GBPUSD daily chart has formed a head and shoulders top pattern. The trend in the short term may be more inclined to fall, but the RSI indicator has returned to around 39, indicating that it has entered the oversold zone. There may be a rebound demand in the short term. It is recommended to wait for the rebound to end and then go short at highs.

Trading Recommendations

Trading direction: sell

Entry price: 1.3395

Target price: 1.3130

Stop loss: 1.3520

Expiration date: 2025-08-13 23:00:00

Support: 1.3307, 1.3110

Resistance: 1.3400, 1.358

Risk Warnings and Disclaimers

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Tank

Commodity

Economic

Forex

Summary:

The escalation of gold tariff risks raises concerns about silver demand; negotiations between China and the U.S. remain inconclusive, making it unlikely for silver to gain fundamental support from its industrial dual-use characteristics.

SELL XAGUSD

EXP

EXPIRED

38.500

Entry Price

37.300

39.000

58.346 +0.029 +0.05%

Pips

EXPIRED

37.300

36.607

Exit Price

38.500

Entry Price

39.000

Fundamentals

Although the trade truce between the U.S. and the EU temporarily alleviated geopolitical tensions, persistent tariffs continue to threaten global industrial demand—a critical component of silver consumption. The majority of EU exports to the U.S. still face a 15% tariff, with inflation concerns and trade uncertainties remaining prevalent. The UK- U.S. agreement's 10% tariff lock-in indicates that elevated costs may remain entrenched across the supply chain. Given the ongoing lack of consensus in U.S.-China negotiations, silver's industrial dual-use properties may struggle to provide fundamental support. The Federal Reserve's policy decision announced today will be pivotal for silver's price trajectory. While a rate cut is not expected, any signs of a dovish shift could weaken the dollar and bolster precious metals. Conversely, a hawkish stance or an upward revision of interest rate expectations could further depress gold and silver prices.

Technical Analysis

The silver 4H timeframe indicates a consolidation with a downward bias, with Bollinger Bands exhibiting a triple contraction pattern pointing downward. Currently, the price is trending below the EMA12, and a bullish crossover in MACD could signal a potential rebound towards the middle Bollinger Band around 38.5, followed by further decline. Failure to break above EMA12 may result in a direct decline towards approximately 37.3. In the 1H timeframe, MACD is crossing below the zero-axis, forming a death cross, which is a strong bearish reversal signal. The price is oscillating within a range bounded by the upper and lower Bollinger Bands, forming a consolidation zone, while RSI shows a double top pattern, suggesting a high probability of a breakout to the downside tonight. Therefore, the current trading strategy is to go short at the highs.

Dark Clouds Loom Overhead! Silver Prices May Crash!_1

Dark Clouds Loom Overhead! Silver Prices May Crash!_2

Trading Recommendations

Trade Direction: Sell

Entry Price: 38.5

Target Price: 37.3

Stop Loss: 39

Support: 37.5, 37.2, 37

Resistance: 38.3, 38.5, 39

Risk Warnings and Disclaimers

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Tank

Commodity

Forex

Summary:

As the Federal Reserve is set to announce its interest rate decision on Wednesday, markets expect rates to remain within the 4.25%-4.50% range. However, Fed Chair Jerome Powell's remarks could signal future policy direction, with a dovish tone potentially triggering a strong rebound in gold.

BUY XAUUSD

Close Time

CLOSED

3309.77

Entry Price

3330.00

3300.00

4215.80 +17.89 +0.43%

97.7

Pips

Loss

3300.00

3299.94

Exit Price

3309.77

Entry Price

3330.00

Fundamentals

With the Federal Reserve's rate decision due Wednesday, markets anticipate rates will stay between 4.25% and 4.50%. Yet, Fed Chair Jerome Powell's speech may hint at future policy shifts, and a dovish stance could fuel a significant rally in gold. Meanwhile, U.S. President Donald Trump's reciprocal tariffs are set to take effect on Friday. These geopolitical developments could sway investor sentiment across risk assets, and gold may react sharply based on market perceptions of risk and inflation.

The U.S. Dollar Index (DXY) initially surged yesterday but sharply retreated overnight, ultimately breaking below the key 99 level today. The primary reason lies in differing interpretations of the EU-U.S. agreement (including statements from relevant officials). Key uncertainties revolve around tariffs on pharmaceuticals, chemicals, and aircraft, as well as potential quotas on specific metals and products. Thus, until trade war dynamics clarify, the DXY is expected to remain range-bound.

Technical Analysis

On the daily chart, gold has formed a triangular consolidation pattern, with MACD bullish histogram bars shrinking for three consecutive sessions, which is a bearish divergence signal. Meanwhile, RSI hovers at the neutral 47 level, suggesting short-term consolidation or a downward trend. The 4H chart indicates a golden cross below the 0-axis, with the signal line and the MACD line approaching the 0-axis. Meanwhile, gold consolidates horizontally around the EMA12, signaling a potential rebound. A likely next target is the Bollinger Band midpoint and EMA50 at 3,338 and 3,346, respectively. If the breakout is strong enough to surpass 3,346 and 3,350, further upside toward 3,380 is possible. Conversely, failure to break higher could lead to a drop below the 3,300 support level, with the next key support around 3,280. Therefore, buying on dips is recommended.