USD/CAD Eyes Further Decline as U.S. Dollar Sinks Under Fed, Fiscal Pressure

Economic

Summary:

USD/CAD trades in a narrow range near its lowest levels since October 2024 as investors brace for the Bank of Canada’s policy announcement.

SELL USDCAD

Close Time

CLOSED

1.37000

Entry Price

1.36000

1.37600

1.38235 +0.00088 +0.06%

45.2

Pips

Profit

1.36000

1.36548

Exit Price

1.37000

Entry Price

1.37600

The USD/CAD pair is treading water near the 1.3715–1.3720 zone as the North American session looms, marking a continued phase of consolidation that reflects traders’ reluctance to place significant directional bets ahead of a key event. The Canadian Dollar has remained steady, holding recent gains after the pair touched its lowest level since October 2024 earlier this week. With the Bank of Canada (BoC) set to announce its latest policy decision today, market participants appear content to remain on the sidelines until they receive more clarity on the path ahead for Canadian monetary policy.

While the BoC is broadly anticipated to maintain its benchmark interest rate at 2.75%, the real market-moving potential lies in the accompanying policy statement and the remarks from Governor Tiff Macklem during the post-meeting press conference. The BoC finds itself navigating a delicate balancing act. On one hand, inflationary pressures in Canada have eased, with recent data showing moderation across both headline and core readings. On the other, signs of economic softness — particularly in consumer spending and business investment — have intensified expectations that a pivot toward rate cuts is not too far off.

A dovish tone from the central bank could open the door for further Canadian Dollar weakness, offering a window for a short-term rebound in USD/CAD. However, should policymakers strike a more balanced or cautious tone — emphasizing data dependency and a need for patience — the Loonie could retain its strength and drive the currency pair even lower.

Complicating the picture further is the parallel narrative developing in the United States, where the Federal Reserve’s future rate trajectory continues to dominate FX sentiment. Although the Fed has kept a tight lid on rate-cut speculation in public commentary, financial markets are becoming increasingly confident that a series of rate reductions will materialize in 2025. This growing conviction has applied sustained downward pressure on the U.S. Dollar, particularly against currencies with more hawkish or neutral central banks.

Today’s U.S. economic calendar offers two key data points — the ADP employment report and the ISM Services PMI — both of which could shape short-term direction for the greenback. A disappointing readout on private-sector jobs or signs of cooling services-sector activity would reinforce expectations for Fed policy easing, potentially undermining USD strength further. Conversely, a surprise on the upside may provide a fleeting reprieve, though the broader downtrend in dollar sentiment suggests any rallies are likely to be capped.

Another structural headwind facing the U.S. Dollar stems from mounting concerns about America’s deteriorating fiscal position. The Congressional Budget Office has flagged persistent deficits and rising debt-servicing costs as long-term risks. While fiscal issues rarely move markets on a day-to-day basis, the sheer scale of the imbalance is beginning to cast a shadow over the dollar’s long-term appeal. These fiscal anxieties, coupled with softer economic data and dovish Fed expectations, form a potent mix that keeps the U.S. Dollar on the defensive.

In Canada, the commodity backdrop also plays a role. The Canadian Dollar, closely tied to crude oil due to the country’s status as a major exporter, has seen limited downside pressure as oil prices retreat modestly. Brent and WTI benchmarks slipped in recent sessions, driven by renewed global demand concerns and the uncertain outlook for China’s post-COVID recovery. However, the weakness in oil has not been dramatic enough to trigger a strong CAD selloff, suggesting that traders are prioritizing monetary policy signals over commodity flows for now.

Technical Analysis

Technically, the USD/CAD chart paints a clearly bearish picture. The pair has broken down from a previously rising channel, confirming a shift in structure. Price action remains decisively below the 50-day exponential moving average, a key indicator that suggests bearish momentum is gaining traction.

The Relative Strength Index (RSI) has also turned south, having recently exited overbought territory without triggering a meaningful bounce — a classic sign of trend continuation rather than reversal. Price appears to be gravitating toward the 1.3690 region, a key support level that has now been breached intraday.

Should this level fail to hold on a daily closing basis, the pair would likely drift toward deeper downside targets in the 1.3660–1.3600 area, zones that were previously flagged by bearish chart formations.

TRADE RECOMMENDATION

SELL USDCAD

ENTRY PRICE: 1.3700

STOP LOSS: 1.3900

TAKE PROFIT: 1.3600

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

OPEC+ will increase production in July, and the market supply pressure will continue to rise. Meanwhile, the demand side has been hit hard by both tariffs and the industrial sector, with the demand for oil plummeting.

