Track market-moving stories before they get noisy

Market moving news for Asian trading on Tuesday, August 11, 2026

Singapore doubles 2026 growth outlook to 4.5-5.5% on tech cycle upgradeRupee set to open weaker as oil pressure builds, RBI support in focusSources: BoJ could raise rates again at September 17-18 meetingSouth Korea: Kospi rises for second day as Samsung Electronics jumps circa 3.6%Australian business conditions edge higher in July but confidence stays fragileNZ PM Luxon calls urgent caucus meeting to address leadership speculationPBOC sets seven-day reverse repo volume at ZERO on Tuesday, citing primary dealer demandGold hits two-month high as markets await US inflation data this weekUK data: Barclaycard spending rises 2.0% in July as consumer confidence hits 21-month highPBOC sets USD/ CNY central rate at 6.7900 (vs. estimate at 6.7497)Yen strength still hinges on BOJ hike, not capital repatriation (or intervention!), Goldman saysIntel plans to sell $15 billion worth of stock after it has risen 400% in a yearYen support looks fragile; Tokyo opts for passive strategy, missed chance to press intervention advantageRBA set to hold rates today, but markets will be watching the fine printPreview: RBA to stay in pause and observe mode, TD Securities says ahead of today's decisionICYMI - Cleveland Fed's Hammack says Fed should already be raising rates, more than one hike neededUNCONFIRMED - Incoming report of further cruise missile launches from Sirik, IranMUFG opens long AUDJPY at 111.20, targets 114.50 as yen intervention debate buildsWhat'd I miss? Trump counters Iran reparations demand, pushing Hormuz deal further out of reach.Summary:

Oil stays supported as Hormuz deal hopes dim further on tit-for-tat reparations demands from Iran and TrumpLibya's NOC declares force majeure at Zawiya refinery after armed clashes and storage tank fires, threatening El Sharara outputRussia's Komsomolsk refinery in Khabarovsk Krai attacked, over 6,500km from UkraineFX subdued; AUD in focus ahead of RBA decision (2:30pm Sydney), hawkish hold expectedKospi up circa 0.6% for a second day on Samsung strength; won stronger, foreigners net buyersJapan closed for holiday; media reports firm September 18 BoJ hike expectations, yen little moved regardlessSingapore Q2 GDP beats at 5.9% y/y, 2026 growth forecast raised to 4.5-5.5% on AI boom; MAS says policy stance remains appropriateOil remained supported in the absence of a Strait of Hormuz deal and with efforts to reopen the waterway dampened by tit-for-tat demands by Iran and US President Trump for reparations.

Further, Libya's NOC declares force majeure at Zawiya refinery after clashes. Libya's state-owned National Oil Corporation (NOC) declared force majeure at its 120,000 b/d Zawiya refinery following clashes between armed groups. The refinery experienced fires after storage tanks were hit, multiple times, threatening production at the El Sharara oil field.

Russia's Komsomolsk Oil Refinery in Khabarovsk Krai came under attack. This is 6,500+ kms from Ukraine.

FX traded in subdued ranges. AUD traders are awaiting the RBA at 2:30pm Sydney time / 0430 GMT / 0030 US Eastern time, with Reserve Bank of Australia Governor Bullock's press conference following an hour later. A hawkish hold is expected.

RBA preview: Analysts see cash rate on hold at 4.35% TuesdayRBA preview - Westpac says soft Q2 CPI gives RBA room to hold at 4.35%Preview: RBA meet Tuesday. CBA expects RBA to hold rates through the rest of 2026

MUFG opens long AUDJPY at 111.20, targets 114.50 as yen intervention debate buildsPreview: RBA to stay in pause and observe mode, TD Securities says ahead of today's decisionRBA set to hold rates today, but markets will be watching the fine printSouth Korea's Kospi rose for a second straight day, up around 0.6%, as Samsung Electronics jumped circa 3.6% while SK Hynix and LG Energy Solution slipped. Foreigners were net buyers and the won strengthened, even as broader sentiment stayed cautious on the Middle East conflict.

Japanese markets were closed for a holiday. Reports from Japanese media, citing unnamed sources, firmed expectations for a Bank of Japan September (18th) interest rate hike. The yen fell regardless, though only in a small range.

Singapore's economy grew 5.9% year on year in Q2, beating forecasts, as the government raised its 2026 growth outlook to 4.5-5.5% from 2.0-4.0%, citing a stronger than expected AI investment boom offsetting a less severe than feared Middle East war impact. An official from Singapore's central bank, the Monetary Authority of Singapore, said the country's monetary policy stance remains appropriate.

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Singapore doubles 2026 growth outlook to 4.5-5.5% on tech cycle upgradeinvestingLive Asia-Pacific Financial Market news: Oil and gold stay near highs Rupee set to open weaker as oil pressure builds, RBI support in focusSources: BoJ could raise rates again at September 17-18 meetingSouth Korea: Kospi rises for second day as Samsung Electronics jumps circa 3.6%Australian business conditions edge higher in July but confidence stays fragileNZ PM Luxon calls urgent caucus meeting to address leadership speculationPBOC sets seven-day reverse repo volume at ZERO on Tuesday, citing primary dealer demandGold hits two-month high as markets await US inflation data this weekUK data: Barclaycard spending rises 2.0% in July as consumer confidence hits 21-month high

Persistent shifts in sentiment surrounding a potential US-Iran agreement continue to reinforce, rather than eliminate, geopolitical risks. As a result, both crude oil and the US Dollar Index (DXY) have regained ground, with the DXY holding above its 2026 uptrend support near 99.30 and WTI crude remaining firmly above the $70 mark.

The unresolved security framework surrounding the Strait of Hormuz—including future navigation and transit arrangements—remains one of the key obstacles preventing the conflict from transitioning into a durable ceasefire and the full resumption of shipping flows through the strait. Alongside the broader nuclear negotiations that remain central to any lasting resolution, these issues require a long-term political framework before markets can confidently price a sustained geopolitical de-escalation.

As discussed in my previous article, Crude Oil Outlook: What the 1973 Oil Embargo Tells Us About the 2026 Hormuz Crisis, the current environment may resemble historical episodes such as the 1973 oil embargo, when geopolitical uncertainty kept energy risk premiums elevated until durable security and political frameworks were established, supporting decades of stability in global energy markets. Similar conditions have yet to emerge in the 2026 Strait of Hormuz conflict.

The recent market reaction continues to reinforce this intermarket framework:

The Dow Jones was the first major index to rally to fresh record highs before broader equity markets followed, while simultaneously testing a major higher-timeframe resistance zone. Dow Jones Outlook The US Dollar Index (DXY) corrected only to its 2026 uptrend support near 99.30, maintaining its broader bullish structure. DXY Outlook  WTI and Brent crude oil continue to hold above their respective geopolitical risk premium zones near $66 and $70, suggesting markets have yet to fully price a lasting de-escalation. Markets reward trends far more consistently than geopolitical headlines. Headlines may trigger volatility, but sustained trends require confirmation through price action. Current intermarket relationships continue to favor caution. Equity indices are testing major long-term resistance, Bitcoin remains unable to confirm the broader risk-on move, the US dollar continues to respect its 2026 bullish structure, and USD/JPY remains resilient despite persistent intervention risks. Together, these signals suggest that markets continue to price geopolitical uncertainty, elevated Treasury yields, and expectations for a more hawkish Federal Reserve as the dominant macro narrative.

Crude Oil Price Outlook: Weekly Time Frame – Log Scale

Source: TradingView

WTI crude oil's latest pullback found support near $72, corresponding with the 78.6% Fibonacci retracement of July's advance. Persistent US-Iran tensions helped stabilize prices above that level, reinforcing the broader bullish structure.

Price action continues to hold above the $70–72 support zone, maintaining the geopolitical risk premium embedded in oil prices. A sustained move above $77—the multi-month support level from March 2026 that has since turned into resistance—would expose the next Fibonacci extension levels derived from July's advance:

$80.40 – 27.2% Fibonacci extension $83.30 – 38.2% Fibonacci extension $86.50 – 50% Fibonacci extension $89.60 – 61.8% Fibonacci extension, representing a major area where pullback risks may emerge as it aligns with the long-term trendline extending from the lower boundary of the March-June consolidation that preceded July's decline from $93 to $77. Such a move would likely coincide with persistent tensions surrounding the Strait of Hormuz and continued disruptions to crude oil refining and supply chains. A sustained move into the $86.50–89.60 region would suggest markets are pricing another phase of geopolitical escalation, increasing broader market drawdown risks.

Bearish Scenario

Should WTI crude oil fall back below $72, attention would immediately shift to the $68–66.50 support zone.

This area continues to define the broader escalation versus de-escalation narrative for 2026, having repeatedly acted as both support and resistance since 2019. A weekly close below $66.50 would expose the 2026 lows near $55, signalling that markets are beginning to price a longer-term geopolitical de-escalation scenario. Such a development would likely improve global risk sentiment while easing inflationary pressures.

USD/JPY Outlook: Weekly Time Frame – Log Scale

Source: TradingView

The USD/JPY pullback from the 164.00 confluence zone—a resistance area aligning with both the midpoint of the April 2025–July 2026 channel and the broader 2022–2026 channel—found support near 155.00.

Current support aligns with:

The 38.2% Fibonacci retracement of the April 2025–July 2026 advance. Oversold daily momentum, last seen in 2024. A breakdown below the 2025–2026 ascending channel. Should the current rebound stabilize above 159.50, bullish momentum could return, allowing the pair to retest 161.00, 161.80, and eventually 164.00.

These former support levels may now act as resistance during another test of price levels not seen since the 1980s. A sustained break above 164.00 would expose the upper boundary of the broader channel near 170, following a significant rebuilding of upside momentum.

Conversely, a close below 155.00 would expose the next key support levels at 152.00 and 149.00. This remains a critical region, aligning with the lower boundary of the 2022–2026 channel and defining the longer-term bullish versus bearish outlook for the US dollar—not only against the Japanese yen but across broader financial markets.

The broader outlook continues to favour a bullish bias unless a durable framework governing Middle East shipping routes is established, US Treasury yields begin to decline, and expectations for further Federal Reserve tightening continue to fade.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

Summary:

USD/CAD climbed toward weekly highs as falling oil prices weakened the Canadian dollar despite strong domestic trade data. Canada's trade surplus reached a four-year high, but the positive economic data was overshadowed by the sharp decline in crude oil prices. Markets are reassessing Federal Reserve expectations, limiting gains in the US dollar after weaker-than-expected US economic data. USD/CAD rises as oil prices pressure the Canadian dollar The USD/CAD exchange rate extended its gains on Wednesday, climbing toward the 1.4080 level as another sharp decline in oil prices continued to pressure the Canadian dollar.

The move came despite encouraging economic data from Canada, where the country’s merchandise trade surplus expanded to its highest level in four years during June. Under normal market conditions, stronger trade figures would support the loonie. However, investors remained focused on the collapse in crude oil prices, which has become the dominant driver of the Canadian currency this week.

