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Gold Price Forecast: XAU/USD approaches $4,300 after rejection at the $4,400 area

Daily Spot Silver (XAG/USD) The main trend is down on the daily swing chart. A trade through $68.33 will change the main trend to up. A move through $62.31 will reaffirm the downtrend.

Silver is trading below the $65.32 minor pivot. Resistance above sits at $65.32, the $66.75 to $67.79 zone, $67.34, and $68.33.

On the downside, the 50-day moving average at $63.26. Below that, the $62.98 to $61.04 zone with the $62.31 main bottom inside it. Below the zone, $60.84.

Friday’s Rally Hit the Zone and Could Not Get Through Silver bounced off the September low area last week and ran for two sessions. The move carried into the $66.75 to $67.79 retracement zone and stopped at $67.34. Inside the zone, not through it. Tuesday’s break through Friday’s low confirmed the rally was finished before sellers had to press for it.

Silver Price Forecast

Every new Silver analysis as it publishes, today's technical signal and key levels, live price — on one page.

See all Silver forecasts The $67.34 high joins the chart as the latest lower top. The previous one was $68.33. The one before that was $71.18 in August. Buyers are getting less room on every rally attempt. Each one starts lower, runs into resistance sooner and fails faster than the last. Two days was all the bulls got and Tuesday gave the whole thing back before New York opened.

That progression is what makes the break under $65.32 feel different from a routine pullback. Silver is not consolidating after a strong move. It is failing at successively lower levels and the time between failures is getting shorter. The two-day rally last week lasted half as long as the move that peaked at $68.33 earlier in the month.

Daily US Government Bonds 10-Year Yield The 10-year Treasury yield is trading near 4.970%, up about 1.9 basis points Tuesday. Last week’s pullback from the 5.041% high found a floor at 4.922%. That is a yield that tested above 5%, backed off less than 12 basis points and started heading higher again. The 4.809% breakout level held easily. The 50-day moving average at 4.735% is well below.

The Fed raised 25 basis points last week to 3.75%-4.00% and signaled at least one more increase this year. Rate markets pushed October hike odds higher after the decision. The 10-year sitting near 4.97% after a hike with more on the table says the rate trade is not letting go. Silver rallied for two sessions while the yield was pulling back from 5.041%. The pullback lasted about as long as silver’s rally did. Both are over.

The resistance above is 5.021%. A sustained move through that level puts the 5.041% high back in play. The rate pressure on silver is not easing. It is settling in near the highs and waiting for the next push.

What to Watch The rate picture does not change until the data changes it. The dollar is pressing toward 101.640. The 10-year is working back toward 5.041% after holding above 4.922%. Until something shows up in the inflation data that gives the doves a case, both keep running against silver.

Sellers have the momentum below $65.32. The 50-day at $63.26 held during the September decline. Whether it holds again depends on the dollar. If the DXY extends toward 101.640, the average gets tested. Below it, the $62.31 main bottom is the swing-chart trigger. A break there reaffirms the downtrend and puts $60.84 in play.

Buyers need the pivot back before anything else matters. The $66.75 to $67.79 zone stopped the rally Friday and sellers will be waiting there again. $68.33 turns the trend. The dollar has to fade for buyers to have a shot at reclaiming any of it. Tuesday morning says the dollar is not interested in fading.

More Information in our Economic Calendar.

Four reasons for USD strength – Forex trading strong vs weak AUD/CAD [Video]

GBP/INR is in consolidation after a sharp drop from 129.50. A combination of central bank moves and multiple external factors are at play.

GBP/USD struggles as UK government borrowing exceeds forecasts, putting pressure on Healey
GBP/USD is struggling above 1.3350, around a six-week low, amid ongoing U.S. dollar strength and following data showing that UK public sector net borrowing was higher than expected in the first five months of the fiscal year.

UK public sector net borrowing was £18.3 billion in August, higher than the £15.4 billion recorded in the same month last year and ahead of expectations of around £15.5 billion. This was the second-highest August on record, behind 2020.

The UK deficit has climbed to £77.3 billion in the first five months of the fiscal year, £8.1 billion more than the Office for Budget Responsibility forecast.

