Track market-moving stories before they get noisy

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.

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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

View the full economic calendar

-- 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.

By the time the Bank of Canada announces its policy decision today, the Canadian Dollar has already built a powerful foundation for further gains. USD/CAD has fallen to its lowest level in nearly a month, supported not by a single catalyst but by three reinforcing forces: a broad retreat in the US Dollar after softer inflation data, higher oil prices that strengthen Canada’s export outlook, and growing expectations that the Bank of Canada may sound more hawkish than markets anticipated only a week ago.

The first two drivers have already reshaped the currency outlook. June’s weaker-than-expected US CPI prompted investors to scale back Federal Reserve tightening expectations, weighing on the Dollar across major currency pairs. At the same time, Brent crude has surged above $86 as renewed US-Iran hostilities threaten energy supplies through the Strait of Hormuz. For Canada, rising oil prices are more than just a global inflation story—they improve the country’s terms of trade and typically provide direct support for the Canadian Dollar, helping explain why the Loonie has outperformed most of its peers following the inflation data.

The Bank of Canada now has an opportunity either to reinforce or challenge that momentum. Economists overwhelmingly expect a sixth consecutive hold at 2.25%, making the decision itself unlikely to surprise. The more important question is whether Governor Tiff Macklem adjusts his message in response to oil’s renewed surge. His previous characterization of policy as balancing weaker growth against energy-driven inflation was formed before Brent’s latest rally, meaning the Monetary Policy Report may already understate current inflation risks. Markets will therefore pay closer attention to Macklem’s live assessment than to the published projections.

That leaves the accompanying statement and Macklem’s press conference as the key market events. Investors will focus on whether the Governor continues to describe policy as a balanced dilemma or acknowledges that the renewed energy shock has tilted inflation risks higher. Any discussion of the ongoing CUSMA trade review will also be closely watched, as it remains an important downside risk to Canada’s growth outlook. Even without signaling an imminent rate increase, a modestly more hawkish tone could encourage markets to further increase expectations of tightening in early 2027, where pricing is already becoming increasingly balanced.

Technically, USD/CAD is approaching an important inflection point. While the decline from 1.4247 has accelerated, it is still viewed as a correction within the broader uptrend from 1.3480. Strong support is expected between former resistance at 1.3965 and 38.2% retracement of 1.3480 to 1.4247 at 1.3954. Break of 1.4159 minor resistance will indicae that the correction has completed.

However, a decisive break below 1.3954/65 would suggest the advance from 1.3480 has completed as a three-wave corrective rebound after failing near 61.8% retracement of 1.4791 to 1.3480 at 1.4290. Such a development would shift the near-term technical outlook decisively in favour of further Canadian Dollar strength.

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.

ING’s Francesco Pesole argues that the EUR/USD short-term rate differential is currently supporting the Euro as Gulf tensions rise, helped by a recovery in EUR front-end rates. However, he doubts this can last if Oil and Gas prices keep climbing, given limited scope for more ECB hikes and worsening eurozone terms of trade. ING warns that EUR/USD could risk a move toward 1.10 under higher energy prices.

Euro buoyed by rates for now"The EUR:USD short-term rate differential is – for now – helping to keep EUR/USD afloat in this Gulf re-escalation. The two-year swap rate gap has re-tightened around 15bp since the start of July, primarily because the rebound in oil prices happened at a time when ECB hike bets were dwindling, leaving more upside room to recover for EUR front-end rates."

"We aren’t convinced this rate gap can offer sustainable support to EUR/USD if energy prices continue to rise though."

"Markets may find it harder to price in more than two ECB hikes by year-end (now, 46bp) considering the less hawkish stance by ECB officials of late, and the medium-term negative implications of an energy crisis – combined with Fed tightening – for the EUR, tend to outweigh the positive of EUR hikes."

"The spike in gas prices is particularly concerning, as it weighs on the eurozone’s terms of trade more than oil."

"In a scenario where Brent returns to $90-100/bl and TTF around €55-60/MWh, a move to 1.10 becomes a tangible risk in EUR/USD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

The Canadian Dollar (CAD) trades higher against its major currency peers, except antipodeans, during the European trading session on Tuesday. The USD/CAD pair declines 0.25% to near 1.4120 at the time of writing as the Loonie gains amid improvement in the appeal of currencies from economies, such as Canada, which are net Oil exporters.