Canada is one of the world’s largest crude exporters, meaning movements in oil prices often have a direct impact on the value of the Canadian dollar. With Brent crude slipping below $80 per barrel as hopes for a diplomatic breakthrough between the United States and Iran improved, traders reduced exposure to the loonie in anticipation of weaker export revenues.

Lower oil prices offset stronger Canadian economic data The Canadian dollar struggled to capitalize on stronger-than-expected domestic economic data as falling crude oil prices remained the dominant driver of market sentiment. Canada reported a merchandise trade surplus that climbed to a four-year high in June, reflecting resilient exports and healthy external demand. Under normal circumstances, such data would provide support for the loonie by reinforcing confidence in the country’s economic outlook.

However, investors largely overlooked the upbeat trade figures as oil prices extended their recent decline. Brent crude slipped below $80 per barrel, marking its lowest level in several weeks, after growing optimism that diplomatic negotiations between the United States and Iran could ease tensions in the Middle East and reduce the risk of supply disruptions. Expectations that global oil supplies could stabilize prompted traders to unwind part of this year’s geopolitical risk premium.

Because crude oil is Canada’s largest export, movements in energy prices have a significant impact on the country’s trade balance, corporate earnings and economic growth prospects. The latest decline in oil prices therefore outweighed the positive impact of Canada’s stronger trade data, leaving the loonie under pressure as investors continued to favor the US dollar.

Softer US data caps US dollar gains While USD/CAD continued to move higher, gains in the US dollar remained limited as investors reassessed the outlook for Federal Reserve policy following a fresh batch of weaker-than-expected US economic data. The greenback initially found support from broad risk sentiment but struggled to build sustained momentum as markets questioned whether the Fed would have enough justification to continue tightening monetary policy.

Recent economic releases painted a mixed picture of the US economy. JOLTS job openings fell by more than economists had anticipated, suggesting labor demand is beginning to cool after months of resilience. Meanwhile, factory orders unexpectedly declined, pointing to softer business investment and moderating manufacturing activity. Together, the data reinforced expectations that economic momentum is slowing, reducing pressure on the Fed to raise interest rates aggressively in the near term.

As a result, traders scaled back expectations for another interest rate hike, with market-implied odds of a September increase easing from the previous session. Lower rate expectations tend to weigh on the US dollar by narrowing its interest-rate advantage over other major currencies.

Despite this, USD/CAD remained supported because weakness in the Canadian dollar proved more significant than softness in the greenback. Falling crude oil prices continued to undermine the loonie, allowing the pair to edge higher even as US dollar gains were capped by expectations of a less hawkish Federal Reserve.

USD/CAD outlook The USD/CAD outlook remains cautiously bullish while the pair trades above the psychological 1.4000 support level. Buyers are now testing resistance around 1.4090, a key technical barrier that has capped recent advances. A decisive breakout above this level could expose 1.4125, with the yearly high near 1.4250 becoming the next major upside target.

However, if oil prices recover or expectations for further Federal Reserve tightening continue to fade, the Canadian dollar could regain some ground, potentially pulling USD/CAD back toward 1.4000.

Why is USD/CAD rising today?

USD/CAD is rising mainly because falling oil prices are weakening the Canadian dollar, while the US dollar remains relatively stable despite softer US economic data.

What is the next key level for USD/CAD?

The immediate resistance level is around 1.4090. A sustained move above this level could open the door for a test of 1.4125, followed by the 2026 highs near 1.4250.

Why do oil prices affect the Canadian dollar?

Canada is a major oil exporter. Lower crude prices reduce export revenues and typically weaken the Canadian dollar, while higher oil prices generally support the currency.

TL;DR: AUD/USD is rallying on improving risk sentiment and a softer Dollar, but the same falling oil prices driving that optimism are also weakening two of Australia’s own fundamental supports — explaining why the pair has lagged the broader market risk momentum.

A Rally That Looks Surprisingly Restrained AUD/USD has staged a rally over the past two days, benefiting from a broad improvement in global risk sentiment, a softer US Dollar, and surging industrial commodity prices. Yet the Aussie’s momentum has looked surprisingly restrained. Wall Street has pushed to fresh record highs, Asian equities have rebounded, and copper has climbed to another record — but AUD/USD has merely edged toward resistance rather than breaking decisively higher.

The contrast suggests the market is weighing two very different implications of the same geopolitical story. Optimism that the Strait of Hormuz could reopen is undoubtedly supporting risk assets globally, but it’s also lowering oil prices in a way that weakens some of Australia’s own fundamental supports. The result is a currency pair caught between powerful global tailwinds and equally meaningful domestic headwinds.

Risk Appetite Is Providing Plenty of Support There’s little doubt the global backdrop has become more supportive for growth-sensitive currencies. The Dow Jones Industrial Average climbed to another record high overnight, while both Japan’s Nikkei and South Korea’s KOSPI surged more than 3.5%, reflecting a broad-based improvement in investor confidence rather than isolated strength in individual markets. Such an environment has traditionally favored the Australian Dollar, often treated as a high-beta proxy for global growth expectations.

Commodity markets have reinforced that narrative. Copper has climbed to fresh record highs this week, supported by structural demand from AI-related infrastructure investment and ongoing supply constraints in China. For Australia, this is particularly significant — copper isn’t merely another commodity but an important contributor to the country’s terms of trade, meaning sustained gains normally translate into stronger support for the Australian Dollar.

At the same time, the US Dollar has weakened as markets rapidly scaled back expectations for further Federal Reserve tightening. The probability of the Fed leaving rates unchanged in September has risen sharply over the past two days, as hopes of a Strait of Hormuz reopening reduced fears of another energy-driven inflation shock. Lower Treasury yields have weighed broadly on the Dollar, providing AUD/USD with an additional lift even without any improvement in Australia’s own economic outlook.

The Same Oil Story Is Working Against Australia The complication is that the very catalyst supporting global markets is simultaneously creating domestic headwinds for the Australian Dollar.

Lower oil prices reduce imported inflation pressures, reinforcing recent market repricing that the Reserve Bank of Australia can comfortably remain on hold after softer inflation and cooling labor market data. Markets had already moved toward expecting a prolonged pause in the RBA’s tightening cycle; falling energy prices only strengthen that conviction by reducing one of the principal upside risks to inflation.

Oil also matters to Australia through a less obvious but equally important channel. A large share of Australia’s LNG exports is priced against Japanese Customs-Cleared Crude benchmarks. As Brent declines, Australia’s export revenues from LNG become less supportive for the country’s terms of trade. In other words, the same fall in oil prices that boosts global equities also removes one of the Australian Dollar’s traditional sources of fundamental support.

This explains why AUD/USD has lagged behind the broader improvement in market sentiment. The global risk environment argues for a stronger Australian Dollar, but Australia’s own interest rate outlook and export dynamics are pulling in the opposite direction.

ActionForex’s Technical View on AUD/USD Technically, AUD/USD’s rebound from 0.6864 resumed by breaking through temporary top today. For now, further rally is expected as long as 0.6983 minor support holds. The next target is the 100% projection of 0.6864 to 0.7026 from 0.6921, at 0.7021. A decisive break there would argue the rebound is an impulsive move — and, more importantly, add to the case that it’s reversing the whole fall from 0.7277. In that scenario, further rally should be seen to the 161.8% projection at 0.7183 next.

However, rejection at or below 0.7021, followed by a break of 0.6983, will turn focus back to 0.6921. A firm break there would argue the rebound has completed as a corrective move, in turn suggesting the fall from 0.7277 is ready to resume through the 0.6864 low.

Key Takeaways AUD/USD has lagged Wall Street’s record highs, a 3.5%+ Asian equity surge, and record copper prices despite the same optimism driving all three. Falling oil prices, tied to Strait of Hormuz reopening hopes, are cutting two ways: supporting global risk assets while reducing Australia’s imported inflation and LNG export revenue. Markets are increasingly confident the RBA can stay on hold, and falling energy prices reinforce that view by removing a key upside inflation risk. A softer US Dollar, driven by fading Fed tightening expectations, is providing AUD/USD support independent of any change in Australia’s own outlook. 0.7021 is the key resistance for confirming an impulsive rebound toward 0.7183; a break of 0.6921 would instead point to a resumed fall toward 0.6864.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

The US Dollar (USD) appreciates for the fourth consecutive day against a weaker Canadian Dollar (CAD) on Wednesday, with the USD/CAD pair pushing against weekly highs at 1.4080 at the time of writing. The CAD is struggling as hopes of a negotiated breakthrough in Iran have sent Oil prices tumbling, although soft US data and fading hopes of immediate Federal Reserve (Fed) rate hikes are keeping the USD from appreciating further.

Crude Oil, Canada's main export, accelerated its decline on Tuesday, with the barrel of Brent Oil trading at three-week lows below $80, amid hopes that diplomacy will find its way to resolve the US-Iran conflict. The decline in Oil prices has offset the impact of the bright Canadian Merchandise Trade Surplus, which reached a four-year high in June.

In the US, recent macroeconomic figures have contributed to cool hopes of Fed tightening in the coming months. JOLTS Job Openings showed a larger-than-.expected decline in June, and Factory Orders contracted against expectations. Against this background, expectations of a Fed rate hike in September have dropped to 58%, from 67% on Tuesday, according to data by the CME Group's FedWatch Tool, which is posing a significant weight for US Dollar rallies.

Technical Analysis: Approaching the top of a triangle pattern

USD/CAD trades at 1.4072, with immediate price action showing a constructive stance and momentum indicators turning bullish. The 4-hour Relative Strength Index (RSI) has climbed above 58, and the Moving Average Convergence Divergence (MACD) holds marginally in positive territory with a flat histogram, hinting at a steady but moderate bullish tone rather than an impulsive breakout.

Bull's confidence, however, is likely to be tested at the top of the descending triangle pattern now at the 1.4090 area. A confirmation above here would clear the path towards the July 27 highs, at the 1.4125 area, ahead of the year-to-date (YTD) highs in the area of 1.4250.

On the downside, the triangle bottom, now around 1.4000, is likely to challenge bears. Further down, the 1.3920 area (June 9 low) and the 1.3865 area (May 28 high, June 5 low) emerge as the next bearish targets.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Canadian Dollar Price Today The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.04%-0.07%0.00%0.06%0.05%0.50%0.01%EUR0.04%-0.03%0.05%0.10%0.07%0.51%0.05%GBP0.07%0.03%0.06%0.12%0.10%0.56%0.08%JPY0.00%-0.05%-0.06%0.06%0.05%0.48%0.00%CAD-0.06%-0.10%-0.12%-0.06%-0.02%0.45%-0.04%AUD-0.05%-0.07%-0.10%-0.05%0.02%0.45%-0.03%NZD-0.50%-0.51%-0.56%-0.48%-0.45%-0.45%-0.46%CHF-0.01%-0.05%-0.08%-0.01%0.04%0.03%0.46% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Why confirmed US-Japan intervention pushed Yen strength into the crosses instead of breaking USD/JPY below 155 What’s happening: Japan and the US jointly confirmed last week’s coordinated Yen-buying intervention, the first since 2011, and did so unusually fast, extending the Yen’s rally into Monday’s session. Yet USD/JPY stalled just above the key 155 support level as buyers emerged, and Yen strength instead squeezed into the crosses, hitting AUD/JPY, NZD/JPY, GBP/JPY, CAD/JPY and CHF/JPY hardest. Why it matters: The pattern suggests traders don’t yet believe intervention was designed to force USD/JPY meaningfully below 155, just to prevent a rapid return above 160. Whether that adjustment mechanism, squeezing carry trades in the crosses, continues, or USD/JPY eventually breaks 155 outright, is one of the more important themes to watch this week.

