USD/CAD's Soaring Rally! Is Danger Ahead?

Tank

Economic

Forex

Technical Analysis

Summary:

The upside potential for the USD/CAD may be limited, as the Bank of Canada has less room for additional interest rate cuts, which could provide support for the CAD.

SELL USDCAD

Close Time

CLOSED

1.39140

Entry Price

1.38700

1.39500

1.38257 +0.00110 +0.08%

44.0

Pips

Profit

1.38700

1.38695

Exit Price

1.39140

Entry Price

1.39500

Fundamentals

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

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

Technical Analysis

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

USD/CAD's Soaring Rally! Is Danger Ahead?_1

USD/CAD's Soaring Rally! Is Danger Ahead?_2

Trading Recommendations

Trading direction: Sell

Entry price: 1.3914

Target price: 1.387

Stop loss: 1.395

Support: 1.387, 1.384, 1.38

Resistance: 1.395, 1.4, 1.401

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Manuel

Central Bank

Economic

Summary:

This same area may once again serve as the foundation for a fresh upside move, potentially driving the pair back toward the descending trendline.

BUY EURUSD

Close Time

CLOSED

1.16188

Entry Price

1.16500

1.15850

1.16482 +0.00056 +0.05%

33.8

Pips

Loss

1.15850

1.15848

Exit Price

1.16188

Entry Price

1.16500

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

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

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

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

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

Meanwhile, the Harmonised Index of Consumer Prices (HICP) is expected to remain steady at 2.0% year-on-year, matching June’s figure, while monthly inflation is projected to hold flat at 0.0%. Core inflation is anticipated to stay at 2.3% annually, unchanged from the prior month, though the 0.2% monthly decline suggests a modest easing in underlying price pressures. Bullish Momentum Could Resume from Key Support_1

Bullish Momentum Could Resume from Key Support_1

Technical Analysis

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

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

Trading Recommendations

Trading direction: Buy

Entry price: 1.1615

Target price: 1.1650

Stop loss: 1.1585

Validity: Aug 29, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Forex

Economic

Summary:

This suggests that a short-term correction could materialize, even if the broader trend remains tilted to the upside.

SELL EURCAD

Close Time

CLOSED

1.61414

Entry Price

1.59500

1.62500

1.61045 +0.00182 +0.11%

93.6

Pips

Profit

1.59500

1.60478

Exit Price

1.61414

Entry Price

1.62500

The United States and the European Union unveiled a long-anticipated joint trade framework on Thursday, marking a significant step in easing transatlantic tensions. The deal sets a ceiling of 15% on most tariffs, helping to calm concerns over rising protectionism. However, U.S. auto tariffs remain firmly at 27.5% until the EU introduces its own tariff-reduction measures. As part of the arrangement, the EU committed to purchasing $750 billion worth of U.S. energy supplies—including LNG, oil, and nuclear—by 2028. In addition, Europe pledged to buy $40 billion in American AI chips in a bid to secure its technological supply chains and reduce vulnerability to external shocks.

On the macroeconomic front, Eurozone manufacturing unexpectedly returned to expansion, while the services sector contracted in August, according to the latest HCOB Purchasing Managers’ Index (PMI) survey released Thursday. The manufacturing PMI climbed to 50.5 in August from 49.8 in July, beating market expectations of 49.5 by a wide margin.

The Harmonised Index of Consumer Prices (HICP) is projected to hold steady at 2.0% year-on-year, the same as in June, with monthly inflation expected to remain flat at 0.0%. Similarly, core inflation is anticipated to stay at 2.3% year-on-year, consistent with the previous month, though the monthly core figure dipped by 0.2%, hinting at a modest easing of underlying price pressures.

In contrast, the services PMI dipped to 50.7 from 51 in July, slightly missing the estimated figure of 50.8 and marking a two-month low.