The United States (US) economy is also a net energy exporter, but the US Dollar faces selling pressure ahead of the Consumer Price Index (CPI) data for June release at 12:30 GMT.

At press time, the WTI Oil price trades 2.73% higher to near $80.00, the highest level seen in almost a month. Oil prices have increased significantly as US President Donald Trump claims that Washington is the rightful recipient of toll fees near the Strait of Hormuz.

On the domestic front, investors await the Bank of Canada’s (BoC) monetary policy announcement due on Wednesday, in which it is expected to leave interest rates unchanged at 2.25%. Investors will pay attention to comments regarding the outlook on inflation and the economy.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 101.18.

USD/CAD technical analysis

Bias: USD/CAD trades lower at around 1.4120, retaining a mildly bearish near-term bias as it remains capped by the 20-day exponential moving average (EMA) at 1.4136.

Momentum: Price action sits just under this dynamic resistance, hinting at a consolidation phase after the recent pullback, while the Relative Strength Index (RSI) around 52 on the daily chart suggests neutral momentum rather than strong directional conviction.

Resistance: On the topside, immediate resistance is located at the 20-day EMA at 1.4136, and a daily close above this barrier would ease current downside pressure and open the way for a more constructive recovery. Looking up, the major barrier would be the yearly high at around 1.4248.

Support: On the downside, the pair could extend its decline towards the June 18 low at 1.4095; below that, the downside momentum could accelerate, and the pair could fall towards the psychological level of 1.4000.

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

Economic Indicator BoC Interest Rate Decision The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.

Read more.

Next release: Wed Jul 15, 2026 13:45

Frequency: Irregular

Consensus: 2.25%

Previous: 2.25%

Source: Bank of Canada

Summary:

The GBP/USD pair retreated from a multi-week peak of 1.3452 toward following a sudden flare-up of US-Iran conflict The escalating geopolitical risk revived global safe-haven demand for the US dollar and pushed crude oil prices sharply higher While near-term technicals point to range-bound consolidation, the medium-term path remains tied to UK GDP growth and central bank divergence. The GBP/USD pair reached a high of approximately 1.3452 last week, its strongest performance since mid-June, driven by increased economic optimism in the UK. However, this upward trend paused at the start of the new trading week.

Geopolitical tensions between the United States and Iran, specifically concerning shipping lanes in the Middle East, caused a significant market reaction. This led to a decline in the GBP/USD pair, bringing it back to around 1.3383 and raising concerns about the durability of sterling’s recent gains.

How Did We Get Here? Sterling’s upward movement last week was primarily influenced by expectations regarding the Bank of England’s monetary policy. Market participants have factored in at least one interest rate increase anticipated for later in 2026, with a possibility of a second, reflecting ongoing inflation concerns. Additionally, political transitions, including the recent resignation of Keir Starmer and the expected leadership of Andy Burnham, contributed to a more stable market sentiment.

However, market sentiment has recently shifted. The weekend saw significant missile and drone exchanges between US and Iranian forces. Reports indicate that Iran launched attacks on American installations in the Gulf and potentially closed the Strait of Hormuz.

This development led to a jump in Brent crude prices of around 3-4% as trading commenced in Asia. According to Reuters, this combination of rising oil prices and inflation fears, coupled with a move towards safe-haven assets, strengthened the US dollar globally.

During periods of heightened military tension, the US dollar typically serves as a primary safe-haven asset. This often prompts institutional investors and corporate treasuries to quickly reallocate capital away from riskier assets and into more liquid U.S. Treasury securities.

The Dollar Has The Upper Hand In The Near-Term In the near term, the GBP/USD exchange rate will probably see some selling, and the pair will likely be range-bound. While the geopolitical situation is causing some choppiness now, it probably won’t change the overall direction for the long term. Typically, during these kinds of crises, investors flock to the dollar for safety. However, this effect usually doesn’t last if tensions ease or talks begin again.

Looking further ahead, though, this conflict probably won’t drastically change the bigger economic picture. The British pound is in a stronger position than it was in past years. The UK economy has shown consistently positive surprises in its data, and the upcoming GDP numbers are expected to show a good recovery.

How Should Investors Position Themselves? Investors should be careful right now. If you hold British pound assets, you might want to consider protecting yourself against the dollar getting stronger, perhaps by using options or spreading out your currency holdings.