SELL WTI

Close Time

CLOSED

63.039

Entry Price

51.500

64.800

59.360 -0.449 -0.75%

176.1

Pips

Loss

51.500

64.801

Exit Price

63.039

Entry Price

64.800

Fundamentals

Recently, the policy shift of OPEC+ has triggered a structural transformation in the crude oil market. At the latest meeting, OPEC+ announced that it would increase production by 411,000 barrels per day starting in July, marking Saudi Arabia's clear shift to the "market share priority" strategy. In contrast, the previous proposal by Russia to suspend production increases was directly rejected. Although the implementation rate of the first two rounds of production increases was less than 20%, the idle production capacity of about 800,000 barrels per day of Saudi Arabia and the United Arab Emirates will be released this time. In addition, combined with the capacity cheating of countries such as Kazakhstan, Citibank expects the actual increase in July to be 386,000 barrels per day. This has led to an expansion of the global crude oil supply surplus to 2.2 million barrels per day. Citibank warns that if OPEC+ maintains the current path, WTI may fall to $45 by the end of the year.

More critically, the market's expectation of continued production increases in August has risen to 65%. Morgan Stanley pointed out that there are almost no signs of a slowdown in the production increase rhythm, while Goldman Sachs, although believing that August may be a "policy inflection point", admits that the risk of continued production increases still exists.

In addition, the demand side is facing a double blow of "tariffs + industry". The Trump administration has doubled the steel tariff to 50%, directly pushing up manufacturing costs. US factory orders in May have hit the largest decline since 2020, and the manufacturing PMI has shrunk for four consecutive months to 48.5, with the refinery profit compression severely curbing the demand for crude oil processing. At the same time, the demand engine in Asia has clearly stalled: China's gasoline and diesel sales in April plummeted by 7% and 15% month-on-month respectively, and the port crude oil turnover has stagnated. Moreover, India has launched industrial power rationing due to extreme heat, resulting in a sharp drop in industrial oil demand, and the Asian crude oil premium has fallen to a three-year low.

Technical Analysis

OPEC+ Production Increase, a "Nuclear Bomb" Breaks through the $60 Barrier, Triple Iron Tops Restrict Rebound _1

The daily chart suggests that WTI is running in a textbook-style downward channel. At present, there are triple pressures above the current price: $63.13(MA60), $64.01 (the high on May 21st), and $64.30 (the weekly neckline). These three positions form a pressure resonance, adding restrictions to WTI in the short term.

At present, if the price closes below the MA60 today, it will further increase the possibility of a decline. The first target of the decline will be the support level of $55.00. If this level is breached, WTI may depreciate to $50.00.

Trading Recommendations

Trading direction: Sell

Entry price: 63.00

Target price: 51.50

Stop loss: 64.80

Valid Until: June 18, 2025, 23:00:00

Support: 59.39/55.00

Resistance: 63.13/64.01

Risk Warnings and Disclaimers

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Manuel

Economic

Central Bank

Summary:

This level aligns with a key resistance zone that has historically acted as a turning point in price action.

SELL USDCHF

Close Time

CLOSED

0.82470

Entry Price

0.81930

0.82700

0.80403 -0.00052 -0.06%

54.0

Pips

Profit

0.81930

Exit Price

0.82470

Entry Price

0.82700

The latest inflation data from Switzerland revealed a slight year-over-year decline in consumer prices for May, with the Consumer Price Index (CPI) falling by 0.1%, compared to a flat reading in April, as reported by the Swiss Federal Statistical Office. The result matched market expectations, reinforcing ongoing concerns over subdued inflation dynamics in the region.

On a monthly basis, CPI edged up by 0.1% in May, in line with forecasts, following a stagnant reading the previous month. The report attributed this modest increase to several factors, including rising prices for housing rents and international package holidays. Additionally, fresh fruits and vegetables saw price gains. However, these upward pressures were partially offset by declines in air transportation, supplemental lodging services, and heating oil.

Investors continue to monitor the Swiss National Bank’s (SNB) policy outlook closely, with strong market expectations pointing to a potential rate cut to zero at the June policy meeting. The risk of deflation remains a significant concern, especially given that headline inflation remained flat on a yearly basis in April, while core inflation declined to 0.6% from 0.9%. Such a low inflation environment gives the SNB more leeway to pursue accommodative measures.

Meanwhile, across the Atlantic, Chicago Fed President Austan Goolsbee reiterated a cautious tone aligned with broader Federal Reserve messaging. While he acknowledged that U.S. economic indicators remain relatively solid, he emphasized the uncertainty created by President Trump’s increasingly aggressive tariff policies. Goolsbee noted that the Fed is beginning to account for potential economic consequences stemming from sweeping trade restrictions.