Across the Atlantic, Canadian data released Tuesday showed that headline Consumer Price Index (CPI) inflation rose 1.7% year-over-year in July, down from 1.9% in June and in line with market forecasts. On a monthly basis, CPI increased 0.3%, compared to 0.1% in the previous month. Core CPI, closely monitored by the Bank of Canada (BoC) because it excludes volatile items such as food and energy, advanced 2.6% on an annual basis and 0.1% month-over-month. A Bearish Correction May Align with Key Fibonacci Levels_1

A Bearish Correction May Align with Key Fibonacci Levels_1

Technical Analysis

EURCAD has repeatedly encountered stiff resistance around 1.6184, a level that has triggered three prior pullbacks. If this pattern repeats, a close below 1.6080 could accelerate bearish momentum. In such a scenario, the 100- and 200-period moving averages on the 4-hour chart, currently located at 1.6022 and 1.6003 respectively, may serve as potential downside targets for a corrective move.

Adding to this view, the Relative Strength Index (RSI) recently touched 72 as the pair approached these resistance levels, signaling classic overbought conditions. This suggests that a short-term correction could materialize, even if the broader trend remains tilted to the upside. Key support lies at 1.5938, a level that aligns closely with the 0.50–0.618 Fibonacci retracement zone, making it an area of high technical importance should selling pressure intensify. On the other hand, a decisive breakout above resistance with strong momentum would invalidate the bearish setup and open the door for further gains.

Trading Recommendations

Trading direction: Sell

Entry price: 1.6140

Target price: 1.5950

Stop loss: 1.6250

Validity: Aug 29, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

The USDCAD advanced beyond 1.3830 as weaker inflation data weighed on the Canadian dollar. The Bank of Canada is unlikely to react solely on the July figures, citing persistent service inflation and tariff pass-through risks.

SELL USDCAD

Close Time

CLOSED

1.38946

Entry Price

1.34740

1.40600

1.38257 +0.00110 +0.08%

53.0

Pips

Profit

1.34740

1.38416

Exit Price

1.38946

Entry Price

1.40600

Fundamentals

In July, Canada's overall CPI year-over-year increase decelerated to 1.7%, down from 1.9% and below expectations. This decline was primarily driven by a significant 16.1% year-over-year decrease in gasoline prices, a larger drop than the 13.4% decrease observed in June. Excluding gasoline, the CPI year-over-year increase remained stable at 2.5%, consistent with the previous two months. On a month-over-month basis, the CPI rose by 0.3%, in line with forecasts.

Key indicators presented a mixed picture. The CPI median increased by 3.1% year-over-year, meeting expectations, while the CPI trimmed remained at 3.0% year-over-year. The CPI average rose by 2.6% year-over-year, slightly below the anticipated 2.7%. Overall, the data suggest that inflation has not accelerated, but underlying pressures persist.

The data reinforces the view that while headline inflation is cooling, core inflation remains elevated, suggesting the Bank of Canada is not yet in a position to consider interest rate cuts. Headline inflation eased to 1.7% in July, primarily due to lower energy prices, reflecting the removal of the Canadian consumer carbon tax. However, this trend was offset by increases in food, shelter, and durable goods prices. The rise in durable goods may be linked to tariffs.

Both headline and core inflation, which currently exceeds 3%, are expected to trend higher in the near term as the costs associated with U.S.-Canada tariff disputes are gradually passed on to retail prices. We anticipate the Bank of Canada will hold the policy interest rate steady at 2.75% on September 17.

Elevated Core Inflation Suggests the Bank of Canada Is Unlikely to Initiate a Rate Cut Cycle_1

Technical Analysis

Following a "bottoming" pattern at 1.3535, the USDCAD has further consolidated its upward momentum, surpassing both the multi-month trendline and the 50-day SMA. With the MACD indicator returning to positive territory and immediate support at 1.3700, the asset is poised to test higher levels at 1.3910.

A sustained break of 1.3910 would target the cluster resistance at 1.4014 (38.2% Fibonacci retracement of the 1.4791-1.3538 range, located at 1.4017). If this resistance reasserts selling pressure, a corrective rebound is anticipated, resuming the downward trend.

On the downside, a break below the minor support at 1.3830 would initially shift the intraday bias to neutral.