For traders, a more sensible move is to see dips as opportunities to buy rather than signs of a major downturn. While at it, be sure to pay close attention to the Consumer Price Index (CPI) report coming out on Tuesday. Also, keep an eye out for any indications that the Strait of Hormuz might be disrupted for a long time, as that would be a real threat to this outlook.

Crude oil prices rose at the start of the week after President Trump said the ceasefire was over and fighting had started again. Stock markets fell, while USD/JPY moved back toward recent highs. Later in the week, the U.S. agreed to continue talks with Iran, which caused oil prices to fall again.

There was little major economic data during the week, so markets focused on the Federal Reserve meeting minutes. The minutes showed that a few officials thought interest rates could be raised, but they still supported keeping rates unchanged. This was close to what markets expected, so the reaction was limited.

In Japan, Finance Minister Katayama said the government may encourage the GPIF and other pension funds to invest more in Japanese assets. She also spoke about gradual interest rate rises and more government bond products for households. These comments supported the yen and Japanese stocks, while higher-than-expected producer prices showed that inflation remains a concern.

Markets This Week U.S. Stocks The Dow fell from record highs early in the week as oil prices rose after fighting restarted in the Middle East. However, the uptrend stayed in place as the U.S. and Iran continued talks, helping the index close above its 10-day moving average. Buying short-term dips may remain the easier strategy, although higher-than-expected U.S. inflation data could create a chance to sell this week. Resistance levels are at 53,000, 53,500 and 54,000. Support is seen at 52,000, 51,000, 50,000, 49,500 and 49,000.

Japanese Stocks The Nikkei continued to move lower as investors took profits and higher oil prices worried the market. However, the index recovered late in the week after Finance Minister Katayama encouraged more investment in Japanese stocks. With selling pressure still strong near 70,000, range trading may remain the best approach this week. Resistance is seen at 70,000, 71,000, 72,000, 73,000, 74,000 and 75,000, while support is at 67,500, 66,500 and 65,000.

USD/JPY USD/JPY tested recent highs early in the week as oil prices moved higher. The pair then fell after the Japanese government called for pension funds to invest more in domestic assets, raising the possibility of less investment overseas. The close below the 10-day moving average is bearish, but higher U.S. interest rates should continue to support the pair unless Japanese authorities intervene. Range trading still appears to offer the best opportunities in the short and medium term. Resistance is at 162.00, 162.50, 163.00 and 165.00, while support is seen at 161.00, 160.50, 160.00, 159.00, 158.00, 157.00, 156.00, 155.50 and 155.00.

Gold Gold struggled to move higher early in the week as a stronger U.S. dollar weighed on the market. Prices later returned to the 10-day moving average, which provided support. With U.S. inflation data due this week, gold may stay volatile, creating range-trading opportunities between $4,000 and $4,200. Resistance is at $4,200, $4,300, $4,400, $4,500, $4,600 and $4,665, while support is at $4,100, $4,050, $4,000, $3,900, and $3,800.

Crude Oil Oil rose quickly after President Trump announced renewed fighting with Iran, but the market still expects a positive result from negotiations. Resistance held near $75, and although the recent downtrend has ended, large gains still look unlikely. Range trading between $67.50 and $75 may be the best short-term strategy. Resistance is at $75, $80, $85, $90, $95 and $100, while support is at $67.50, $65, and $60.

Bitcoin Bitcoin continued its recent recovery as buyers returned to the market. Resistance held near $65,000 and volatility remained low, but with the 10-day moving average now rising, buying on weakness may be a better strategy than range trading this week. Resistance is at $65,000, $75,000, $80,000, $85,000, and $90,000, while support is at $60,000, $55,000 and $50,000.

This Week’s Focus Monday: U.S. OPEC Meeting Tuesday: Australia NAB Business Confidence, Japan Industrial Production, China Trade Balance, U.S. CPI Wednesday: Japan Reuters Tankan Index, China GDP, Industrial Production and Chinese Unemployment Rate, E.U. Industrial Production, U.S. PPI and Beige Book Thursday: U.K. GDP and Industrial Production, E.U. Trade Balance, U.S. Retail Sales and Pending Home Sales Friday: E.U. Current Account and CPI, U.S. Housing Starts, Industrial Production and Michigan Consumer Sentiment Several important U.S. reports are due this week, including CPI, PPI, retail sales and consumer confidence. Traders will watch them for clues about when U.S. interest rates may rise. News about talks between the U.S. and Iran will also be important for oil and other markets, while traders will watch for more action from Japan to support the yen.