Also today:

Oil gapped lower again to as low as $81.55 as the US cancelled planned strikes and Trump signaled talks with Iran, though Tehran says no direct negotiations are planned yet. A week of top-tier US data begins today with ISM Manufacturing, building toward Friday’s non-farm payrolls, which will shape the Fed’s flexibility heading into next week’s CPI report rather than settle September policy on its own. Confirmed Intervention Marks a Break From Japan’s Usual Playbook The week’s opening session was dominated by an unusually explicit display of currency cooperation between Washington and Tokyo. Both governments confirmed they had jointly intervened to support the Yen last week, marking the first coordinated operation since 2011. More striking than the intervention itself was the speed of the confirmation. Rather than adhering to Japan’s long-standing strategy of refusing to comment on intervention, officials on both sides moved quickly to acknowledge the operation, reinforcing the message that they stand ready to act again if necessary. The shift suggests policymakers are placing greater value on intervention credibility than on strategic ambiguity.

USD/JPY Stalls at 155 as Yen Strength Squeezes Into the Crosses That message initially extended last week’s Yen rally, pushing USD/JPY lower in early trading. Yet the decline stalled just ahead of the key 155 support area, where buyers emerged before the pair could test the level decisively. The price action is notable because it suggests traders remain reluctant to challenge what has become an important technical level. For now, the market still appears to believe the objective of last week’s intervention was to prevent another rapid return above 160 rather than engineer a sustained move below 155.

Instead of forcing USD/JPY through support, demand for the Japanese currency found another outlet. Yen strength was effectively squeezed into the crosses, with high-yielding currencies bearing the brunt of the adjustment. AUD/JPY led losses, followed by NZD/JPY, while GBP/JPY, CAD/JPY and CHF/JPY also declined sharply. The pattern points to a broader reduction in Yen-funded carry trades rather than outright Dollar weakness. Whether this remains the preferred adjustment mechanism, or whether USD/JPY eventually breaks below 155, will be one of the more interesting themes to watch in the days ahead.

Crosses Under Pressure AUD/JPY: led losses among Yen crosses NZD/JPY: second-sharpest decline GBP/JPY, CAD/JPY, CHF/JPY: also declined sharply

Oil Gaps Lower Again as Diplomatic Signals Conflict Oil markets also began the week with another sharp gap lower. Brent crude, which closed above $90 last week, briefly fell to as low as $81.55 before stabilizing around the $83 area. As in recent weeks, the move reflected hopes of easing tensions in the Middle East after the US cancelled planned military strikes over the weekend. President Donald Trump said negotiations with Iran would begin on Monday, again raising expectations of a diplomatic breakthrough.

Tehran, however, continued to offer a far more cautious assessment. Iranian Foreign Ministry spokesperson Esmail Baghaei said there were no immediate plans for direct negotiations with Washington, reiterating that discussions remain limited to Omani mediation over the Strait of Hormuz. The conflicting narratives have become a familiar feature of this crisis. Markets appear reluctant to react aggressively to political statements alone, preferring to wait for tangible evidence of changes in shipping conditions or energy flows before reassessing geopolitical risk.

A Week Packed With Top-Tier US Data Attention now shifts firmly to a week packed with top-tier US economic data. ISM Manufacturing kicks things off today, followed by ISM Services, ADP employment and Friday’s non-farm payrolls. Fed funds futures continue to price a little over a 60% probability of a September rate hike, indicating markets still lean toward further tightening but without strong conviction.

That makes this week’s data particularly important, not because they are likely to determine September policy on their own, but because they will shape how much flexibility the Federal Reserve has heading into next week’s CPI report. A strong run of data would reinforce confidence in the economy and leave policymakers well positioned to tighten again should inflation remain sticky. Conversely, softer readings would raise the bar for another hike.

This Week’s US Data Calendar Today: ISM Manufacturing This week: ISM Services, ADP employment Friday: Non-farm payrolls Fed funds futures: a little over 60% probability of a September hike Currency Performance Today For the day so far, Yen is currently the strongest, followed by Euro, and then Dollar. Aussie is the worst, followed by Kiwi, and the Swiss Franc. Sterling and Loonie are positioning in the middle.

Related Coverage Yen & Precious Metals Deep Dives Read the deeper dive into why Japan and the US broke decades of strategic ambiguity to confirm intervention this fast, and what holding above 155 would signal: Why Did Japan and the US Confirm Intervention So Fast? Can USD/JPY Hold 155?. See why Gold has stopped reacting to oil, yields and the Dollar, and what could finally break its trading range: Why Gold Ignores Oil, Yields and Dollar, and What Could Finally Break the Range. Global Manufacturing PMI Roundup Read why the UK’s softer PMI headline masks the fastest factory output growth in almost two years: UK PMI Manufacturing at Four-Month Low, but Faster Output Growth Points to Resilient Recovery. See why Eurozone factory output hit a 52-month high, and why the recovery still isn’t being driven by fresh demand: Eurozone PMI Manufacturing at Three-Month High, but Recovery Still Lacks Fresh Demand. Read how AI and semiconductor demand are offsetting Middle East-related cost pressures in Japan’s factory sector: Japan PMI Manufacturing Finalized at 54.5, AI Demand Offsets Middle East Headwinds. See why Australia’s manufacturing rebound to a six-month high still comes with a fragility warning: Australia Manufacturing PMI Finalizes at Six-Month High, Yet Inflation and Supply Risks Limit Confidence. Read the three encouraging trends inside China’s slower manufacturing expansion: China’s Manufacturing Expansion Slowed, but Three Trends Offer Encouragement. Inflation Data See why Swiss inflation’s slip to 0.4% is concentrated in imported goods, not domestic price pressures: Swiss CPI Slips to 0.4% in July on Lower Fuel and Airfare Costs. Frequently Asked Questions Q: Why did USD/JPY stall at 155 instead of continuing lower after confirmed intervention? A: Buyers emerged just ahead of the 155 support area before the pair could test it decisively, suggesting traders remain reluctant to challenge what has become an important technical level. The market still appears to believe last week’s intervention was aimed at preventing a rapid return above 160, not at engineering a sustained move below 155.

Q: Why is Yen strength showing up in crosses like AUD/JPY instead of pushing USD/JPY lower? A: Instead of forcing USD/JPY through support, demand for the Japanese currency found another outlet in the crosses. AUD/JPY led losses, followed by NZD/JPY, GBP/JPY, CAD/JPY and CHF/JPY, a pattern that points to a broader reduction in Yen-funded carry trades rather than outright Dollar weakness.

Q: Why did Brent gap lower again despite Iran signaling no immediate direct talks with the US? A: The gap reflected hopes of easing tensions after the US cancelled planned military strikes over the weekend and President Trump said negotiations with Iran would begin Monday. Iran, however, offered a more cautious assessment, with its Foreign Ministry saying discussions remain limited to Omani mediation over the Strait of Hormuz. Markets have grown reluctant to react aggressively to political statements alone, preferring tangible evidence of changes in shipping conditions or energy flows.

Key Takeaways Confirmed intervention marks a real shift in strategy: Japan and the US jointly confirmed last week’s coordinated Yen-buying operation, the first since 2011, and did so far faster than Japan’s usual practice of strategic ambiguity. USD/JPY is defending 155, not breaking it: The pair stalled just ahead of the support zone as buyers emerged, suggesting markets see intervention’s goal as capping a return above 160, not forcing a sustained move below 155. Yen strength got squeezed into the crosses instead: AUD/JPY, NZD/JPY, GBP/JPY, CAD/JPY and CHF/JPY all fell sharply, pointing to a broader unwind of Yen-funded carry trades rather than Dollar weakness. Oil’s gap lower reflects hope, not confirmation: Brent fell as low as $81.55 on prospects of US-Iran talks, but Iran’s Foreign Ministry says no direct negotiations are planned yet, just Omani mediation, keeping the conflicting-narrative pattern intact. This week’s US data matters more for Fed flexibility than for a September verdict: ISM Manufacturing, ISM Services, ADP and Friday’s payrolls will shape how much room the Fed has heading into next week’s CPI report, with Fed funds futures currently pricing just over 60% odds of a September hike. What to Watch Next Whether USD/JPY eventually breaks below 155 or continues bleeding out through the Yen crosses is one of the week’s key technical questions. On the data side, today’s ISM Manufacturing kicks off a run of releases culminating in Friday’s non-farm payrolls, all of which will help determine how much flexibility the Fed has heading into next week’s CPI report.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

U.S. Dollar Retreats As CB Consumer Confidence Drops

DXY 280726 4h Chart U.S. Dollar Index is losing ground as traders focus on the weak CB Consumer Confidence report and react to the strong pullback in the oil markets.

CB Consumer Confidence decreased from 92.2 in June (revised from 91.2) to 90.8 in July, compared to analyst forecast of 92.3.

Today, traders also had a chance to take a look at the Case-Shiller Home Price Index report for May. The report showed that home prices increased by +1.6% on a year-over-year basis, compared to analyst consensus of +1.3%.

Oil prices pulled back by -5% amid signs of de-escalation in the Middle East. Falling oil prices pushed Treasury yields lower, which was bearish for the American currency.

Currently, U.S. Dollar Index is trying to settle below the support level at 101.15 – 101.30. In case this attempt is successful, U.S. Dollar Index will head towards the next support, which is located in the 100.50 – 100.65 range.

EUR/USD Rebounds As Oil Markets Dive EUR/USD 280726 4h Chart EUR/USD gains ground, supported by the strong sell-off in the oil markets. Falling Treasury yields provided additional support to EUR/USD. The yield of 2-year Treasuries pulled back towards the 4.26% level, while the yield of 10-year Treasuries settled below 4.60%.

EUR/USD failed to settle below the support at 1.1350 – 1.1365 and rebounded towards the 50 MA at 1.1406. In case EUR/USD settles above the 50 MA, it will get to the test of the nearest resistance level at 1.1420 – 1.1435. A move above the 1.1435 level will push EUR/USD towards the next resistance at 1.1485 – 1.1500.

GBP/USD Moves Away From Weekly Lows GBP/USD 280726 4h Chart GBP/USD is moving higher as traders focus on general weakness of the American currency.

