USD/CAD Holds Near 1.3920 as Traders Weigh U.S. Shutdown Risks, Tariffs, and Canadian Growth Signals

Warren Takunda

Traders' Opinions

Summary:

USD/CAD steadied around 1.3920 as traders weigh U.S. shutdown risks, Trump’s new tariffs, and Canadian growth data.

BUY USDCAD

Close Time

CLOSED

1.39100

Entry Price

1.41500

1.38300

1.38204 +0.00057 +0.04%

17.5

Pips

Profit

1.38300

1.39275

Exit Price

1.39100

Entry Price

1.41500

The U.S. dollar-to-Canadian dollar pair traded largely unchanged in early Asian hours on Tuesday, hovering near the 1.3920 level after a subdued performance in the previous session. While the market tone remains cautious, the underlying dynamics suggest a tense and unpredictable trading environment, shaped as much by politics in Washington as by the fundamentals on either side of the border.

The immediate driver of sentiment has been renewed uncertainty over the U.S. government’s funding outlook. President Donald Trump has openly threatened mass federal job cuts if Congress fails to pass a new spending bill, heightening fears of a shutdown that could disrupt both economic reporting and government operations. Investors are particularly concerned about the potential delay or cancellation of this week’s closely watched U.S. jobs report, a release that often serves as the single most important monthly data point for dollar traders. The prospect of flying blind without nonfarm payrolls data could significantly reduce liquidity and increase volatility across dollar pairs, including USD/CAD.

Trump’s combative stance on trade policy has added yet another layer of complexity. The President has unveiled sweeping new tariffs, including a 100% levy on branded or patented pharmaceutical imports unless manufacturers relocate production to U.S. soil. He also introduced 50% tariffs on kitchen cabinets and bathroom vanities, and a 25% tariff on truck imports. These measures mark an escalation of protectionist policies that could further stoke inflationary pressures while raising questions about the long-term competitiveness of U.S. industries. For markets, the unpredictability of Trump’s approach injects an element of political risk that may overshadow otherwise supportive U.S. data in the near term.

Meanwhile, Canadian economic data has provided some relief for the loonie. Statistics Canada revised July GDP growth upward to 0.2% while reporting flat activity in August, easing fears that the economy might be slipping into contraction. While the data is not spectacular, it suggests that Canada remains on steadier footing than some had anticipated, offering the Bank of Canada a bit more breathing room in its balancing act between growth concerns and inflation risks.

Still, the Canadian dollar’s performance remains heavily tied to commodities, particularly oil, which suffered sharp losses in the last session. Crude prices fell more than 3% after Iraq’s Kurdistan region resumed oil exports following a 2.5-year suspension, pushing additional supply into an already saturated market. According to the new agreement, initial flows of 180,000–190,000 barrels per day will be directed to Turkey’s Ceyhan port, effectively restoring a key supply channel. For the loonie, this renewed pressure on oil represents a headwind that limits its upside potential, even in the face of steady domestic growth.

Technical Analysis

From a technical perspective, USD/CAD has shown signs of resilience. The pair broke out above a descending trendline, signaling bullish momentum and potentially setting the stage for further gains. Traders may watch for a retest of the broken resistance zone before a push higher, with near-term targets at 1.4000, 1.4050, and 1.4150. Recent stronger-than-expected U.S. data has bolstered the case for a higher dollar, and unless Washington’s political brinkmanship derails sentiment, the path of least resistance still looks upward.

The bigger question, however, is whether political risk can derail fundamentals. Trump’s threats of tariffs and shutdowns may keep the dollar from realizing its full potential, leaving traders caught between solid economic data and a White House that seems determined to test the limits of investor patience. For now, USD/CAD’s stability near 1.3920 reflects a market waiting for clarity—but it may not remain this calm for long.

TRADE RECOMMENDATION

BUY USDCAD

ENTRY PRICE: 1.3910

STOP LOSS: 1.3830

TAKE PROFIT: 1.4150

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Summary:

Gold retreated from an early record high of $3,871 on Tuesday as European profit-taking set in, with XAU/USD sliding to around $3,814 despite a weaker dollar and subdued yields.