Fed Governor Lisa D. Cook offered a similarly wary perspective, underscoring that, despite current economic stability, trade-related risks continue to pose a threat to long-term growth.

The ISM Manufacturing PMI for May added to these concerns, as the headline figure slipped slightly to 48.5 from April’s 48.7—marking the third consecutive month of contraction. While some sub-indices showed mild improvements, including New Orders at 47.6 (up from 47.2) and Employment at 46.8 (up from 46.5), the Import Index dropped sharply to 39.9, highlighting the impact of weaker trade flows and tariff-driven headwinds.

Market focus now shifts to upcoming U.S. labor data, starting with Tuesday’s JOLTS report, which is expected to show around 7.1 million job openings in April—just under the 7.19 million figure from March. These results will set the tone for Wednesday’s ADP employment numbers and Friday’s highly anticipated Nonfarm Payrolls report. Strong labor figures would be necessary to counteract concerns raised by weakening manufacturing performance and help the dollar maintain upward traction. Bearish Momentum Could Regain Control for a Pullback_1

Bearish Momentum Could Regain Control for a Pullback_1

Technical Analisys

USD/CHF has recently staged a short-term rally, climbing from the previous session’s local low of 0.8156 to a high of 0.8247. This level aligns with a key resistance zone that has historically acted as a turning point in price action. Given its past significance, this area could once again attract bearish pressure if it continues to act as a barrier to further gains.

The RSI indicator has surged to 75, a level last observed during the May 28 high near 0.8348. This move creates a notable divergence between price and momentum: while price action has not reached previous highs, the RSI has climbed more aggressively. This divergence could be an early signal of waning bullish momentum and a potential trend reversal, with downside targets potentially extending toward the lower boundary of the current trend channel.

However, should USD/CHF break convincingly above the resistance zone, it would invalidate the divergence signal and open the door for further upside. Until then, the risk of a corrective pullback remains on the table, especially as technical exhaustion begins to emerge.

Trading Recommendations

Trading direction: Sell

Entry price: 0.8247

Target price: 0.8193

Stop loss: 0.8270

Validity: Jun 13, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This shift from resistance to support is often viewed as a bullish signal, and it could provide a platform for buyers to re-enter the market.

BUY EURUSD

Close Time

CLOSED

1.13752

Entry Price

1.14200

1.13350

1.16529 +0.00103 +0.09%

44.8

Pips

Profit

1.13350

1.14200

Exit Price

1.13752

Entry Price

1.14200

Inflationary pressures in the Eurozone appear to be cooling faster than expected, potentially granting the European Central Bank (ECB) more room to maneuver on the monetary front. The May Consumer Price Index (CPI) report showed no monthly change in headline inflation, while the annual rate fell below 2% for the first time in eight months, down from April’s 2.2%.

Core CPI also remained flat month-over-month, with the yearly figure easing to 2.3%—a sharper-than-anticipated decline from the previous 2.7%, and better than the forecasted dip to 2.5%. These figures will likely be welcomed by the ECB ahead of Thursday’s policy meeting, where a widely anticipated 25-basis-point rate cut would mark the eighth consecutive reduction.

ECB President Christine Lagarde is expected to maintain a neutral tone, reiterating that future policy decisions will remain data-dependent. However, with market participants already pricing in at least one more cut by year-end, expectations of continued easing could weigh on the euro in the near term.

Meanwhile, in the U.S., Chicago Fed President Austan Goolsbee echoed a cautious stance aligned with broader Federal Reserve sentiment. While he acknowledged current economic conditions look relatively healthy, he flagged tariff-related uncertainty stemming from President Trump’s aggressive trade stance as a potential headwind. Goolsbee noted that the Fed is beginning to factor in possible economic fallout from broad-based tariff increases.

Fed Governor Lisa D. Cook struck a similar tone, emphasizing that although the U.S. economy appears stable for now, trade policies remain one of the most significant threats to sustained economic health.

Tuesday’s ISM manufacturing data reinforced concerns over softening momentum, with the headline index dipping slightly to 48.5 in May, from 48.7 in April. This marked the third consecutive month of contraction. Sub-indexes were generally weak but offered some silver linings: New Orders rose slightly to 47.6 from 47.2, while the Employment index ticked up to 46.8 from 46.5. However, the Import index plunged more than seven points to 39.9, signaling ongoing strain on trade flows, exacerbated by tariff headwinds and recent soft trade data.