In case GBP/USD manages to settle above the 1.3300 level, it will head towards the nearest resistance at 1.3335 – 1.3350. A move above 1.3350 will push GBP/USD towards the 50 MA at 1.3380. If GBP/USD climbs above the 50 MA, it will head towards the resistance at 1.3450 – 1.3465.

USD/CAD Pulls Back As Traders Take Some Profits Off The Table Ahead Of Fed Decision USD/CAD 280726 4h Chart USD/CAD is losing ground as traders monitor commodity markets and prepare for Fed decision, which will be released tomorrow. FedWatch Tool indicates that there is a 71.7% chance that Fed will leave the federal funds rate unchanged.

If USD/CAD stays below the 1.4100 level, it will head towards the 50 MA at 1.4073. A move below the 50 MA will push USD/CAD towards the nearest support level at 1.4010 – 1.4025.

USD/JPY Remains Stuck Below 164.00 USD/JPY 280726 4h Chart USD/JPY continues its attempts to settle above the resistance level at 163.50 – 164.00 despite falling Treasury yields. Traders ignore intraday dynamics of Treasury markets and focus on hawkish Fed policy outlook. The strong pullback in the oil markets did not provide support to the Japanese yen, which was a bearish sign for the currency.

A successful test of the resistance at 163.50 – 164.00 will push USD/JPY towards the 165.00 level. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

If you’d like to know more about how to trade forex, please visit our educational area.

The USD/CAD pair trades marginally lower to near 1.4113 during the European trading session on Tuesday. The Loonie pair edges down as the Canadian Dollar (CAD) outperforms its major currency peers. However, the strength is expected to be temporary, as oil prices have declined further due to continued negotiations between the United States (US) and Iran to adhere to the peace agreement after recent violations.

In European trade, the WTI Oil price posts a fresh weekly low, trading 2.2% lower to near $79.40. Currencies from economies, such as Canada, which are net energy exporters, tend to lose their appeal when oil prices start declining.

Meanwhile, the US Dollar trades flat after a strong Monday, awaiting the Federal Reserve’s (Fed) monetary policy announcement on Wednesday. According to the CME FedWatch tool, traders see a 62% chance that the Fed will leave interest rates unchanged in the range of 3.50%-3.75%.

On Monday, US President Donald Trump urged Fed Chairman Kevin Warsh to cut interest rates in the Wednesday meeting. To support his view, Trump said that there was a good inflation report recently, costs were falling rapidly, and that prices should drop significantly once the Gulf War ends.

USD/CAD technical analysis

USD/CAD trades slightly lower at around 1.4113. The pair wobbles near the 20-day exponential moving average (EMA), which is at 1.4103, suggesting a sideways trend.

The Relative Strength Index (RSI) at 53.7 has drifted back toward neutral territory, hinting that upside momentum has cooled but not reversed, leaving scope for a gradual grind higher while the price stays supported by the short-term EMA.

On the downside, the area between 1.3962 and 1.4001 would be the key demand zone for the pair. Looking up, the pair needs a decisive break above the July 14 high at 1.4157 to revisit the yearly high at 1.4248.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator Fed Interest Rate Decision The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

Read more.

Next release: Wed Jul 29, 2026 18:00

Frequency: Irregular

Consensus: 3.75%

Previous: 3.75%

Source: Federal Reserve

USD/CAD edges higher on Monday, paring earlier losses as the US Dollar (USD) rebounds after opening the week with a bearish gap. The Greenback initially weakened as a temporary pause in attacks between the United States (US) and Iran improved risk sentiment. At the time of writing, the pair trades around 1.4114 after bouncing from an intraday low of 1.4070.

Oil prices have erased most of last week’s gains in response to the pause, weighing on the commodity-linked Canadian Dollar (CAD). West Texas Intermediate (WTI) trades near $82.70 per barrel after hitting an intraday low of $81.28, but is still down more than 7% on the day.

Despite Monday’s decline, Oil prices remain elevated. However, the Loonie has received only limited support from higher Oil prices since the US-Iran war began, as USD/CAD remains driven mainly by US Dollar flows and monetary policy expectations amid heightened energy-driven inflation risks.

Markets see the Federal Reserve (Fed) as more likely to raise interest rates than the Bank of Canada (BoC). Against this backdrop, the near-term outlook for USD/CAD remains tilted to the upside, with technical indicators also pointing to easing selling pressure following the pullback from June’s high near 1.4250.

Technical analysis

On the daily chart, USD/CAD holds a constructive near-term bias as it trades above the 50-day and 100-day Simple Moving Averages (SMAs) at 1.4030 and 1.3883, respectively.

The pair is testing nearby horizontal resistance at 1.4120, while the Relative Strength Index (RSI) around 54 suggests neutral-to-firm momentum, and the Moving Average Convergence Divergence (MACD) indicator, still slightly negative but improving, hints at waning downside pressure.

A clear break above 1.4120 could open the door toward the June high near 1.4250. On the downside, the 50-day SMA near 1.4030 closely aligns with the psychological 1.4000 mark, making this area an important support zone. The 100-day SMA at 1.3883 would provide deeper support if selling pressure picks up.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.

USDEURGBPJPYCADAUDNZDCHFUSD-0.03%0.18%-0.08%0.15%-0.16%0.12%0.06%EUR0.03%0.16%-0.07%0.15%-0.16%0.15%0.07%GBP-0.18%-0.16%-0.24%-0.00%-0.32%-0.05%-0.09%JPY0.08%0.07%0.24%0.20%-0.09%0.19%0.15%CAD-0.15%-0.15%0.00%-0.20%-0.29%-0.02%-0.07%AUD0.16%0.16%0.32%0.09%0.29%0.31%0.22%NZD-0.12%-0.15%0.05%-0.19%0.02%-0.31%-0.08%CHF-0.06%-0.07%0.09%-0.15%0.07%-0.22%0.08% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

GBP/CAD could recover towards 1.8900 this week, although the Bank of England decision, UK fiscal concerns and volatile oil prices will determine whether the rebound can hold. The Pound to Canadian Dollar exchange rate (GBP/CAD) opened the new week near CA$1.8820, having recovered from last week’s three-week low around CA$1.8740.

GBP/CAD nevertheless ended the previous week approximately 0.4% lower, as UK fiscal concerns weighed on Pound Sterling while rising oil prices supported the commodity-linked Canadian Dollar.

Latest — Exchange Rates:

Pound to Canadian Dollar (GBP/CAD): 1.8819 (+0.20%)

Euro to Canadian Dollar (EUR/CAD): 1.608296 (+0.35%)

Dollar to Canadian Dollar (USD/CAD): 1.4096 (+0.01%)

Image: GBP/CAD Technical Outlook Ahead of the Bank of England Decision Near-term momentum has improved after GBP/CAD moved back above the 1.8800 area.

The 15-minute chart shows the pair holding above its short-term moving average and session VWAP, while the relative strength index remains positive without signalling an extreme overbought position.

Initial resistance is located around 1.8830. A sustained break above this level could open the way towards 1.8870 and then the psychologically important 1.8900 area.

On the downside, 1.8800 is the first support to watch. A break beneath 1.8780 would weaken the recovery and expose last week’s low near 1.8740.

Near-Term GBP/CAD Forecast: Bank of England Holds the Key Thursday’s Bank of England decision will provide the week’s main test for Sterling.

The Bank is widely expected to leave interest rates unchanged at 3.75%, meaning the vote split, updated forecasts and guidance on future tightening will be more important than the decision itself.

At the previous meeting, two Monetary Policy Committee members voted for an immediate increase to 4.00%.

Further concern about the inflationary impact of elevated energy prices could therefore reinforce expectations that the Bank may raise rates later this year.

A relatively hawkish decision, particularly one that keeps a September increase under consideration, would support a GBP/CAD move through 1.8830 and towards 1.8900.

However, Pound Sterling could retreat if the Bank emphasises weaker growth, softer headline inflation or the risk that higher energy costs will damage demand rather than create persistent domestic inflation.

UK political and fiscal developments will remain an additional risk.

The Pound struggled last week after Prime Minister Andy Burnham appointed John Healey as Chancellor and investors questioned how the government’s proposed tax reductions would be funded.

This political uncertainty overshadowed stronger-than-expected UK retail sales and business activity figures, preventing Sterling from making a sustained recovery.

Oil Prices and Canadian GDP Could Support the Loonie For the Canadian Dollar, oil prices are likely to remain at least as important as domestic data.

Crude prices surged last week following attacks on Saudi tankers and infrastructure around the Red Sea, but fell sharply on Monday as a pause in US-Iran attacks encouraged hopes of renewed diplomacy.

Shipping disruption through the Bab el-Mandeb Strait means the risk premium has not disappeared, leaving CAD sensitive to further geopolitical headlines.

A renewed rise in Brent crude would probably favour the Canadian Dollar and could push GBP/CAD back towards 1.8780.

Conversely, a continued oil-price correction would remove an important source of CAD support.

Friday’s Canadian GDP report will provide the main domestic event.

Statistics Canada will publish May’s GDP figures alongside an advance estimate for June, following April’s 0.5% expansion.

Stronger growth would reinforce the downside risk for GBP/CAD.

Nevertheless, the central forecast is for the pair to remain supported above 1.8780, with a hawkish Bank of England outcome potentially driving a recovery towards 1.8870–1.8900.

Ceasefire headlines trigger familiar Monday playbook Brent may now influence escalation risks Light calendar on Monday leaves geopolitics in control Charts suggest rallies remain opportunities to sell Donald Trump has delivered another Sunday TACO, triggering a familiar market reaction as Globex reopened for the week. Energy futures that spiked last week tumbled in early Asian trade, while equity futures jumped and the euro and British pound strengthened against the US dollar. Whether those moves extend into the European session will largely depend on the news flow from the Middle East. As this conflict has repeatedly shown, sentiment can turn very quickly.

Another Sunday TACO Almost inevitably, we're back here again early on Monday morning in Asia with a risk-on tone, sparked by another barrage of positive headlines out of the Middle East. After spending the weekend worrying about a major escalation, traders have once again been handed a de-escalation headline just before Globex reopened, amplifying the initial reaction in extremely illiquid conditions.

Zooming out to 40,000 feet, it seems Brent crude may no longer be just a barometer of geopolitical risk. Repeated moves below $70 a barrel during the conflict have been followed by renewed escalation. Conversely, the latest de-escalation arrived with Brent trading above $100 a barrel, a level that risks fuelling inflation and lifting gasoline prices at a politically awkward time for Trump ahead of November's midterm elections.

It's entirely speculative on my behalf, but both sides appear to have developed an implicit reaction function around Brent since the conflict began. Prices below $70 a barrel seem to invite renewed escalation, while moves above $100 have so far been met with efforts to de-escalate.

Europe Wins, For Now

Source: TradingView

The latest headlines have provided Europe an immediate release valve. Natural gas and Brent crude, shown on the left and right respectively above, have fallen sharply, drowning out renewed trade concerns after Trump threatened additional tariffs on Europe in response to the EU's antitrust fine against Alphabet. Whether those moves last will depend almost entirely on where the news flow heads next. 