BUY XAUUSD

Close Time

CLOSED

3820.01

Entry Price

4000.00

3780.00

4209.26 +11.35 +0.27%

294.1

Pips

Profit

3780.00

3849.42

Exit Price

3820.01

Entry Price

4000.00

Gold’s spectacular rally paused on Tuesday after briefly touching a new all-time high near $3,871 per ounce in early Asian trading. The precious metal’s surge — fueled by persistent safe-haven flows and expectations of lower U.S. borrowing costs — met stiff resistance as European traders locked in gains, prompting a swift pullback.

By mid-afternoon in London, spot gold (XAU/USD) was trading near $3,814, down around 0.5% on the day, and roughly $78 below the intraday peak. The retreat came even as the U.S. dollar softened and Treasury yields stayed subdued, a sign that the move was driven more by technical dynamics than a fundamental shift in investor sentiment.

Market participants say the correction was overdue after gold’s relentless climb over the past several weeks. “We saw a classic bout of profit-taking,” said a London-based precious-metals trader. “Momentum was stretched, and once we failed to push through $3,880 decisively, short-term players rushed to book gains.”

Still, the broader narrative for gold remains constructive. The metal has been buoyed by a confluence of macroeconomic and political factors that continue to encourage investors to seek out safe-haven assets. Chief among them is the looming risk of a U.S. government shutdown. Congress faces a deadline at midnight Tuesday to pass a funding bill; failure to do so could disrupt federal operations and dampen confidence in the U.S. economy.

Geopolitical tensions, including persistent flashpoints in Eastern Europe and the Middle East, and the renewed U.S. tariffs on select imports, have also reinforced gold’s appeal as a hedge against uncertainty and inflation. In such an environment, dips are increasingly seen as opportunities rather than trend reversals.

Technical Analysis

From a technical perspective, Tuesday’s pullback served as a healthy consolidation after the metal’s extended rally. Signs of overbought conditions on the Relative Strength Index (RSI) that had built up during the recent climb. The retreat helped ease those pressures, with traders noting that gold’s ability to hold above the $3,800 psychological level underscores the underlying bullish tone.

Gold continues to trade above its short-term rising trend line and remains comfortably supported by the 5-day exponential moving average (EMA5) — a signal that upward momentum is intact as long as prices stay above the immediate support levels. A decisive break below $3,780, however, could prompt deeper retracement, though many still see strong dip-buying interest on any approach toward that region.

Markets need to breathe. The rally has been extraordinary — from below $3,700 to nearly $3,900 in just days. A pause at these levels is not only expected but healthy if we’re to build a sustainable push toward $4,000.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 3820

STOP LOSS: 3780

TAKE PROFIT: 4000

Risk Warnings and Disclaimers

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Alan

Forex

Summary:

Recent market forecasts indicate a potential partial government shutdown in the U.S., which is expected to exert downward pressure on the U.S. dollar. Meanwhile, the Bank of Japan's upcoming monetary policy is leaning towards a hawkish stance, further strengthening the bearish momentum of the USDJPY.

SELL USDJPY

Close Time

CLOSED

148.200

Entry Price

145.100

149.100

155.423 +0.078 +0.05%

100.0

Pips

Profit

145.100

147.200

Exit Price

148.200

Entry Price

149.100

Fundamentals

Recent geopolitical risks in the U.S. have emerged as a prominent factor influencing U.S. dollar volatility: escalating partisan disagreements in Congress over the budget bill threaten to trigger a partial government shutdown if federal appropriations are not enacted promptly. This short-term fiscal impasse is likely to disrupt the continuity of economic data releases and diminish market visibility regarding the Federal Reserve's monetary policy trajectory. Consequently, investors tend to reduce dollar exposure or increase holdings in cash and safe-haven assets amid this uncertainty, exerting downward pressure on the USDJPY in the short term. Simultaneously, the U.S. Dollar Index strength is also affected by domestic economic indicators—specifically, a slowdown in employment growth expectations—making the exchange rate more susceptible to oscillations driven by news flow.