All eyes now turn to U.S. labor market releases, starting with JOLTS job openings on Tuesday, expected to show a relatively stable demand with 7.1 million openings in April—only slightly below March’s 7.19 million. These numbers will frame Wednesday’s ADP employment data and Friday’s pivotal Nonfarm Payrolls report. Strong job figures will be needed to offset concerns raised by weakening manufacturing activity and support the dollar’s recovery. Support and Divergence Could Unlock a Bullish Turn_1

Support and Divergence Could Unlock a Bullish Turn_1

Technical Analisys

EUR/USD has pulled back from its recent local high at 1.1454, retreating toward the 100- and 200-period moving averages. The pair found support around 1.1363—a level that previously acted as resistance. This shift from resistance to support is often viewed as a bullish signal, and it could provide a platform for buyers to re-enter the market, potentially fueling a fresh upward leg.

From a momentum perspective, the RSI has declined to 33, approaching oversold territory. More notably, it has developed a bullish divergence: while the price reached lower lows, the RSI has not followed suit, suggesting that downward momentum may be fading. If this support level holds, the pair could initiate a recovery targeting the 1.1418 zone, where further resistance might come into play.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1375

Target price: 1.1420

Stop loss: 1.1335

Validity: Jun 13, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

OPEC+ decided at the end of last week that crude oil production will increase by 411,000 barrels per day in July. This is the third consecutive production increase by OPEC+. Increased geopolitical tensions offset the bearish oil prices.

SELL WTI

Close Time

CLOSED

63.068

Entry Price

57.040

64.800

59.360 -0.449 -0.75%

173.2

Pips

Loss

57.040

64.801

Exit Price

63.068

Entry Price

64.800

Fundamentals

Crude oil prices surged on Monday following drone strikes by Ukraine on Russian territory, raising concerns about potential supply disruptions. These attacks offset OPEC+'s planned production increase of 411,000 barrels per day in July.

While the market anticipated the supply increase, it should have a limited impact on prices in the short term. However, the outlook for oversupply remains unchanged through the end of 2025. With no indication of OPEC+ slowing its quota increases, WTI crude could trade around US$50 per barrel by the first half of 2026.

The European Commission announced on the 2nd that the EU is preparing its 18th round of sanctions against Russia, focusing on Russian energy revenues. The new sanctions will target the Nord Stream infrastructure, Russian banking, and further reductions in the crude oil price cap.

In Berlin, European Commission President von der Leyen met with a delegation led by U.S. Republican Senator Graham to coordinate on Russia sanctions. Following the meeting, the EU announced Graham's commitment to intensify pressure on Russia, with a bill slated for Senate consideration next week, a move von der Leyen welcomed. She emphasized that aligning EU and U.S. actions would significantly amplify the sanctions' impact.

Looking ahead, crude oil price movements may continue to be influenced by API and EIA inventory data, alongside global trade developments.

Increased Geopolitical Tensions Offset Crude Oil Oversupply_1

Technical Analysis

WTI crude oil prices exhibit consolidation following a test of resistance near US$63.61, currently trading around US$62.30 per barrel. WTI appears to be forming a horizontal trading range, with key support at US$60.50 and recent highs near US$63.24.

The bearish bias persists, given the continued validity of the 1H head and shoulders top pattern. However, in terms of momentum, the stochastic oscillator is currently hovering in neutral territory, indicating neither bulls nor bears have decisive control. Further volatility is anticipated, necessitating close monitoring for potential divergences or momentum shifts.

The Relative Strength Index is also in a mid-range position, reflecting the ongoing consolidation phase. While remaining above the midpoint, maintaining a marginally bullish outlook, a break below 50 would signal increased selling pressure.

Trading Recommendations

Trading Direction: Sell

Entry Price: 63.30

Target Price: 57.04

Stop Loss: 64.80

Valid Until: June 18, 2025 23:55:00

Support: 61.71、60.50、59.43

Resistance: 63.27、63.51、64.04

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Economic

Summary:

EUR/JPY holds near 163.30 as traders await key Eurozone inflation data and digest hawkish remarks from BoJ Governor Ueda.

BUY EURJPY

Close Time

CLOSED

163.698

Entry Price

165.000

162.700

181.131 +0.258 +0.14%

70.5

Pips

Profit

162.700

164.403

Exit Price

163.698

Entry Price

165.000

The euro held steady against the Japanese yen during the Asian trading hours on Tuesday, with EUR/JPY lingering around 163.30 as investors looked ahead to the release of critical Eurozone inflation figures. The pair’s stability followed modest gains in the previous session, underlining market resilience amid central bank crosswinds and renewed global trade tensions.