EUR/USD: Downtrend Still Intact

Source: TradingView

Despite the pop higher on the ceasefire headlines, the EUR/USD H4 chart suggests this remains a sell-on-rallies play for now, with the string of lower highs and lower lows in place since the middle of July still intact.

The price remains trapped within a well-defined range between 1.1364 and 1.1397. Bulls have already failed twice to break above the upper end of that structure, including earlier today when EUR/USD briefly pushed through 1.1400 before retreating. That leaves a clear range to work with.

The oscillators suggest downside momentum is ebbing but has yet to trigger an outright bullish signal. RSI (14) has lifted but remains below the neutral 50 level, while MACD is on the cusp of a bullish crossover despite remaining in negative territory, placing greater emphasis on price action around the range extremes.

Should buyers finally break above 1.1397 and hold there, attention shifts to the former uptrend from the June 24 low, which comes in around 1.1415 today, followed by the July 7 swing high at 1.1436. On the downside, a break beneath 1.1364 would expose the June 24 swing low at 1.1325, with little meaningful technical support in between.

As long as the positive news flow from the Middle East continues, there may be scope for further upside. But the broader technical picture still favours selling rallies. The daily chart shows EUR/USD remains below its 50, 100 and 200-day moving averages, all of which continue to slope lower, suggesting the medium-term downtrend remains intact.

GBP/USD: Breakout Fading

Source: TradingView

GBP/USD looks much the same as EUR/USD on the H4 timeframe. The pair is attempting to break the downtrend that's been in place since the middle of July, although it's already given back a sizeable chunk of the gains seen earlier in the session.

The daily chart, shown in the right-hand pane, suggests rallies should still be treated with caution. The 50-day moving average is found at 1.3368, but it's the 100 and 200-day moving averages around 1.3400 that are of greater interest. The pair stalled beneath those levels last week, making them an important resistance zone should the current bounce extend.

On the H4 chart, support emerged around 1.3300 late last week, while 1.3360 is the first level overhead to watch, having acted as support earlier in the month. Outside of that range, 1.3263 is the next level of note on the downside, while 1.3400 and 1.3413 provide additional resistance above.

The oscillators suggest downside momentum is ebbing but has yet to trigger an outright bullish signal. RSI (14) continues to climb towards the neutral 50 level, while MACD has crossed above its signal line but remains below zero, placing greater emphasis on price action around these key technical levels.

The Pound Sterling advances by some 0.20% on Friday as Oil prices tumble, weighing on the US Dollar, while the US-Iran conflict signals a further escalation, which market participants ignored. Despite registering daily gains, the GBP/USD is poised to finish the week with losses of nearly 0.70%. Read More...

British Pound retreats from 1.3340 as bright UK data fails to offset risk aversionThe British Pound (GBP) remains depressed near three-week lows against the US Dollar (USD) on Friday, with upside attempts capped below 1.3340, and on track for a 1% weekly decline. The upbeat UK Preliminary S&P Global Purchasing Managers Index (PMI) and Retail Sales reports failed to lift the Pound, heavily weighed by risk-averse markets and increasing fiscal concerns in the UK. Read More...

British Pound rebounds above 1.3300 ahead of UK Retail Sales dataThe GBP/USD pair recovers some lost ground to near 1.3325, snapping the five-day losing streak during the Asian trading hours on Friday. However, the potential upside might be limited amid heightened military tensions in the Middle East. Traders brace for the release of the UK Retail Sales data, which will be published later on Friday. Read More...

Key Points:EUR/USD pulled back below the 1.1400 level as traders reacted to ECB Interest Rate Decision. GBP/USD moved lower as traders focused on the strong rally in the oil markets. USD/JPY tested multi-decade higher amid rising Treasury yields.

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U.S. Dollar Moves Higher Amid Rising Demand For Safe-Haven Assets

DXY 230726 4h Chart U.S. Dollar Index gains ground as traders focus on the strong rally in the oil markets and react to the better-than-expected Initial Jobless Claims report.

The report indicated that 187,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 212,000.

Oil prices gained 6.5% as Houthis attacked vessels linked to Saudi Arabia. Brent oil climbed above the psychologically important $100 level. As a result, demand for safe-haven assets increased, which was bullish for the U.S. dollar.

U.S. Dollar Index climbed above the resistance at 101.15 – 101.30 and is trying to settle above the 101.50 level. In case this attempt is successful, U.S. Dollar Index will move towards the resistance level at 101.80 – 101.95.

EUR/USD Retreats As ECB Leaves Rates Unchanged EUR/USD 230726 4h Chart EUR/USD is losing ground as traders react to ECB Interest Rate Decision. The European Central Bank left the interest rate unchanged at 2.4%, in line with analyst estimates.

Comments from ECB President Christine Lagarde showed that ECB was ready to raise rates in September due to high oil prices.

Currently, EUR/USD is trying to settle below the support level at 1.1350 – 1.1365. In case this attempt is successful, EUR/USD will head towards the next support level at 1.1270 – 1.1285.

GBP/USD Tests New Lows As Oil Prices Rally GBP/USD 230726 4h Chart GBP/USD is under pressure as traders focus on the potential impact of high oil prices. Demand for risk assets declined, which was bearish for the British pound.

From the technical point of view, GBP/USD moved below the support level at 1.3335 – 1.3350 and is trying to settle below the 1.3300 level. If GBP/USD manages to settle below 1.3300, it will head towards the support at 1.3250 – 1.3265. RSI has just moved into oversold territory, but there is enough room to gain additional momentum in the near term.

USD/CAD 230726 4h Chart USD/CAD is mostly flat as traders react to developments in commodity markets. Precious metals markets suffered a sell-off while oil markets soared. Other commodity-related currencies pulled back in today’s trading session.

Today, traders also focused on the Retail Sales report from Canada. The report showed that Retail Sales increased by +0.4% month-over-month in June, in line with analyst estimates.

If USD/CAD manages to settle back above the 1.4100 level, it will head towards the nearest resistance level, which is located in the 1.4125 – 1.4140 range. A move above the 1.4140 level will open the way to the test of the resistance at 1.4235 – 1.4250.

USD/JPY Tests Multi-Decade Highs USD/JPY 230726 4h Chart USD/JPY tests new highs as traders focus on rising Treasury yields. The yield of 2-year Treasuries climbed towards the 4.35% level, while the yield of 10-year Treasuries settled near 4.70%. Rising oil prices serve as a major negative catalyst for the Japanese yen as Japan’s economy is dependent on energy imports.

Currently, USD/JPY is trying to settle above the 164.00 level. In case USD/JPY manages to settle above 164.00, it will head towards the 165.00 level. It should be noted that RSI is in the overbought territory, so the risks of a pullback are rising.

If you’d like to know more about how to trade forex, please visit our educational area.

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Yen Crosses Forecasts – Rising US Rates and Oil Surge Punish Japanese YenMulti-Asset Forecasts – US Yields Surge as USD/CAD and DAX Test SupportECB’s Next Move: Patience in July, Flexibility LaterAbout the Author

Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.

Editors’ Picks

As we all know, the Iran war is severely restricting the flow of Crude Oil through the Strait of Hormuz.

Saudi Arabia started to send more tankers out via the Red Sea, but now, we have a completely different set of problems in the Bab al-Mandab Strait, which is driving crude even higher.

In today’s Market Outlook, let’s take a look at Forex trading on EURNZD, NZDUSD, AUDUSD, AUDNZD, AUDCAD, Silver, XAGUSD, Gold, XAUUSD, WTI, and Brent Crude Oil.

So, the question for traders is, “when can we go short on WTI and Brent CFDs and watch price action fall to normal levels?”

There is no easy answer to this question, but the current US administration is under enormous pressure to end the war, but that may mean nothing in the short term.

This has caused more geopolitical uncertainty, and investors tested the $4,000 level of support on gold, with price heading up past $4,100 this week.

Silver followed gold, as it has been doing for months.

On the technical side, price action has broken through the upper trend line that we have been following for months.

On the weekly charts, we see falling wedges, which are almost always bullish patterns.

But keep in mind, these are weekly charts, so this may take a long time to play out.

This morning we saw Australian Employment Figures way higher than analysts’ expectations, and look what happened.

If we follow the rules of the News Catalyst Fade, we want to trade with the trend or within the range.

We note that in almost every case, the news drove price action WITH the trade buy; we can still look for reversals on other time frames.

We will keep an eye on AUDUSD, for example, where price is at a key level of resistance.

Also on AUDNZD, we see price at a key level with an overbought stochastic oscillator.

And, on AUDCAD, we see a strong ranging market with price at an upper trend line and an overbought stochastic oscillator.

Please feel free to check all other AUD pairs.

We see that NZD has been the strongest currency this month, but we also see that this may be changing.

For example, on NZDUSD, we see a pullback through the lower trend line, but we also see a falling wedge and an oversold stochastic oscillator.

Inflation in New Zealand is not under control, so we will keep an eye on all NZD pairs.

On EURNZD, we see the pullback as well, but with price action forming a rising wedge, and we will keep an eye on this as well.

And tomorrow’s ECB Interest Rate decision, so keep an eye on these and all EUR pairs.

That’s all for now.

CFDs and FX are leveraged products, and your capital may be at risk.

ECB to leave rates but could pave the way to a September hike The ECB will announce its rate decision today at 12:15 GMT. The central bank is expected to leave its deposit rate unchanged at 2.25% after raising rates by 25 basis points in June, as policymakers assess the implications of the renewed U.S.-Iran conflict.

The ceasefire between the U.S. and Iran following June's ECB meeting sent oil prices sharply lower, helping ease inflationary pressures. However, the collapse of that ceasefire and the renewed hostilities have pushed oil back above $95 a barrel, reviving concerns over inflation and increasing the likelihood of further policy tightening.

That puts the focus firmly on ECB President Christine Lagarde's press conference. She is expected to reiterate that the ECB remains data dependent and will continue to take decisions one meeting at a time. However, investors will also be looking for any hints that another rate hike could come as early as September.

The market is currently pricing in around 41 basis points of additional tightening this year, with the deposit rate expected to reach 2.77% by March 2027.

However, the U.S. dollar is also finding support from safe-haven demand as the Middle East conflict deepens. Higher oil prices are fuelling inflation concerns, lifting Treasury yields ahead of next week's FOMC meeting.

As a result, even a hawkish hold from the ECB may struggle to generate a sustained rally in the euro towards 1.1500.

EUR/USD Forecast – Technical Analysis

EUR/USD continues to trade within a descending channel dating back to mid-April.

The pair found support at the 2026 low of 1.1325 and has staged a modest recovery, although it continues to struggle around the 1.1400–1.1450 resistance zone.

Buyers would need to break above this area to move out of the falling channel and bring 1.1500 into focus, where horizontal resistance and the 50-day EMA converge.

A move above there would expose the 200-day EMA at 1.1570, before attention turns to 1.1600, the mid-June swing high. A break above this level would strengthen the bullish outlook.