In the Japanese context, inflation has retreated from its peak but remains within the central bank's concern zone, prompting more hawkish discussions within the Bank of Japan. The minutes of the monetary policy meeting and statements from multiple board members signal that the pace of interest rate hikes may be earlier than market expectations. This suggests a marginal weakening of the interest rate differential transmission to the U.S. dollar, supporting the yen amid revised interest rate outlooks. Additionally, although recent Japanese inflation data shows a decline, it still exhibits signs of structural upward pressure, providing both technical and psychological grounds for the normalization of monetary policy.

Technical Analysis

In the 4H timeframe, the USDJPY has recently tested the 150.00 psychological level. The inability to sustain a breakout has weakened bullish momentum, exerting downward pressure on the exchange rate. Concurrently, the 4H candlestick pattern has formed a head and shoulders top, further reinforcing short-term bearish momentum and suggesting a potential shift toward a downward trend in the short term.

Currently, the initial downside target for the USDJPY may be below 147.45. If the price breaks this level and then rebounds without surpassing 148.37, the head and shoulders top in the 4H timeframe could evolve into a head and shoulders top in the 1D timeframe, extending the downside target toward approximately 145.00.

Trading Recommendations

Trading Direction: Sell

Entry Price: 148.20

Target Price: 145.10

Stop Loss: 149.10

Valid Until: October 14, 2025 23:00:00

Support: 147.45, 145.00

Resistance: 148.46, 148.90

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This divergence signals fading bullish strength and raises the likelihood of a corrective move lower from current levels.

SELL USDCHF

Close Time

CLOSED

0.79779

Entry Price

0.78750

0.80350

0.80397 -0.00058 -0.07%

18.8

Pips

Profit

0.78750

0.79591

Exit Price

0.79779

Entry Price

0.80350

Last week, the Swiss National Bank (SNB) kept its policy rate unchanged at 0%, pausing after six consecutive cuts since March 2024. Most economists now believe the easing cycle has effectively come to an end, with expectations that rates will remain at zero throughout the coming year. This outlook is largely supported by subdued domestic inflation alongside persistent risks stemming from sluggish global growth and ongoing trade tensions.

Looking ahead, key data releases that could influence CHF sentiment this week include Wednesday’s retail sales figures and Thursday’s Consumer Price Index (CPI) reading for August. These indicators will likely shape expectations around the SNB’s next moves and provide a clearer view of inflationary dynamics within Switzerland.

In the U.S., political risks remain in the spotlight. President Donald Trump escalated tensions in Washington by threatening to cut thousands of federal jobs if lawmakers fail to pass a government funding bill. By effectively holding his own administration hostage, Trump has signaled that the congressional deadlock could further undermine federal operations. He is scheduled to meet with senior Democratic and Republican leaders later on Monday in a last-ditch effort to avoid a government shutdown.

On the economic side, the latest inflation data painted a mixed picture. The Fed’s preferred gauge of underlying inflation, the Core PCE Price Index, rose 0.2% month-on-month, in line with expectations but revised lower from July’s initial reading of 0.3%. Meanwhile, the headline PCE Price Index advanced 0.3% in August, accelerating from July’s 0.2% and lifting the annual rate to 2.7% from 2.6%. While inflationary pressures remain under control, they continue to hover above the Fed’s comfort zone.

Commentary from Federal Reserve officials highlighted diverging views. St. Louis Fed President Alberto Musalem downplayed the impact of tariffs, estimating they account for only about 10% of overall inflation. Meanwhile, New York Fed President John C. Williams struck a more cautious tone, warning against overcommitting to further cuts while acknowledging that current policy settings remain restrictive at a time when labor market risks appear to be rising.

According to CME’s FedWatch tool, markets currently assign an 89% probability to a 25-basis-point cut in October, while the odds of a larger 50-basis-point move stand at just 11%. Bearish Pressure Could Resume Near a Key Moving Average_1

Bearish Pressure Could Resume Near a Key Moving Average_1

Technical Analysis

USDCHF has been trending firmly lower on the 12-hour chart, with the 200-period moving average repeatedly acting as a catalyst for bearish momentum. Closely aligned with the descending trendline, this area has proven to be a strong technical barrier in recent sessions. The 100-period moving average has also converged around the 0.8000 level, reinforcing this resistance zone. Should the pair fail to break decisively above this area, the stage may be set for a deeper pullback toward the 0.7875 support level.