Later in the day, the spotlight will turn to the Eurozone’s Harmonized Index of Consumer Prices (HICP) report—a key barometer for inflation across the bloc. Market participants are eager to see whether price pressures have subsided enough to shift the European Central Bank’s cautiously hawkish stance. A higher-than-expected reading could fuel speculation that the ECB might hold interest rates higher for longer, thereby bolstering the euro. On the other hand, a downside surprise could weaken the case for tight monetary policy, potentially dragging on the single currency.

While the euro awaits inflation clarity, the Japanese yen is facing its own tug-of-war as markets digest signals from the Bank of Japan. Speaking on Tuesday, BoJ Governor Kazuo Ueda reiterated that the central bank is prepared to raise interest rates if inflation and economic momentum develop as forecasted. He emphasized that Japan’s economy continues to recover moderately despite pockets of weakness, and that corporate earnings and business sentiment remain on a positive trajectory. Ueda also revealed that the central bank will revisit its bond tapering plans at its next policy meeting, taking into account feedback from bond market participants.

Despite this hawkish tone, the yen failed to find meaningful support. Part of the reason lies in broader currency market dynamics, particularly a modest rebound in the U.S. dollar. The dollar’s recovery is being driven largely by technical correction and positioning shifts as traders brace for heightened trade-related tensions. The Biden administration is expected to enact new “double import tariffs” on steel and aluminum, raising duties from 25% to 50%, starting Wednesday. Although these measures are part of the lingering legacy of Trump-era trade policies, their reimplementation comes at a delicate time, as concerns about stagflation grow within the U.S. economy.

Europe, meanwhile, has responded to Washington’s renewed protectionist stance with sharp criticism. Over the weekend, the European Commission expressed strong disappointment at Trump's plan to escalate tariffs, warning that such moves threaten to derail ongoing trade negotiations. In a statement quoted by the BBC, the Commission said Trump's decision “undermines the efforts” of both parties to reach a balanced agreement and suggested that Brussels may consider countermeasures if the U.S. proceeds.

This resurgence in trade tensions comes at a time when the global economy is delicately balanced between cooling inflation and persistent structural risks. For currency markets, this geopolitical overhang could trigger fresh bouts of volatility, especially in euro and yen crosses, which are often sensitive to macroeconomic uncertainty and shifts in global risk sentiment.

Technical Analysis

On the technical front, EUR/JPY continues to trade within an established ascending channel that has shaped the pair’s bullish trajectory in recent weeks. After bouncing from a key support level near 163.000, the euro regained upward momentum, signaling strong interest from buyers looking to maintain control.

The structure of the rally suggests that as long as the pair holds above 163.000, bulls are likely to remain in command. Momentum has been building steadily, with the next immediate level of interest emerging around 163.700—a zone that could attract short-term supply.

A break above this level would set the stage for a potential push toward 165.00, a key resistance that may prove pivotal for determining whether the rally extends further.

TRADE RECOMMENDATION

BUY EURJPY

ENTRY PRICE: 163.70

STOP LOSS: 162.70

TAKE PROFIT: 165.00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

Gold prices held below the four-week highs touched earlier on Tuesday. The intraday decline was driven by the emergence of some dollar buying, which tends to weaken demand for gold.

BUY XAUUSD

Close Time

CLOSED

3355.67

Entry Price

3500.00

3299.00

4209.59 +11.68 +0.28%

566.7

Pips

Loss

3299.00

Exit Price

3355.67

Entry Price

3500.00

Fundamentals

Gold prices retreated on Tuesday, partially reversing Monday's gains, yet remained elevated amid renewed trade concerns. Resurfacing trade anxieties and escalating geopolitical tensions bolstered gold's safe-haven appeal.

Trump's prior threat to double tariffs on steel and aluminum to 50% starting Wednesday prompted retaliatory statements from Canada and the EU. Concurrently, heightened geopolitical tensions following Ukrainian drone strikes on Russia solidified gold's status as a safe-haven asset, supporting prices.

This recent gold price surge is primarily driven by multiple factors. Given that the bullish drivers are largely structural, a continued strong performance from gold is probable. Current price trajectories suggest that gold is nearing its previous all-time high of US$3,500.

Increased Geopolitical Tensions Consolidate Gold's Safe-Haven Appeal_1

Technical Analysis

Technically, gold prices are more likely to continue and approach or even break through the highest level of US$3500.

Following yesterday's rally, the price action is currently forming a bullish flag pattern. A breakout from this pattern is anticipated to generate significant upward momentum, with a potential to surpass the recent high of US$3,438, nearing the all-time high.