These figures highlight the challenges facing Chancellor John Healey as he prepares his first Budget on October 28. The government needs not only to set out Prime Minister Andy Burnham's economic plans but also reassure a jittery bond market that borrowing remains under control.

The 10-year gilt yield is around 5.24%, mirroring moves in Europe as oil prices rise and snapping a four-day decline.

The rise in borrowing in August came despite improvements in tax receipts and reflected higher spending on public services and benefits, as well as increased debt interest costs.

Healey's room for manoeuvre is becoming increasingly limited, as higher borrowing costs, partly triggered by the Middle East conflict, have already reduced the government's fiscal headroom. KPMG estimates that headroom could fall to around £12 billion from £23.6 billion in March.

Speculation is therefore rising that the government will need to raise taxes or cut spending to rebuild its fiscal headroom.

Elsewhere, the U.S. dollar is pushing higher, extending gains from last week to a seven-week high after the Federal Reserve hiked interest rates and signalled at least one more rate hike this year.

Comments from Federal Reserve officials at the start of the week also reinforced expectations for further rate hikes, with Chicago Fed President Austan Goolsbee and St. Louis Fed President Alberto Musalem suggesting that tighter policy may be necessary to achieve the Fed's inflation target.

The BoE left rates unchanged last week. The BoE-Fed divergence is keeping GBP/USD under pressure.

GBP/USD forecast – technical analysis

GBP/USD broke down from the ascending channel, falling below the 50 and 200 EMAs. Combined with the RSI below 50, this keeps sellers hopeful of further downside.

Sellers will look to take out support at 1.3340 to turn attention to 1.3275, the late-July low. Below here, attention turns to the 1.3200 support zone.

Any recovery would first need to take out the 200 EMA at 1.3425. A rise above here turns attention to the 1.3500 resistance zone, which combines horizontal resistance, the lower band of the rising channel and the 50 EMA. A rise above 1.3500, the September high, would put the pair on a firmer footing.

DAX eases back after yesterday's gains as oil prices and political headwinds rise
The DAX, together with its European peers, is easing back after solid gains in the previous session.

The DAX rallied over 1% yesterday, boosted by tech and bank strength as oil prices retreated. However, today, a rise in oil prices is pushing bond yields higher, hurting demand for riskier assets such as equities.

Weakness in autos and financials is putting pressure on the index, whilst lingering political uncertainty in Germany adds to a cautious tone.

German political uncertainty remains a background headwind. Chancellor Friedrich Merz's CDU suffered significant losses in recent regional elections, raising questions over his political position and potentially making it harder for Germany to drive EU policy, including negotiations over the €2 trillion EU budget.

In elections in Mecklenburg-Western Pomerania on Sunday, the CDU fell below the 5% threshold for entering the state parliament, marking its worst result in the post-war period.

On the data front, the German economic calendar is quiet today, with attention turning to PMI figures tomorrow.

DAX forecast – technical analysis

The DAX ran into resistance around 26,500, forming a double top before reversing lower and breaking below its rising trend line to find support around the 25,500 zone. The RSI is below 50.

Sellers will need to take out the 25,500 support zone to create a lower low and turn attention to 25,000, the round number, and the 200 EMA at 24,900. Below here, sellers could gain traction.

Any recovery would need to rise above the 50 EMA at 25,700 and the horizontal and rising trend-line resistance at 25,800. Above here, attention turns to 26,500 and fresh record highs.

Gold Spot/US Dollar tests 0.5 Arc – Awaiting directional confirmation

Euro declines as US Dollar recovers recent losses amid hawkish Fed tone

Euro: Fair value drop points to downside against US Dollar – ING

British Pound: Oversold slide nears 1.3335 against US Dollar – UOB

Dollar Index Outlook: Fed Hike Bets Support Dollar as EUR and GBP Face Diverging Policy Paths The Federal Reserve’s hawkish stance on inflation has strengthened the U.S. dollar on Monday as investors expect the central bank to increase interest rates beyond the recent increase. The CME Group’s FedWatch tool shows that the chances of a 0.25% hike in the target range for the federal funds rate in October has increased to around 56%, from 43.5% last Wednesday.