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U.S. Dollar Pulls Back As Demand For Safe-Haven Assets Declines

DXY 090726 4h Chart U.S. Dollar Index is losing some ground as traders react to the Initial Jobless Claims report and focus on the pullback in the oil markets.

The Initial Jobless Claims report indicated that 215,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 218,000.

Today, traders also focused on the Existing Home Sales report. The report showed that Existing Home Sales decreased by -2.4% month-over-month in June, compared to analyst consensus of +0.7%.

Oil prices pulled back by -4% despite escalation in the Middle East. Falling oil prices put pressure on the American currency as demand for safe-haven assets declined.

In case U.S. Dollar Index settles below the 100.80 level, it will head towards the support at 100.50 – 100.65. On the upside, a successful test of the resistance at 101.15 – 101.30 will open the way to the test of the next resistance level at 101.80 – 101.95.

EUR/USD Tests Resistance At 1.1420 – 1.1435 EUR/USD 090726 4h Chart EUR/USD gained some ground as traders focused on Germany’s Exports report. The report indicated that Exports increased by +0.9% month-over-month in May, compared to analyst forecast of -0.3%.

If EUR/USD manages to settle above the resistance at 1.1420 – 1.1435, it will head towards the next resistance level at 1.1500 – 1.1515. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

GBP/USD Tests Multi-Week Highs GBP/USD 090726 4h Chart GBP/USD continues to move higher as traders focus on general weakness of the U.S. dollar and monitor dynamics of the oil markets.

If GBP/USD stays above the 1.3400 level, it will head towards the resistance level at 1.3450 – 1.3465. On the support side, a move below the support at 1.3335 – 1.3350 will open the way to the test of the next support level at 1.3250 – 1.3265.

USD/CAD 090726 4h Chart USD/CAD is moving lower as traders react to the strong rebound in precious metals markets. Other commodity-related currencies are also moving higher in today’s trading session.

The nearest support level for USD/CAD is located in the 1.4125 – 1.4140 range. A successful test of this level will open the way to the test of the next support at 1.4010 – 1.4025.

USD/JPY Moves Lower As Treasury Yields Fall USD/JPY 090726 4h Chart USD/JPY is losing some ground as traders react to the pullback in Treasury yields, which was triggered by falling oil prices. The yield of 2-year Treasuries declined towards the 4.15% level, while the yield of 10-year Treasuries pulled back towards the 4.53% level.

There are no signs of interventions from the Bank of Japan, and it looks that BoJ is not ready to provide additional support to the Japanese yen at current levels.

If USD/JPY pulls back below the support at 161.50 – 162.00, it will head towards recent lows near the 160.50 level. On the upside, a move above 162.80 will push USD/JPY towards the 165.00 level. It should be noted that USD/JPY has not traded at 165.00 since June 1986.

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British Pound strengthens to near 1.3400 as UK political risk fadesThe GBP/USD pair gathers strength near 1.3395 during the Asian trading hours on Thursday, bolstered by fading domestic political uncertainty. However, hawkish minutes from the Federal Reserve (Fed) and renewed tensions between the US and Iran might support the US Dollar (USD) and cap the upside for the major pair.

Following the resignation of Keir Starmer in late June, UK political risk has eased significantly, lifting the Cable. The formal race to replace outgoing Prime Minister Keir Starmer begins on July 9. Frontrunner Andy Burnham is widely expected to become Prime Minister by July 20. Read more...

British Pound Sterling wins the day and stays stuck in the same trapGBP/USD trades just below 1.3400 on Wednesday, up around a quarter of a percent and once again leaning on the 200-day Exponential Moving Average (EMA) that has repelled every advance since the pair clawed back from its mid-June washout. Cable has recovered roughly two big figures from the 1.3150 area in under two weeks, and the reward for the effort is a ceiling it cannot break and a floor it refuses to leave.

The Pound's bid is not homegrown: Fresh US strikes on Iran sent Crude Oil surging more than 6% and dragged Bank of England (BoE) tightening expectations up with it. Markets now fully price a 25-basis-point hike by year-end, up from roughly three-quarters odds before President Trump declared the Versailles ceasefire over, and a November move trades better than even. The June hold at 3.75% already carried two dissenters voting for 4.00%, so the hawkish bloc only needs the energy shock to persist, and the Strait of Hormuz is supplying persistence daily. Read more...