Meanwhile, the RSI has reached 63, edging closer to overbought territory. What is particularly noteworthy is the emergence of a clear bearish divergence: the RSI has printed higher highs even as price momentum weakens compared to the previous peak. This divergence signals fading bullish strength and raises the likelihood of a corrective move lower from current levels. Conversely, a strong breakout above the descending trendline would shift the outlook, potentially paving the way for a longer-term trend reversal.

Trading Recommendations

Trading direction: Sell

Entry price: 0.7978

Target price: 0.7875

Stop loss: 0.8035

Validity: Oct 10, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

A revisit to the descending trendline, accompanied by a fresh rejection, could open the door for renewed selling opportunities, targeting 1.1660.

SELL EURUSD

Close Time

CLOSED

1.17600

Entry Price

1.16600

1.18050

1.16552 +0.00126 +0.11%

62.1

Pips

Profit

1.16600

1.16979

Exit Price

1.17600

Entry Price

1.18050

U.S. President Donald Trump has raised the stakes in Washington, threatening to eliminate thousands of federal jobs if lawmakers fail to reach an agreement on a government funding bill. By effectively holding his own administration hostage, Trump is signaling that the standoff in Congress could further disrupt federal operations. He is set to meet later on Monday with top Democratic and Republican leaders in a last-ditch effort to secure a deal and avert a shutdown.

On the economic front, the latest inflation data provided mixed signals. The Fed’s preferred measure of underlying inflation, the Core PCE Price Index, rose 0.2% month-on-month, in line with expectations and revised down from July’s previously reported 0.3% to 0.2%. Meanwhile, the headline PCE Price Index advanced 0.3% in August, matching forecasts and accelerating from 0.2% in July. On an annual basis, the headline rate climbed to 2.7% from 2.6%, highlighting persistent, though controlled, inflationary pressures.

St. Louis Fed President Alberto Musalem argued that most of the current inflationary stubbornness faced by U.S. consumers cannot be attributed to tariffs, estimating that import taxes account for only around 10% of the total inflation picture. In parallel, New York Fed President John C. Williams appeared cautious on Monday, expressing reluctance to commit to further rate cuts while acknowledging that current policy settings lean toward the restrictive side at a time when labor market risks seem to be mounting.

According to CME’s FedWatch tool, markets are currently pricing in an 89% probability of a 25-basis-point cut at the October meeting, with only an 11% chance of a larger 50-basis-point reduction.

Across the Atlantic, Eurozone data painted a mixed picture. September’s Consumer Confidence improved modestly to -14.9 from -15.5, while Industrial Confidence slipped slightly to -10.3 from -10.2—still beating expectations of -10.9. Meanwhile, Services Sentiment weakened to 3.6 from 3.8, falling short of consensus at 3.7. ECB President Christine Lagarde is scheduled to speak on Tuesday and is expected to reinforce the central bank’s neutral stance on interest rates. Trendline Resistance Holds the Key to EURUSD´s Next Direction_1

Trendline Resistance Holds the Key to EURUSD´s Next Direction_1

Technical Analysis

EURUSD has been trading in a bearish trend that began on September 16. The pair reached its recent peak during the heightened volatility following the Fed’s rate cut on September 17 but quickly reversed lower by the end of the session, consolidating its downside momentum. A revisit to the descending trendline, accompanied by a fresh rejection, could open the door for renewed selling opportunities, targeting 1.1660. This level represents a key support zone that aligns with the ascending trendline; a decisive break below it could pave the way for a more pronounced decline.

From an indicator perspective, the RSI is hovering around the neutral 50 level, leaving room for the pair to rise slightly before resuming its downward leg. On the 4-hour chart, the 100- and 200-period moving averages sit at 1.1751 and 1.1706, respectively, while the 0.50 Fibonacci retracement is marked at 1.1763. Consolidation around this cluster of resistance levels could strengthen the bearish outlook. However, a decisive breakout above the descending trendline would shift the structure toward a bullish scenario, signaling potential trend reversal. For now, the trendline resistance remains the critical reference point for the next move.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1760

Target price: 1.1660

Stop loss: 1.1805

Validity: Oct 10, 2025 15:00:00

Risk Warnings and Disclaimers

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Gerik

Forex

Traders' Opinions

Summary:

As of 29/09/2025, USD/CHF is trading around 0.7965, reflecting a decline from the previous day's high of 0.8000. The U.S. dollar is under pressure due to concerns over a potential U.S. government shutdown, which could delay key economic data releases and impact market sentiment....