On Monday, St. Louis Fed President Alberto Musalem said that he expects that inflation will remain above the central bank’s target for a prolonged period of time, and that further increases to the policy rate will be appropriate. According to the latest projections from the Fed, the policy rate will be increased in December.

In the short term, the declining price of oil could mitigate the effects of a stronger U.S. dollar. Declining Treasury yields have eased investors’ concerns about energy supply. However, the U.S. dollar has appreciated against a group of peer currencies over the last few weeks, and it is expected that U.S. yields will continue to increase.

The euro has fewer near-term catalysts. The European Central Bank raised rates in July. However, some officials recently said not to read too much into energy price increases and that they don’t necessarily call for larger rate increases. Falling energy prices should ease inflation, which supports the case for no further rate increases.

There is more support for the British pound. The Bank of England kept rates at 3.75% last week, but said it could increase rates if the disruption in the energy supply from the Middle East continues. Three months’ worth of inflation swaps, which reflect market expectations for future interest rates, show a 65% probability of a rate increase in November and indicate that the bank could increase rates by an additional 1.25 percentage points by the end of 2027. Other recent economic data supported the case for higher interest rates. August’s retail sales grew and July’s GDP growth was greater than expected.

Fundamental bias: I am neutral to slightly bullish on the British pound and euro against the dollar.

U.S. Dollar Index Technical Analysis: DXY Holds 100.33 Support as 100.53 Breakout Comes Back Into Focus

Dollar Index Price Chart – Source: Tradingview The U.S. Dollar Index is currently trading at 100.45. I’m interested in the short-term trend. Note that the index is trading above a rising trendline and recent support at 100.33. A quick buy of the dip to the rising trendline indicates that 100.33 and the rising trendline continue to delineate supporting levels.

The 100.53 level represents the next major resistance. Should 100.53 be taken out, the next levels of interest would be 100.68 and 100.83. The 100.33 level, rising trendline, and 100.19 would provide support should the current uptrend be surrendered. The 100.04 and 99.89 levels would also provide support.

EUR/USD Price Forecast

Every new EUR/USD analysis as it publishes, today's technical signal and key levels, live price — on one page.

See all EUR/USD forecasts From a momentum perspective, the Rising trendline and current support at 100.33 are providing support to the bullish outlook. A move below the 100.19 level would negate this outlook. The bullish outlook would also be negated should a move above 100.53 lead to a breakout to the upside with the next target levels at 100.68 and 100.83.

GBP/USD Technical Analysis: Sterling Holds 1.3365 Support as 1.3405 Remains the Key Recovery Hurdle

GBP/USD Price Chart – Source: Tradingview The GBP/USD pair trades at 1.3372 and is consolidating above the 1.3365 support level on the 2 hour time frame. Currently, the price action is below the 200 and 100 hour moving averages and a descending trend line. However, the pair has recently formed a series of higher lows from 1.3336 and this suggests that bears have lost their momentum to push the pair lower.

If the bulls can break the 1.3405 resistance level, then the trend line and higher levels would come into play. The 1.3365 support level would be the next floor if the bears make a return. The 1.3336 and 1.3307 levels would also see increased interest if the sellers gain control.

The relative strength index (RSI) is in the center suggesting that no clear trend is present. With the 1.3405 level as a resistance and the trend line as a lower boundary, a bearish bias is warranted. A bullish bias would be realized if the 1.3436 level is cleared to the upside. The 1.3336 level would also come into play on the downside if support is broken.

EUR/USD Technical Analysis: Euro Slips Back Toward 1.1457 as Descending Trendline Keeps Pressure Intact

EUR/USD Price Chart – Source: Tradingview EUR/USD is currently trading at 1.1461. It is hovering around the 1.1478 resistance level which has capped its upside moves and above which further upside is expected to be seen.

Nonetheless, EUR/USD is below both the 20 and the 100 hour moving averages and a descending trendline which continues to give a bearish bias. The upward move from the lows is also capped by the 1.1492-1.1502 resistance level.

The near term 1.1457 level is the first support below which the 1.1444 and 1.1430 support levels are located. The 1.1478 resistance level is located above which is followed by the 1.1492-1.1502 levels, and then by the 1.1513 resistance level.