Oil extends rally for a 5th day as US-Iran conflict deepens and supply worries intensify Oil prices are continuing to rise, with WTI heading towards $90 a barrel and Brent towards $100.

Prices are on track for a third consecutive week of gains, leaving crude up around 28% in July, which would mark the strongest monthly gain since March, when the U.S.-Iran conflict first began.

The latest leg higher comes as the U.S. and Iran exchanged fire for a 12th consecutive night, while concerns over global oil supplies continue to intensify.

Attacks on tankers in the Red Sea by Yemen's Houthis, together with the near closure of the Strait of Hormuz, mean Middle East oil exports are now facing disruption through both the Bab el-Mandeb and the Strait of Hormuz.

As a result, geopolitical risk premiums have returned to the market and are likely to keep oil prices supported as long as shipping disruption persists.

Goldman Sachs believes Brent could reach $120 a barrel by the fourth quarter if the conflict continues to escalate.

However, its base-case forecast remains $80 a barrel, assuming the conflict is eventually resolved.

Oil Forecast – Technical Analysis

Oil has recovered sharply from the $67 low, breaking above several important resistance levels, including the 50-day EMA, the 200-day EMA, the falling trendline and the 50% Fibonacci retracement of the $55–$120 move.

The RSI continues to point to further upside while remaining below overbought territory.

Buyers will look for a move towards $95, the 38.2% Fibonacci retracement, before attention turns to the $100 psychological level.

On the downside, initial support can be seen at $88, the 50% Fibonacci retracement.

Below there, trendline support comes in around $83.50, alongside the 50-day EMA at $82.20.

Further support is located at $80, the 61.8% Fibonacci retracement, followed by the 200-day SMA around $78.

The Pound Sterling holds firm during the North American session as UK inflation data dipped, easing pressure on the Bank of England to tackle higher prices, while attacks between the US and Iran don’t seem to be ending in the Middle East. The GBP/USD trades at 1.3377. Read More...

UK inflation cools and fiscal concerns grow: Why the British Pound is surrendering recent gainsThe British Pound (GBP) is facing renewed downward pressure across major currency pairs, forfeiting its recent gains as market participants digest a combination of cooling domestic inflation and growing fiscal uncertainty surrounding Prime Minister Andy Burnham’s economic agenda. Read More...

British Pound remains depressed against US Dollar following soft UK inflation dataThe British Pound (GBP) consolidates losses against the US Dollar (USD) on Wednesday, as a string of UK inflation figures provided some leeway for the Bank of England to maintain its “wait-and-see” stance through the coming months. The GBP/USD pair remains pinned near weekly lows, below 1.3400 following a nearly 1.2% decline in the last four days. Read More...

Summary:

USD/CAD held near 1.4100 after extending its recovery, with traders watching the key 1.4115 resistance level. Safe-haven demand for the US dollar continues to outweigh support for the Canadian dollar from higher crude oil prices. A break above 1.4115 could strengthen bullish momentum, while oil prices and US economic data remain the next major catalysts. The USD/CAD exchange rate traded around 1.4101 on Tuesday after recovering steadily over the past several sessions, as renewed demand for the US dollar continued to offset the Canadian dollar’s traditional support from rising crude oil prices.

The pair has advanced despite Brent crude remaining above $90 per barrel, highlighting how geopolitical uncertainty and expectations for higher US interest rates have become the dominant drivers of currency markets.

Investors are now watching whether USD/CAD can break above 1.4115, a level that could determine whether the pair resumes its broader uptrend.

Why Is USD/CAD Rising Today? The US dollar has regained strength as investors continue to favour safe-haven assets amid escalating tensions between the United States and Iran.

The conflict has pushed oil prices sharply higher, raising concerns that inflation could remain elevated and encouraging expectations that the Federal Reserve may keep interest rates restrictive for longer.

Those expectations have supported US Treasury yields and increased demand for the dollar across the forex market.

Ordinarily, rising oil prices benefit the Canadian dollar because Canada is one of the world’s largest crude exporters. However, the current geopolitical environment has strengthened the US dollar by an even greater margin, allowing USD/CAD to continue climbing despite favourable conditions for the loonie.

How Do Higher Oil Prices Affect USD/CAD? Crude oil remains one of the most important drivers of the Canadian dollar.

When oil prices rise, Canada’s export revenues typically increase, improving the country’s trade balance and supporting the value of the Canadian dollar.

This week, however, that relationship has weakened.

Brent crude has remained above $90 per barrel after threats to shipping through the Strait of Hormuz raised concerns over global energy supplies. Instead of boosting the Canadian dollar, the oil rally has primarily fuelled inflation concerns, strengthening demand for the US dollar and limiting gains for commodity-linked currencies.

As long as geopolitical risks continue driving oil prices higher, the Canadian dollar may struggle to fully benefit from stronger energy markets.

Will USD/CAD Break Above 1.4115? The 1.4115 level has become the key technical hurdle for USD/CAD. ActionForex notes that a decisive move above this resistance would confirm that the recent pullback from 1.4247 has likely ended and increase the probability of another test of that July high.

Conversely, failure to break above 1.4115 could trigger short-term profit-taking after the pair’s recent rally. For now, the broader outlook remains constructive while the pair continues trading comfortably above the 1.3954 support area.

USD/CAD Outlook The short-term USD/CAD outlook remains tilted to the upside while the pair trades just below the key 1.4115 resistance level.

Although elevated oil prices would normally strengthen the Canadian dollar, safe-haven demand for the US dollar and expectations that the Federal Reserve could keep interest rates higher for longer continue to dominate market sentiment.

Whether USD/CAD extends its recovery will likely depend on upcoming US economic data, developments in the Middle East and the direction of crude oil prices. A convincing move above 1.4115 would strengthen the case for another attempt at 1.4247, while renewed strength in the Canadian dollar could limit further gains if oil prices continue climbing.

Why is USD/CAD rising today?

USD/CAD is rising as investors buy the US dollar amid geopolitical uncertainty and expectations that the Federal Reserve may keep interest rates higher for longer. Safe-haven demand has outweighed support for the Canadian dollar from stronger oil prices.

How do oil prices affect USD/CAD?

Higher oil prices usually strengthen the Canadian dollar because Canada is a major oil exporter. A stronger Canadian dollar typically pushes USD/CAD lower. However, during periods of heightened geopolitical risk, the US dollar can outperform despite rising crude prices.

Will USD/CAD break above 1.4115?

The 1.4115 level is the next key resistance for USD/CAD. A sustained break above this level could signal a continuation of the recent recovery and open the door for a retest of the 1.4247 high.

USD/JPY has finally broken higher after weeks of compression, with easing bearish sentiment towards the Japanese yen adding fuel to the rally. While the US dollar led the move, the technical backdrop also favours further upside for GBP/JPY, although crude oil prices remain a key variable for CAD/JPY bears.

Source: LSEG

View related analysis:

US Dollar Bulls Lose Momentum, Commodity FX Defies Positioning | COT Report Australian Dollar Outlook: AUD/USD Bulls Hold the Edge Ahead of Jobs Data Nasdaq Could Look to KOSPI for Directional Clues Beyond Earnings Canadian Dollar Slides as Soft CPI and Trump Tariffs Lift USD/CAD USD/JPY Leads as Japanese Yen Weakness Keeps GBP/JPY and CAD/JPY in Focus It only seemed a matter of time before volatility erupted on USD/JPY, given the compression pattern beneath its 39-year high. Momentum ultimately broke to the upside, helped by a strong session for the US dollar amid the latest flare-up in Middle East tensions.

As noted in this week’s COT report, net-short exposure to the Japanese yen has moved away from a sentiment extreme. That removes some pressure from bearish yen positions and gives the USD/JPY breakout more breathing room. The question now is whether other currencies, such as the British pound or Canadian dollar could also take advantage of the weaker yen.

Source: CFTC (COT), LSEG

For traders wanting a deeper understanding of futures positioning, I’ve also published a guide on how to read and interpret weekly COT data in forex markets.

USD/JPY Tests Trendline Resistance After Breakout Regular readers will know I am not an advocate of trendlines, but I concede they deserve attention from time to time. In this case, a trendline projected from the January high coincides with Tuesday's high, making it a valid interim resistance level. It is also one that could break, given the strength of the move out of the compression pattern.

The monthly R1 pivot (163.72) and 165.30 may be the next resistance levels for bulls if the trendline breaks. That said, prices appear stretched on the 1-hour chart, while bearish RSI divergences have formed in overbought territory, raising the potential for a near-term pullback. Bulls could look to buy dips within Tuesday's range, with 163 potentially providing support.

Source: ICE, TradingView

GBP/JPY Bulls Eye 219 as British Pound Holds the Advantage The GBP/JPY uptrend on the daily chart speaks for itself, with bullish momentum accelerating from the June low. Prices have retraced to the 10-day EMA and the monthly R2 pivot, while Tuesday's wide-legged doji has caught my eye as it hints at a swing low forming within a strong uptrend.

Price action on the 1-hour chart appears corrective, given the overlapping nature of the decline. Moreover, elevated volumes accompanied the swing low, reinforcing my suspicion of bullish accumulation above 217.50. GBP/JPY is now attempting to form a higher low around the 218.00 handle and the weekly pivot point.

Ultimately, my near-term bias for the British pound against the Japanese yen remains bullish while prices hold above Tuesday's low, with a move to 219.00 as the minimum upside target. Note the July 2007 low at 219.036 and the 219.61 high as additional resistance levels ahead of the weekly R1 pivot just below 220.00.

Source: ICE, TradingView

CAD/JPY Reversal Pattern Faces Crude Oil Headwind The daily chart shows an evening star pattern (a three-bar bearish reversal) forming around the 116.00 handle, warning that a top may be in place. Tuesday's small bullish inside day represents a lacklustre attempt by bulls to reclaim lost ground, and the fact it closed around the monthly R1 pivot suggests CAD/JPY could be gearing up for another leg lower.

However, rising crude oil prices are a fly in the ointment for CAD/JPY bears. As a major oil exporter, Canada typically benefits from higher crude oil prices, which can underpin the Canadian dollar against the Japanese yen. If crude oil continues to rally, it could support CAD/JPY, or at least make life more difficult for bears. Conversely, if Middle East tensions ease and crude oil prices retreat, it could pave the way for the next leg lower in CAD/JPY.

A break below the weekly pivot point (115.31) would bring the weekly S1 level and monthly pivot point into focus near 114.50.

Source: ICE, TradingView

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

Markets struggled to settle on a single narrative today as investors weighed conflicting geopolitical headlines alongside a range of regional developments. Reports that mediators had proposed a 10-day ceasefire between Washington and Tehran initially offered hope that last month’s Memorandum of Understanding could be revived. Those hopes were tempered, however, by market chatter that US President Donald Trump may reject the proposal, leaving traders reluctant to make large directional bets.