SELL USDCHF

Close Time

CLOSED

0.79700

Entry Price

0.79000

0.80000

0.80397 -0.00058 -0.07%

24.1

Pips

Profit

0.79000

0.79459

Exit Price

0.79700

Entry Price

0.80000

Market Overview

USD/CHF is currently at 0.7974, down from a high of 0.8000 on 25/09/2025. The U.S. dollar is facing downward pressure amid concerns over a potential U.S. government shutdown, which could delay key economic data releases, including the September payrolls report. This uncertainty has led to a cautious risk appetite, benefiting the Swiss franc. The Swiss National Bank has paused its easing cycle, keeping rates at 0% after six consecutive cuts since March 2024, and is expected to maintain this stance through 2025 due to subdued domestic inflation and global challenges.

Market Sentiment

Sentiment towards USD/CHF is currently bearish. The U.S. dollar is weakening due to political uncertainties and expectations of a potential government shutdown, while the Swiss franc remains stable. Traders are closely monitoring developments in U.S. fiscal policy and economic data releases, which could influence the pair's direction

Technical Analysis

Bollinger Bands: On the M15 chart, USD/CHF is trading near the lower band, indicating potential oversold conditions. A break below the lower band could signal a continuation of the bearish trend.

Ichimoku: The price is below the Kijun-sen and Tenkan-sen, suggesting a bearish trend. The cloud ahead is red, reinforcing the negative outlook.

Stochastic: The Stochastic Oscillator is in the oversold region, indicating potential for a short-term bounce. However, a bearish crossover would confirm the continuation of the downtrend.

Trade Recommendation

Entry: Consider entering a short position if USD/CHF breaks below the 0.7970 support level, with confirmation from technical indicators.

Take Profit: Initial target at 0.7900, with potential extension to 0.7850 if bearish momentum continues.

Stop Loss: Place a stop loss above the 0.8000 resistance level to manage risk.

Risk–Reward: With an entry at 0.7945, stop loss at 0.8010, and take profit at 0.7900, the risk-reward ratio is approximately 2:1.

Risk Warnings and Disclaimers

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Gerik

Forex

Economic

Summary:

On 29/09/2025, GBP/USD is trading around 1.3430, rebounding from recent lows. The pair benefits from a softer U.S. dollar, influenced by expectations of Federal Reserve rate cuts and concerns over a potential U.S. government shutdown...

BUY GBPUSD

Close Time

CLOSED

1.34354

Entry Price

1.35000

1.33900

1.33234 -0.00078 -0.06%

23.7

Pips

Profit

1.33900

1.34591

Exit Price

1.34354

Entry Price

1.35000

Market Overview

GBP/USD is currently at 1.3430, recovering from a decline that saw it dip below 1.3350 earlier in the week. The U.S. dollar has weakened amid growing expectations of Federal Reserve rate cuts and the looming risk of a U.S. government shutdown, which could delay key economic data releases, including the September payrolls report. This uncertainty has led to a cautious risk appetite, benefiting the British pound. However, the pound remains under pressure due to domestic factors, including concerns over the UK's fiscal position and economic performance.

Market Sentiment

Sentiment towards GBP/USD is cautiously optimistic. The pair is benefiting from a weaker U.S. dollar, but domestic challenges in the UK, such as fiscal concerns and economic data disappointments, continue to weigh on the pound. The market is awaiting further developments, including U.S. economic data and UK fiscal policy announcements, to gauge the sustainability of the current rebound.

Technical Analysis

Bollinger Bands: On the M15 chart, GBP/USD is trading near the middle of the Bollinger Bands, indicating a neutral short-term trend. A breakout above the upper band could signal a continuation of the current rebound.

Ichimoku: The price is approaching the Kijun-sen, which may act as a dynamic resistance. A breakout above this level could suggest a shift towards a bullish trend.

Stochastic: The Stochastic Oscillator is moving out of oversold territory, indicating increasing bullish momentum. A crossover above the 20 level would confirm this shift.