RSI is also indicating bearish momentum. Bearish bias will be in effect as long as prices are below the 1.1478 and 1.1492 resistance levels and the descending trendline. A break above 1.1502 is expected to give a bullish outlook.

Euro: Downtrend eyes 1.1400 support against US Dollar – UOB

The Pound-Dollar rate could come under pressure if UK borrowing rises, while dovish Fed commentary may limit support for the US Dollar. The Pound US Dollar (GBP/USD) exchange rate was subdued on Monday as central bank dynamics continued to impact the pairing following last week’s policy announcements.

At the time of writing, GBP/USD was trading at $1.3387, down marginally on the day.

Latest — Exchange Rates:

Pound to Dollar (GBP/USD): 1.337673 (-0.13%)

Euro to Dollar (EUR/USD): 1.14738 (-0.10%)

Dollar to Yen (USD/JPY): 157.3522 (+0.30%)

DAILY RECAP:

The Pound (GBP) lacked direction on Monday, with a quiet UK data calendar giving Sterling little impetus to make a decisive move.

The currency also remained subdued following last week’s Bank of England (BoE) decision. The central bank left interest rates unchanged but reduced the pace of its bond sales, a move that contributed to some losses for the Pound.

Meanwhile, the US Dollar (USD) initially traded with modest gains on Monday as USD continued to enjoy the afterglow of last week’s Federal Reserve interest rate decision.

In a unanimous vote, the Fed hiked rates for the first time since 2023. Markets increased their bets for further hikes following the decision. This continued to underpin the US Dollar on Monday.

However, the safe-haven currency found itself limited as market risk appetite improved during the European session.

Near-Term GBP/USD Forecast: Jump in Government Borrowing to Pressure the Pound? Looking forward, Tuesday’s UK data could give the Pound a clearer direction, with the government’s latest borrowing figures likely to attract attention first.

A rise in borrowing during August could put pressure on Sterling by prompting fresh concerns over the health of the public finances ahead of the Autumn Budget.

The Pound could then come under additional pressure when the Confederation of British Industry (CBI) releases its industrial trends orders. If the data points to a sharper deterioration in industrial orders, Sterling may struggle further.

As for the US Dollar, speeches from two Federal Reserve officials could influence the ‘Greenback’. Despite voting for a rate hike last week, policymakers John Williams and Philip Jefferson are both on the more dovish end of the scale. If they indicate that one hike may be enough to tame inflation, the US Dollar could stumble.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

Philippines Gold price today: Gold steadies, according to FXStreet data

Saudi Arabia Gold price today: Gold steadies, according to FXStreet data

Pakistan Gold price today: Gold steadies, according to FXStreet data

AUD/JPY Price Forecast: Sticks to gains above 112.00 as bulls await 50% Fibo. breakout

Gold struggles to lure buyers amid hawkish Fed counters sliding US bond yields

EUR/JPY Price Forecast: Remains above 180.50 amid subdued upside momentum

Silver Price Forecast: XAG/USD sticks to gains near mid-$66.00s; 23.6% Fibo. holds the key

US two-year yield advantage has rarely been this wide
NZD/USD rate correlation hits 99.6th percentile since 2000
Bearish four-hourly structure keeps downside breaks in focus
Fed speak looms as key near-term directional catalyst
The RBNZ’s dovish hike earlier this month, coupled with a hawkish repricing of the US interest rate outlook, has delivered a hammer blow to NZD/USD, sending the pair to fresh multi-month lows last week.

I recently described USD/CAD as perhaps one of the best-trending major G10 FX pairs around. Looking at NZD/USD, you could make a similar argument.

Since the corrective bounce following the RBNZ’s meeting earlier this month ran out of steam, it’s been almost one-way traffic, extending a broader bearish trend that’s been in place since late August.

What makes this unwind especially interesting is that it appears to have been significantly influenced by shifts in the relative front-end interest rate outlook for New Zealand and the United States, likely explaining much of the price action seen over the past month.

And with NZD/USD now carving out what resembles a bearish continuation structure, the move may not be done yet.