Trading Recommendations

Trading Direction: Sell

Entry Price: 1.3910

Target Price: 1.3474

Stop Loss: 1.4060

Valid Until: September 5, 2025 23:55:00

Support: 1.3830, 1.3798, 1.3722

Resistance: 1.3910, 1.3947, 1.4017

Risk Warnings and Disclaimers

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Gerik

Economic

Forex

Summary:

As of August 21, 2025, CAD/CHF is trading around 0.5800, approaching a critical support level at 0.5785. A failure to break below this level could lead to a rebound toward 0.5830, while a break below may signal a continuation of the bearish trend....

SELL CADCHF

Close Time

CLOSED

0.58100

Entry Price

0.57350

0.58300

0.58183 -0.00024 -0.04%

3.5

Pips

Loss

0.57350

0.58135

Exit Price

0.58100

Entry Price

0.58300

Overview

CAD/CHF has been under pressure, with the pair closing below the 0.6020 resistance level, activating negative momentum. The price is now testing the support at 0.5785, and a break below this level could lead to further declines toward 0.5735 and 0.5655.

Market Sentiment

The market sentiment remains bearish, with CAD/CHF trading below its 50-day, 100-day, and 200-day moving averages, indicating a negative setup in the near, medium, and long-term.

Technical Analysis

CAD/CHF tests support at 0.5785—bearish continuation likely if trendline holds_1

On the chart, CAD/CHF is trading within a bearish channel, with the price approaching the lower boundary. The Relative Strength Index (RSI) is showing negative momentum, supporting the bearish outlook.

Trade Recommendation

Entry: 0.58100

TP: 0.5735

SL: 0.5830

Risk Warnings and Disclaimers

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Gerik

Economic

Forex

Summary:

As of August 21, 2025, EUR/USD is trading around 1.1620, approaching a critical support level at 1.1600. A rebound from this level could signal a bullish reversal, while a break below may lead to further declines...

BUY EURUSD

Close Time

CLOSED

1.16050

Entry Price

1.16500

1.15800

1.16482 +0.00056 +0.05%

45.0

Pips

Profit

1.15800

1.16502

Exit Price

1.16050

Entry Price

1.16500

Overview

EUR/USD is currently trading at 1.1620, experiencing a slight decline of 0.27% from the previous day. The pair has been consolidating within a range between 1.1600 and 1.1730. The recent dip brings the pair closer to the lower end of this range, testing the 1.1600 support level.

Market Sentiment

Investor sentiment is cautious ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium. The outcome of this speech could influence the US dollar's strength and, consequently, the EUR/USD pair.

Technical Analysis

EUR/USD tests key support at 1.1620—bullish reversal possible if trendline holds_1

On the 15-minute chart, EUR/USD is testing the 1.1620 support level. A break below 1.1600 could lead to further declines, while a rebound from this level may indicate a bullish reversal. Key resistance levels to watch are at 1.1650 and 1.1680.

Trade Recommendation

Entry: 1.16050

TP: 1.1650

SL: 1.1580

Risk Warnings and Disclaimers

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Gerik

Commodity

Economic

Summary:

As of August 21, 2025, silver (XAG/USD) is trading around $38.00, encountering resistance at a descending trendline. A failure to break above this level could lead to a decline toward $37.00, with further support at $36.65....

SELL XAGUSD

Close Time

CLOSED

38.000

Entry Price

37.500

38.200

58.399 +0.082 +0.14%

20.0

Pips

Loss

37.500

38.210

Exit Price

38.000

Entry Price

38.200

Overview

Silver prices have been consolidating within a symmetrical triangle pattern, with support around $37.50 and resistance near $38.20. The recent rebound from the $37.50 level indicates buying interest; however, the inability to surpass the $38.00 resistance suggests a potential bearish reversal.

Market Sentiment

Investor sentiment remains cautious ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium. The outcome of this speech could influence the US dollar's strength and, consequently, silver prices.

Technical Analysis

Silver stalls at $38.00—bearish reversal likely if trendline resistance holds_1

On the chart, silver is testing the $38.00 trendline resistance. A failure to break above this level could lead to a decline toward the $37.00 support zone, with further downside potential to $36.65.