That uncertainty was enough to lift Brent crude back above $91 a barrel, helping Dollar edge higher alongside a modest rise in US Treasury yields. Still, the broader market reaction remained restrained. Without confirmation from either side, investors were unwilling to fully embrace either a de-escalation or renewed escalation scenario, leaving most major asset classes confined to relatively narrow ranges.

The stronger oil price nevertheless carries broader implications for foreign exchange. Rising energy costs risk feeding inflation expectations and keeping upward pressure on Treasury yields, a combination that has historically supported Dollar against Yen. With the US 10-year yield back above 4.6%, USD/JPY is once again approaching levels associated with the Yen’s weakest point in 40 years.

The timing is notable. Japanese authorities did not intervene during Monday’s holiday, despite the combination of closed domestic markets and thinner-than-usual liquidity providing an opportunity to catch speculative positioning off guard. With that window now behind them, market participants may increasingly test Tokyo’s tolerance for further Yen weakness if oil prices continue to rise and Treasury yields extend their advance.

Away from geopolitics, Sterling was under pressure as investors continued to digest Prime Minister Andy Burnham’s decision to name John Healey as Chancellor. Opinions were divided over the implications. Supporters argue the appointment signals a commitment to fiscal discipline and respect for bond markets, while critics believe it undermines assumptions that a fiscally conservative figure would restrain the government’s broader agenda. Until greater policy clarity emerges, confidence in UK assets may take time to recover.

Trade policy also stayed on the radar as US and Mexican officials prepared to begin a third round of bilateral talks aimed at revising the USMCA, following Washington’s decision earlier this month not to renew the regional trade agreement while simultaneously imposing fresh duties on Canada. Although the negotiations are unlikely to generate immediate market moves, they reinforce that North American trade policy remains an evolving source of uncertainty.

For the day so far, Australian Dollar outperformed major peers, followed by Euro and New Zealand Dollar. Sterling lagged behind all other major currencies, with Yen and Swiss Franc also weaker, while Dollar and Canadian Dollar traded in the middle of the performance table.

AUD/USD Breaks Higher, but Jobs Data Will Decide Whether Rally Lasts AUD/USD climbed to a four-week high as broad US Dollar weakness, improving risk sentiment and a rally in copper prices combined to lift the Australian Dollar. However, the move has so far been driven largely by external factors rather than domestic fundamentals. Attention is now firmly on Australia’s June employment report, which is expected to play a decisive role in shaping expectations for an August RBA rate hike and determining whether the breakout can develop into a sustained rally. Read More.

USD/CAD Climbs as Trump Expands Tariffs Beyond USMCA Protections USD/CAD advanced after the Trump administration announced a new round of 50% tariffs on selected Canadian imports, but the market reaction reflected more than the immediate trade impact. Investors viewed the measures as further evidence that Washington is increasingly willing to bypass USMCA protections by invoking alternative legal authorities, reinforcing the perception that US-Canada trade tensions are becoming structural. While Canada’s response has so far remained measured, the risk of reciprocal tariffs could deepen the economic headwind for Canada and keep pressure on the Canadian Dollar. Read More.

German ZEW Sentiment Jumps to One-Year High as Recovery Hopes Strengthen German investor confidence strengthened sharply in July, with the ZEW Economic Sentiment Index climbing to its highest level in five months as optimism over exports, domestic demand and economic reforms continued to build. While assessments of current conditions remain weak, they also improved modestly, suggesting the recovery is gradually broadening. The survey also showed confidence improving across the Eurozone, although ZEW warned that the Iran conflict and elevated oil prices remain significant risks to the region’s economic outlook. Read More.

UK Wage Growth Holds Steady as Payroll Employment Continues to Weaken The latest UK labour market report reinforced the picture of a gradual cooling rather than a sharp slowdown. Payroll employment continued to soften, while wage growth remained stable at its weakest pace since 2020. Although the unemployment rate held steady and claimant growth came in well below expectations, moderating earnings should provide further reassurance to the Bank of England that domestic inflation pressures are easing. Read More.

New Zealand CPI Hits 4.1% as Fuel Costs Reinforce RBNZ Challenge New Zealand’s annual inflation accelerated to 4.1% in the second quarter as higher petrol and fuel prices drove the strongest increase in consumer prices. While the headline reading came in slightly above the RBNZ’s own forecast, the details showed imported inflation remained the primary driver, with tradeable inflation reaching 4.9% compared with 3.4% for non-tradeable inflation. The report keeps pressure on the RBNZ to remain vigilant, but policymakers will be focused on whether higher energy costs begin spilling over into broader domestic inflation before deciding whether further tightening is needed. Read More.

USD/JPY Daily Outlook USD/JPY is still staying below 162.83 despite today’s rally. Intraday bias remains neutral. Consolidations from 162.83 could extend with another fall. But in that case, but downside should be contained by 38.2% retracement of 155.01 to 162.83 at 159.84. On the upside, firm break of 162.83 will extend the larger up trend to 164.34 projection level.

In the bigger picture, rise from 139.87 (2025 low) is seen as another rising leg of the long term up trend. Next target is 61.8% projection of 139.87 to 159.44 from 152.25 at 164.34. For now, outlook will remain bullish as long as 155.01 support holds, even in case of deep pullback.

Economic Indicators Update GMT CCY EVENTS Act Cons Prev Rev 22:45 NZD CPI Q/Q Q2 1.50% 1.50% 0.90% 22:45 NZD CPI Y/Y Q2 4.10% 4.00% 3.10% 06:00 GBP Claimant Count Change Jun 6.7K 29.4K 31.2K 06:00 GBP ILO Unemployment Rate (3M) May 4.90% 4.90% 4.90% 06:00 GBP Average Earnings Excluding Bonus 3M/Y May 3.40% 3.40% 3.40% 06:00 GBP Average Earnings Including Bonus 3M/Y May 4.30% 4.50% 4.40% 09:00 EUR Germany ZEW Economic Sentiment Jul 26.3 15.1 10.5 09:00 EUR Germany ZEW Current Situation Jul -77.6 -77.8 -81 09:00 EUR Eurozone ZEW Economic Sentiment Jul 23.4 11.2 9.5

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

GBP/USD fell to 1.3437 on Tuesday as investors assessed the appointment of Andy Burnham as the new Prime Minister of the UK and the outlook for monetary policy.

Burnham succeeded Keir Starmer without a contest, becoming the country’s seventh prime minister in the past decade and the second since the Labour Party returned to power in 2024.
The new head of government reaffirmed his commitment to current fiscal rules but indicated he would consider raising the tax-free personal allowance, which has remained frozen in recent years.

Attention is now turning to the appointment of the Chancellor of the Exchequer. According to media reports, Shabana Mahmood is considered the leading candidate.

Additional pressure on the pound is coming from elevated oil prices, which are increasing inflationary risks and reinforcing expectations that the Bank of England will keep interest rates higher for longer.

Technical Analysis

On the H4 GBP/USD chart, the market is moving lower towards 1.3380. A wide consolidation range is forming around the 1.3468 level. An upside breakout from this range would open the way for a move towards 1.3520, while a downside breakout would suggest a decline towards 1.3380, with scope for the trend to extend to 1.3222. The MACD indicator supports this scenario, with its signal line above zero and pointing firmly downwards, reflecting continued bearish momentum.

On the H1 chart, the market has formed a compact consolidation range around the 1.3468 level, currently extending down to 1.3414. A move higher towards 1.3455 is expected, followed by a decline to 1.3380. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.

Conclusion Sterling has retreated as markets digest the transition of power to Prime Minister Andy Burnham, who has reaffirmed fiscal discipline while signalling a possible increase in the tax-free allowance. Investors are now focused on the appointment of the new Chancellor, with Shabana Mahmood reportedly the frontrunner. Meanwhile, elevated oil prices continue to stoke inflation risks, reinforcing expectations that the Bank of England will maintain higher interest rates for longer. Technically, the pound appears poised for further downside towards 1.3380, with the broader outlook dependent on upcoming fiscal announcements and the trajectory of global energy prices.

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The Canadian dollar was the weakest-performing major currency on Monday after softer-than-expected inflation data reduced expectations of further Bank of Canada policy tightening. Cooling headline and core inflation diminished Canada's relative yield advantage, weighing on the Loonie despite the central bank leaving its policy rate unchanged at 2.25%. Separately, reports that the US and Iran had signed a memorandum aimed at ending the conflict weighed on oil prices, adding further pressure to the oil-sensitive Canadian dollar. The loonie then came under renewed selling late in the US session after Reuters reported that Washington would impose new 50% tariffs on Canadian products.

Source: LSEG

Trump's Tariffs Add to Pressure on the Canadian Dollar The proposed 50% tariffs on Canadian products add a fresh headwind for the loonie by threatening Canada's export outlook and economic growth. Slower growth could reinforce expectations that the Bank of Canada will keep interest rates on hold or even consider easing if the economic impact proves material, reducing the Canadian dollar's yield appeal relative to the US dollar. While the full scope and timing of the tariffs remain uncertain, the announcement was enough to fuel another leg higher in USD/CAD.

USD/CAD Technical Analysis: US Dollar vs Canadian Dollar USD/CAD posted its largest daily gain in 23 sessions, rising 0.5% after finding support at the 50-day EMA and the 1.40 handle, strongly suggesting a swing low may be in place, at least in the near term. It has been just under a month since USD/CAD peaked, and recent developments suggest the pair could extend its rebound towards the 2025 high at 1.4140.

The 1-hour chart shows support has emerged around the weekly pivot point for now, although the sharp momentum shift below ¥116 suggests bears may look to sell into minor pullbacks. A break below 115.31 would bring the 115.00 handle into focus, followed by a key support zone around 114.60 where the monthly and weekly pivot points converge.

Source: ICE, TradingView

CAD/JPY Technical Analysis: Canadian Dollar vs Japanese Yen While crude oil prices didn’t exactly roll over on Monday, they did form doji’s on the daily chart to show indecision. Given but WTI and brent crude have stalled around their respective resistance levels, it removes another pillar of support for CAD/JPY – which is leaving bearish reversal signals of its own.

CAD/JPY formed a notable bearish engulfing candle on Monday to mark its second worst day of the month. Given it formed around 1.16 after a solid bounce, the case for a pullback was arguably growing anyway.

The 1-hour chart shows support has been found around the weekly pivot point for now, though the sharp momentum shift below 116 suggests bears may be seeking to fade into minor pullbacks, A break below 115.31 brings the 115 handle, and tight support zone around 114.6 into focus comprising of the monthly and weekly pivot points.  

Source: ICE, TradingView

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The Pound to Canadian Dollar (GBP/CAD) exchange rate traded lower last week as UK political developments drove volatility while rising oil prices supported the commodity-linked Canadian Dollar.

At the time of writing, GBP/CAD was trading at CA$1.8861, down around 0.5% on the week.

Latest — Exchange Rates:
Pound to Canadian Dollar (GBP/CAD): 1.88631 (-0.31%)
Euro to Canadian Dollar (EUR/CAD): 1.60365 (-0.20%)
Dollar to Canadian Dollar (USD/CAD): 1.40207 (-0.14%)

DAILY RECAP:

The Pound (GBP) had a quiet start to the week as a sparse UK economic calendar left Sterling lacking fresh direction, opening it up to losses against stronger rivals.