Rate gap reaches rare territory
For a commodity currency that’s historically been closely aligned with risk appetite and the outlook for the global economy, the Kiwi’s had an almost unhealthy focus on relative rates this year, especially since the RBNZ’s September meeting, where it delivered a dovish hike, taking the overnight cash rate to 2.75%.

Source: LSEG

That’s helped drive a significant widening in the US two-year yield advantage over New Zealand, which has blown out to around 87.5 basis points. On a historical basis, that’s an unusually wide gap, sitting around the bottom 2% of observations since 2000.

The relationship with NZD/USD has strengthened dramatically at the same time. The 20-session correlation between daily moves in the pair and daily changes in the NZ-US two-year spread has climbed to around +0.81, putting it near the 99.6th percentile of observations since 2000.

It’s not just a very short-term phenomenon either. The current 40-session correlation sits around +0.53, while the 60-session measure is around +0.61, suggesting that rather than risk appetite or commodity market movements, it’s been relative front-end rates that have been driving the bus for the Kiwi over recent months.

Source: LSEG

It also helps explain why the current bearish trend has been so persistent despite broader risk conditions remaining firm. Put bluntly, rather than being driven by a conventional risk-off shock, the downside pressure has largely come from the shifting rates outlook, with US yields helping to drive the dollar higher in response.

And with that yield advantage sitting near historically extreme levels, there’s little in the rates picture yet to suggest the pressure on NZD/USD has meaningfully eased, making relative front-end rates the focal point when assessing directional risk for the pair.

Bears wait for confirmation
Turning to the technicals, and demonstrating the beautiful trending nature of the pair flagged in the introduction, NZD/USD finds itself coiling within something akin to a rising wedge structure on the four-hourly, having hit fresh multi-month lows last week.

Given the prevailing trend, selling into strength is still favoured, along with potential downside breaks. Of course, we haven’t seen a break of the structure as yet, so until that takes place, patience is warranted.

Source: TradingView

Levels to focus on in the near term are the 23.6% Fib retracement of the May to June bear move, along with 0.5704, the low hit on September 17. If we were to see a break of the lower side of the structure that extends beyond 0.5704, it would create a setup where shorts could be established beneath the level with a tight stop above for protection, initially targeting a retracement towards 0.5680, where the price bounced on a couple of occasions in early July.

Below that, 0.5660 is the next level of note, having acted as both resistance and support for periods in June this year. If that were to break, bears would likely be eyeing off a retest of the swing low set in June at 0.5627.

If we were to see a bounce in the pair in the near term, the upper end of the structure is the first level of note, along with 0.5750. The latter is a minor level that has acted as both support and resistance at times this year, reinforcing the need to wait for confirmation before setting bearish trades.

The message from the oscillators is one of gradually diminishing downside pressure. While RSI (14) and MACD continue to favour short setups over longs, both have been grinding higher over the past few days. Unless we were to see a fresh low print in RSI (14) and MACD curl back lower and cross beneath the signal line, delivering a bearish crossover, it’s another indicator pointing to the need for patience before looking to pounce.

Fed speak takes centre stage
There’s not a great deal on the economic calendar this week that screens as likely to move NZD/USD materially, which suggests Fed speak looms as the most likely catalyst to generate directional cues from a fundamental perspective.

We saw Chicago Fed President Austan Goolsbee out overnight delivering another hawkish message, suggesting persistent inflation pressures could warrant more hikes than the median one additional move signalled by the Fed in its latest dot plot at the September FOMC meeting.

But with markets already pricing another 75 basis points of hikes by the June meeting next year, you could argue the near-term risks around the Fed outlook are skewed towards a slightly less hawkish outcome.

That makes New York Fed President John Williams’ speech later Tuesday worth watching closely. Williams has often come across as a little more dovish than the consensus view on the committee, suggesting there may be grounds for a pop in NZD/USD should he continue down that path, despite voting for a hike last week.

Gold has held up remarkably well despite a stronger US dollar, rising rate expectations and increasingly hawkish Fed rhetoric. With DXY momentum beginning to fade near resistance, a short-term dollar pullback could provide gold with room to rebound.