EUR/USD forecast remains uncertain as renewed US-Iran tensions sends oil higher FOMC minutes coming up but market’s attention is on developments in the Middle East again EUR/USD selling contained relative as it holds inside bear flag Oil returns to the forefront of currency markets The EUR/USD edged only slightly lower, showing surprising resilience for now while European equity markets took the brunt of the sell-off, as tensions in the Middle East made an unwelcome return with renewed intensity. A sharp rebound in crude oil prices has quickly become the dominant market theme again, overshadowing economic data and forcing investors back into defensive positions.

Will tensions de-escalate quicker this time? Well, it is tough to say. Already, Trump has announced they will probably strike Iran again tonight. There will be retaliation from Tehran and things could get quite messy very quickly. Trump’s latest comments certainly don’t point to any de-escalation after he effectively dashed hopes that recent diplomatic progress could continue, reviving concerns over potential disruptions to global energy supplies.

Whether events develop into a prolonged confrontation remains uncertain. There is still scope for political rhetoric to soften over the coming days, but for now traders are once again having to price in geopolitical risk. That naturally favours the US dollar while simultaneously weighing on risk-sensitive assets, including European equities and the euro. Europe also relies heavily on energy imports, which makes the euro even more vulnerable.

The prospect of renewed disruption around the Strait of Hormuz also keeps stagflation risks firmly on investors’ radar. Higher energy prices would complicate the outlook for central banks at a time when many had been preparing for a more benign inflation environment.

EUR/USD forecast: US rates expectations remain supportive for dollar Against this backdrop, the publication of the latest Federal Reserve meeting minutes may struggle to attract its usual level of attention. Markets already have a fairly clear understanding of the Fed’s position, with policymakers remaining cautious about inflation risks.

If oil prices remain elevated, inflation expectations could become more persistent, giving the Fed more reason to keep policy restrictive for longer, and deliver some rate hikes later this year. That view continues to support US Treasury yields, maintaining one of the dollar’s strongest advantages over its major counterparts. This explains why, despite relatively resilient European economic data, investors have continued to favour the greenback lately.

EUR/USD technical analysis: bear flagging From a technical perspective, the EUR/USD forecast continues to point lower, even if we haven’t seen an immediate drop amid the geopolitical uncertainty yet. But with the pair showing a potential bear flag in the making, the pressure remains.

Source: TradingView.com The 1.1400 area remains an important near-term support level to watch on the daily EUR/USD chart. A decisive break beneath that zone would expose the 1.1300 handle.

On the upside, resistance around 1.1450 continues to cap advances. A sustained move above that level would shift attention towards the psychological 1.1500 mark, with 1.1575 representing the next significant upside objective.

In summary  For the time being, however, the fundamental backdrop offers little justification for a sustained recovery. Unless incoming US economic data begins to weaken convincingly or expectations surrounding Fed policy changes materially, say as a result of significantly weaker oil prices (again, unlikely), the dollar’s combination of higher yields and safe-haven demand is likely to keep rallies in EUR/USD relatively limited. That leaves the broader EUR/USD forecast cautiously bearish over the near term.

The USD/CAD pair loses traction to near 1.4175 during the early European trading hours on Wednesday. Renewed US military strikes against Iran have boosted crude oil prices and provide some support to the commodity-linked Canadian Dollar (CAD) strengthens against the US Dollar (USD).

Reuters reported on Wednesday that the Islamic Revolutionary Guard Corps (IRGC) said they attacked US military sites in Bahrain and Kuwait after the US launched a wave of strikes against Iran in response to attacks on tankers in the Strait of Hormuz. It is worth noting that Canada is a major oil-exporting country, and high crude oil prices generally have a positive impact on the Loonie.

"For now, the market is keeping to the playbook that Tehran and Washington are still in a high-stakes game to gain leverage during the temporary truce, and that Tuesday’s incident would not descend back into a full-scale war," DBS analysts wrote in a research report.

Technical Analysis:In the daily chart, USD/CAD retains a bullish near-term bias as spot holds above the Bollinger Bands’ 20-period middle simple moving average and comfortably over the 100-day moving average. The pair is advancing along the upper half of the Bollinger envelope, while the Relative Strength Index (14) around 66 stays in positive territory but shy of overbought, suggesting firm upside pressure with some room for further gains before stretched conditions become acute.