Comments from Bank of England Governor Andrew Bailey added to the subdued mood after he warned about the UK's long-standing growth challenges. As a result, GBP/CAD slid to a near two-week low.

Sterling surged in the middle of the week as markets reassessed expectations for the next Chancellor under incoming Prime Minister Andy Burnham.

Confidence improved after Shabana Mahmood emerged ahead of Ed Miliband as the favourite for the role, with investors viewing Mahmood as the more fiscally credible candidate.

However, Sterling couldn’t hold on to its gains, despite data confirming the UK economy expanded by 0.1% in May.

Meanwhile, the crude-linked Canadian Dollar (CAD) strengthened early last week as renewed conflict in the Middle East saw oil prices climb higher.

This propelled the ‘Loonie’ to a near two-week high against the Pound.

Midweek, CAD faced some pressure following the Bank of Canada’s monetary policy decision. The bank left rates unchanged and struck a broadly cautious tone, thereby dampening interest rate hike bets.

However, the Canadian Dollar was able to quickly regain lost ground on Thursday, and extended its upside on Friday, as crude prices continued to rise.

Near-Term GBP/CAD Forecast: Inflation Figures in Focus Looking ahead, the spotlight for GBP investors will first fall on the UK's latest labour market report, due on Tuesday.

If the data points to a resilient jobs market, with unemployment unchanged and wage growth remaining robust, Sterling may find fresh support.

Attention will then turn to Wednesday's UK consumer price index. Should June's figures show headline inflation eased further, the Pound may come under renewed pressure.

The week's final UK releases arrive on Friday, with June's retail sales data and the preliminary PMIs for July. A slowdown in consumer spending, coupled with another contraction in the services sector, could see Sterling end the week on the back foot.

As for the Canadian Dollar, the week kicks off with Canada’s latest CPI. A forecast cooling of inflation in June could dent CAD.

However, the crude-linked currency may attract support throughout the week if the US-Iran conflict continues to intensify, driving up the price of oil.

Summary:

CAD/JPY is on a winning streak despite a notable spike in geopolitical risk following renewed US-Iran hostilities. Why has the yen lost it? The CAD/JPY currency pair has recovered from an 18-week low of 112.96 on July 4th, achieving a four-day winning streak and surpassing 115.70. Typically, global markets see investors move away from cyclical currencies towards safe-haven assets like the Japanese yen during periods of geopolitical tension.

However, the yen is currently weakening while the loonie gains. This analysis explores why the CAD/JPY pair is deviating from traditional safe-haven behavior and what factors might influence its near-term performance.

Can the Yen Challenge the Canadian Dollar? Rising oil prices generally benefit the Canadian dollar, reflecting Canada’s position as a significant energy exporter. Recent geopolitical events in the Middle East have pushed crude oil prices higher, providing fundamental support for the Canadian dollar.

Meanwhile, the Japanese yen, often considered a safe-haven currency, faces its own challenges. Persistent interest rate differences and the Bank of Japan’s cautious monetary policy limit the yen’s attractiveness compared to currencies like the Canadian dollar, which offer higher yields.

While the yen has weakened against the US dollar, the CAD/JPY pair is benefiting from Canada’s resource-based economy. A continued increase in oil prices could further favor the Canadian dollar, although any easing of geopolitical tensions might reduce this advantage.

The Yen’s Deeper Problem Oil aside, the yen’s been fighting a losing battle for months. The Bank of Japan lifted its policy rate to its highest level since 1995, yet the currency still slid to its weakest point since 1986 by late June. Tokyo’s Ministry of Finance stepped in with a record ¥11.7 trillion between late April and May, but that effect vanished within six weeks.

Lazard Asset Management points out that the usual explanation, the US-Japan interest rate gap, has actually narrowed recently. That would normally support the yen. Instead, rising inflation expectations and worries about Japan’s ballooning public debt, now close to 240% of GDP, seem to be the main problem, keeping the currency under pressure no matter what.

Beyond the oil slick, the broader trajectory of the CAD/JPY is being shaped by monetary policy differentials. On July 15, 2026, the Bank of Canada decided to keep its main interest rate at 2.25%. This makes sense because Canada’s economy grew by 2.5% in the second quarter, and the job market is getting tighter. So, the Bank of Canada doesn’t feel any pressure to lower interest rates right now.

Positioning Strategies for Investors Considering the Japanese yen is generally weak and oil prices are helping the Canadian dollar in the short term, the overall trend suggests that CAD/JPY could go up. Predictions show it might climb a bit more in the near future, although some models suggest it might eventually settle back down.

However, just betting on this upward trend has a risk of intervention. Japanese officials have shown they’re ready to step in to influence the market, even if their actions haven’t always had a lasting effect.

Instead of treating this as a sure thing, it seems smarter to be cautious with how much you invest, take smaller positions, and keep an eye out for any signs that the Bank of Japan or the Ministry of Finance might step in.

Why has CAD/JPY shown recent strength?

Gains in oil prices from US-Iran tensions have supported the commodity-linked Canadian dollar against the yen.

Has Bank of Japan intervention helped the yen?

Bank of Japan intervention provided only temporary support for the yen. Record intervention in April-May 2026 briefly boosted the yen, but its weakness soon resumed.

How should investors approach CAD/JPY currently?

They should favor the broader uptrend but size positions cautiously. It is advisable to monitor intervention risks and developments in the Middle East rather than assuming continued, unchecked momentum.

The Pound to Canadian Dollar (GBP/CAD) exchange rate strengthened on Wednesday after the Bank of Canada maintained interest rates and struck a cautious tone on the outlook for monetary policy.

At the time of writing, GBP/CAD was trading at CA$1.8903, up around 0.4% on the day.

Latest — Exchange Rates:
Pound to Canadian Dollar (GBP/CAD): 1.89695 (+0.77%)
Euro to Canadian Dollar (EUR/CAD): 1.606759 (+0.09%)
Dollar to Canadian Dollar (USD/CAD): 1.40514 (-0.01%)

DAILY RECAP:

The Canadian Dollar (CAD) retreated on Wednesday as markets digested the Bank of Canada’s latest interest rate decision.

As was widely expected, the BoC opted to leave rates unchanged at 2.25% following its July policy meeting.

The bank’s accompanying statement also appeared to signal that policymakers are in no rush to follow some of their peers in tightening monetary policy, as they expect inflation to ease through the second half of 2026 and return to the 2% target in early 2027.

The cautious messaging from the Bank, coupled with a pullback in oil prices from Wednesday’s earlier highs, led investors to largely shun the ‘Loonie’.

Meanwhile, the Pound (GBP) spent Wednesday trading sideways against most of its major peers.

With no major domestic economic releases to provide direction, investors instead focused on developments in the UK bond market.

A steady rise in gilt yields pushed the benchmark 10-year yield close to its highest level in two months, tempering sentiment towards Sterling.

Higher borrowing costs continue to raise concerns that incoming Prime Minister Andy Burnham could face a more challenging fiscal backdrop as elevated financing costs weigh on the UK's economic outlook.

Near-Term GBP/CAD Forecast: Positive UK GDP Print to Strengthen Sterling? Looking ahead, the UK’s latest GDP figures are likely to provide the next major catalyst for the Pound to Canadian Dollar exchange rate.

Economists expect monthly growth to return to positive territory in May, with output forecast to rise by 0.1% after April’s 0.1% contraction.

While a return to growth could support Sterling, any gains may prove limited if the underlying data still points to an uneven economic recovery.

Meanwhile, as the impact of the Bank of Canada’s policy decision fades, attention is likely to return to oil price movements.

Any renewed strength in crude prices could provide support for the commodity-linked Canadian Dollar through the remainder of the week.

Summary:

The GBP/JPY pair rose today, building on early-week gains despite Middle East tensions that typically favor the safe-haven yen Spiking oil prices have hurt Japan's import-dependent economy, widening its trade deficit and neutralizing the yen's traditional safe-haven status A widening interest rate gap between the BoE and BoJ fuels carry trades, keeping the pair's path toward 220.00 technically intact The British pound has strengthened against the Japanese yen for the third consecutive trading day. This move is notable as elevated geopolitical risks in the Middle East typically lead to increased demand for the yen as a safe-haven asset. Examining the factors influencing this trend offers insight into current market dynamics.

How the Pound is Countering the Yen’s Safe-Haven Flows Recent military actions in the Persian Gulf and threats concerning the Strait of Hormuz have significantly impacted oil markets. While higher energy costs affect Japan, the primary driver for the GBP/JPY pair is the substantial interest rate difference between the Bank of England (BoE) and the Bank of Japan (BoJ). This differential is crucial for JPY-funded carry trades.

The BoE has maintained a relatively hawkish monetary policy, with its base rate at 3.75%. Monetary Policy Committee members voted 7-2 to keep the rates unchanged in the June meeting, with two committee members actually pushing for a hike to 4%. The reasoning is telling because the BoE explicitly flagged that the war in the Middle East has driven up energy prices.

The BoE is therefore seen as hawkish compared to the Bank of Japan’s cautious approach to normalization. This gap in interest rates continues to favor the pound in carry trade strategies, encouraging investors to hold or increase their GBP positions.

Although energy prices have seen some decline from their peak, the persistent risk of inflation keeps the committee in a stance that supports holding rates steady, rather than cutting them as some market participants had anticipated earlier in the year.

Economic indicators from the UK, including stable growth and inflation trends, have bolstered confidence in the pound. Conversely, the yen faces headwinds from Japan’s domestic economic policies and global interest rate differentials.

Is 220.00 Inevitable This Year? With strong underlying forces, reaching the significant psychological mark of 220.00 for GBP/JPY seems very possible, though not guaranteed. Many predictions suggest GBP/JPY will trade between 205 and 218 until 2026. This could go higher if the Bank of England keeps its policy advantage and investors are comfortable taking risks.

Investors must remain alert to two key risks. The biggest immediate risk is the Japanese Ministry of Finance directly interfering in the currency markets. If the yen drops too fast, officials in Tokyo will probably sell dollars and buy yen, which could cause a quick drop of several hundred pips in GBP/JPY.

Another risk is if an oil crisis leads to a global economic slowdown. This would cause a rapid unwinding of carry trades, meaning capital would rush back to Japan, quickly weakening the pound.

Why is GBP/JPY rising despite Middle East tensions?

The same conflict is keeping UK inflation expectations elevated. This pushes the Bank of England towards a policy that supports sterling’s attractiveness due to its yield.

Why isn’t the yen acting as a safe haven right now?

Structural concerns about Japan’s finances appear to be outweighing the yen’s traditional defensive role during this geopolitical stress period.

Should investors view current GBP/JPY gains as sustainable?

The sustainability of current GBP/JPY gains depends on continued monitoring of geopolitical developments and economic data to ensure momentum persists.