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Gold Holds Firm as Fed Hawkishness Tests the US Dollar Rally
While the Fed delivered a hawkish hike on Wednesday, effectively signalling another move by December, they kept us guessing over whether we’ll see the further tightening that money markets are pricing into 2027. However, the increasingly hawkish commentary since the FOMC meeting appears to be part of a broader narrative that could be laying the groundwork for further hikes next year.

Concerns that the AI investment boom is adding to demand could also prove longer lasting than the supply-driven inflation shock from oil. And the fact that the Nasdaq is on the cusp of breaking to a new high despite a hawkish Fed highlights just how much enthusiasm remains around this segment of the technology sector.

Fed Officials Sing from the Same Hawkish Hymn Sheet
Noting that the current policy rate remains on the “accommodative side,” St. Louis Fed President Alberto Musalem said on Monday that further hikes would likely be required to quell inflation, and that acting sooner could be preferable to waiting. He suspects supply shocks and strong demand will keep inflation elevated.

Austan Goolsbee has also shifted to a more hawkish stance, warning that inflation may increasingly reflect overheating demand rather than simply rising energy costs. If correct, he thinks tightening may need to be more aggressive and front-loaded. Jeffrey Schmid made a similar case on Friday.

While none of the three are current FOMC voters, the consistency of their message has caught my attention. I have noticed over the years that Fed officials can suddenly start singing from the same hymn sheet when markets fail to fully embrace the message delivered at an FOMC meeting. Whether coordinated or not, this latest round of commentary has that feel to it — and could be laying the groundwork for further hikes in 2027.

Source: CME

DXY Hesitates Despite Hawkish Fed, Gold Holds Firm
Yet the US dollar does not appear entirely convinced. The DXY weekly chart remains constructive, but the daily chart has struggled to extend its post-FOMC rally despite an increasingly hawkish stream of Fed commentary. That leaves room for a near-term pullback before the broader dollar rally potentially resumes.

Such a retracement could provide some breathing room for gold. The metal has been surprisingly resilient in the face of a stronger dollar and higher US rate expectations, with buyers continuing to defend support. If DXY does correct lower, gold could therefore be positioned for another bounce — even if the broader rates backdrop remains a headwind.

US Dollar Index (DXY) Technical Analysis
While the weekly chart shows a potential rising wedge pattern — which projects a downside target near the January low — I am open to the US dollar eventually breaking above this year’s high if the Fed continues to beat its hawkish drum. A bullish engulfing candle formed last week after the FOMC meeting, following a marginally higher low to show demand is building above 99.

While this paints a bullish picture, I also note that bulls are struggling to maintain last week’s momentum despite recent hawkish Fed comments. A shooting star candle formed on Friday, and the US dollar index is yet to break above last week’s high. Even if it does, the 200-week EMA sits just above 100.50, making it a likely resistance level over the near term. So, despite its bullish structure above 99, I am also on guard for a minor pullback on the daily chart. And that could bode well for gold over the near term, which is holding above support.

Source: ICE, TradingView

Gold Futures (GC) Technical Analysis
Despite the surge in US dollar strength, gold has remained resilient. While I do not claim to know what the bullish trigger may be, I can make the technical assumption that gold may benefit from a decent bounce if the US dollar index retraces lower.

The weekly chart shows the four-week pullback from ~4600 printed a small bullish hammer around its 50-week EMA, with the lower-volatility range showing bears are losing steam. The daily chart shows a bullish engulfing day around 4600, the 50-day EMA and a prior weekly VPOC. Prices are gently retracing against that move, but my near-term bias for gold is now bullish while prices hold above last week’s low of 4277.

The daily swing high around 4555 and the 4600 handle make potential interim targets. Whether gold can retest the cycle highs or break above them is likely to depend on the strength of the US dollar and Fed policy expectations.

Source: ICE, TradingView

Silver's bullish breakout puts $71.18 and the 200-day moving average near $73.14 in focus.