On the topside, the first upside barrier emerges at the June 24 high of 1.4248. The next notable resistance is the Bollinger Bands’ upper band, coming in around 1.4315 and marking the immediate cap for the current advance. 

On the downside, initial support is located at the Bollinger middle band at 1.4145. The crucual contention level is seen at the 1.4000 psychological level ahead of a deeper cushion at the lower band near 1.3975, with the 100-day moving average at 1.3827 reinforcing the broader bullish structure as long as USD/CAD holds above it.

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

Canadian Dollar FAQs The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

The Pound to Canadian Dollar (GBP/CAD) exchange rate climbed to its strongest level in around a decade on Monday as persistently weak oil prices continued to undermine the commodity-linked Canadian Dollar.

At the time of writing, GBP/CAD was trading at CA$1.8971, having eased back slightly after touching a session high of CA$1.8980.

Latest — Exchange Rates:
Pound to Canadian Dollar (GBP/CAD): 1.89894 (+0.16%)
Euro to Canadian Dollar (EUR/CAD): 1.623308 (-0.04%)
Dollar to Canadian Dollar (USD/CAD): 1.42169 (+0.12%)

DAILY RECAP:

The Canadian Dollar (CAD) found itself under pressure on Monday, as weaker oil prices continued to weigh heavily on the commodity-linked currency.

Crude has fallen sharply since the US and Iran agreed an interim peace agreement, allowing shipping to resume through the Strait of Hormuz.

Brent crude – the global benchmark for oil – remains below $72 per barrel, its lowest levels since before the war began in late February and down from its mid-war peak of $113.

This sharp decline in crude has dragged the Canadian Dollar lower in recent weeks, with subdued prices continuing to pressure CAD on Monday.

Meanwhile, the Pound (GBP) enjoyed modest support on Monday as markets continued to unwind the political risk premium that has burdened Sterling in recent weeks.

MP Andy Burnham is largely expected to become the next Prime Minister, without a drawn-out leadership contest unsettling investors.

Burnham has sought to soothe markets since announcing his bid for Labour leader, committing to the government’s existing fiscal rules and laying out ambitious plans for the economy.

GBP investors have responded positively to Burnham’s rhetoric, helping GBP rally as political anxiety eases.

Near-Term GBP/CAD Forecast: Canadian PMI to Aid the ‘Loonie’? Looking forward, Canada’s latest Ivey PMI is due out on Tuesday afternoon. The survey is expected to reveal another acceleration in economic activity in June, with the index forecast to reach its highest level since September 2025, when it hit a 15-month peak.

If the PMI prints as anticipated, the Canadian Dollar could catch bids.

Meanwhile, oil price movements could continue to influence the commodity-linked ‘Loonie’. If crude prices remain subdued, this could offset the potential upside from the PMI results.

As for the Pound, UK data is in short supply on Tuesday, potentially leaving the British currency to trade without a clear direction.

Key Highlights

GBP/USD started a recovery wave and surpassed the 1.3320 resistance. A key contracting triangle is forming with support at 1.3290 on the 4-hour chart. EUR/USD struggled to extend its recovery wave above the 1.1475 resistance. WTI Crude Oil prices are under pressure below the $72.50 pivot level. GBP/USD Technical Analysis The British Pound started a recovery wave above 1.3200 against the US Dollar. GBP/USD gained pace after it settled above 1.3250.

Looking at the 4-hour chart, the pair surged above the 100 simple moving average (red, 4-hour) and 1.3320. However, the bears defended the 1.3385 resistance and the 200 simple moving average (green, 4-hour).

A high was formed at 1.3384, and the pair started consolidating gains. There was a minor decline below 1.3350. If there is another decline, the pair might find support near 1.3290. Besides, there is a key contracting triangle forming with support at 1.3290.

The first major support could be near 1.3250. A downside break and close below 1.3250 might send the pair toward 1.3220. Any more losses could open the doors for a test of 1.3150.

On the upside, the bears might remain active near 1.3385. The next major resistance might be 1.3400. A close above 1.3400 could spark a sharp increase. In the stated case, the bulls could aim for a move to 1.3500.

Looking at EUR/USD, the bulls attempted a recovery wave, but they need a daily close above 1.1475 for upside continuation.

Upcoming Key Economic Events:

UK’s Financial Stability Report. FPC Meeting Minutes. FPC Statement. BoE’s Mann speech.

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