Gold market manipulation and the paper system [Video]

USD/JPY Talking Points:
From shorter-terms, USD/JPY remains rather clean with higher-highs and lows and quite a bit of structure from prior swings. Last week saw a strong bounce from the 155.00 handle around FOMC and BoJ rate decisions.
Longer-term, however, questions abound about where the next line-in-the-sand might be, and this can constrain rallies as buyers show trepidation of testing fresh breakouts as the 160.00 level nears.
The larger facet of carry unwind would be fundamental convergence between the two economies and that doesn’t appear nearby, at this point.

If you look at USD/JPY from short-term charts, there’s a clear bullish trend that’s been in-place for most of the past two weeks. From longer-term charts, however, a shift has clearly taken place since Scott Bessent and the Japanese Finance Ministry intervened on the matter almost two months ago.

The past two weeks have seen support delivered from the five-year trendline in the pair. But, from the weekly chart below a clear change of pace has shown.

USD/JPY Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview

What is clear: Significant Yen weakness will probably not be tolerated beyond the 164.00 level where we had seen a prior intervention. And this is, perhaps, relevant to the 160.00 level as well following the strong sell-off that developed three weeks ago as buyers were showing more comfort above that level.

After sell-offs, however, given the still positive carry on the long side of the pair along with some upside room until one of those problem areas might come into play, and there could be motive for buyers to jump in very much like what we’ve seen.

Perhaps most telling, it was two weeks ago when US Treasury Secretary Scott Bessent issued his clearest warning yet, saying he has asymmetric information and he knows what the Bank of Japan is going to do and he knows what Japanese policymakers will do. He then went on to say ‘you can bet against me if you want.’ And while the initial reaction to that comment was weakness in the pair – USD/JPY still didn’t break down to a fresh low. Buyers simply showed up around the 153.00 level and at this point the pair is more than 400 pips higher.

This is, of course, the type of headline that gets attention, as the Treasury Secretary baits markets only for the market to growl right back. But, in reality, this magnifies the dynamic noted above, where intervention after a five or six hundred pip sell-off makes little sense, especially when monetary policy is still decisively tilted against it.

USD/JPY Daily Chart
Chart prepared by James Stanley; data derived from Tradingview

USD/JPY Shorter-Term
At this point bidding dips can still be argued in the pair. But the conversation around the long side grows less attractive as prices push higher and get closer to those previous lines-in-the-sand. The fear being, of course, an intervention, or a comment similar to that, as the risk-reward gets increasingly less attractive the further price rallies from support and the closer it gets to one of these spots that might elicit a response from policymakers, either on the US or Japanese side.

At this point, I think 160 can be assumed as a possible area that could produce something of that nature as we saw a massive sell-off after the last test of the big figure. But the 158.05 level may not present as much worry, even though it did provide a clean reversal on Friday morning. That was a prior swing of support and in the post-BoJ breakout, that’s what ultimately carved out the highs. It makes sense the buyers saw price test prior support and decided to take profit off the table after a smooth one-sided run.

In the aftermath of that, another key level has come back into play and this time as support at 156.68. This was a higher low back in August when the pair was recovering from the initial sell-off driven by the dual intervention, and it came in as resistance earlier in September. On Friday, this price helped to mark the swing low that has so far been defended as bulls have returned shortly after.

If we do see a larger pullback, the 155.00 area is of interest as this is what held the lows around FOMC, and that can be synced up to a spot of resistance turned support at 155.37.

USD/JPY Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro

A new trading week is underway, and the Canadian dollar continues to show signs of weakening momentum. This can be seen in recent USD/CAD price action, with the pair gaining nearly 0.7% over the last four trading sessions. Buying pressure around the pair has been supported primarily by two factors: expectations of a more aggressive Federal Reserve and an ongoing trade dispute that still shows few signs of resolution. Both developments appear to be weighing on the Canadian dollar's relative attractiveness and, as long as these conditions remain in place, buying pressure around USD/CAD could continue to play a relevant role in the sessions ahead.

Is the USD Becoming a Threat?
Since last week, expectations of a more aggressive Federal Reserve have continued to gain traction. This perception is largely driven by persistent inflationary pressures in the United States, a backdrop that could justify additional rate increases over the coming months. In fact, CME Group's probability tracker still assigns more than a 50% chance that interest rates will rise another 0.25% to the 4.25% area at the October 28 meeting.

The situation looks somewhat different at the Bank of Canada. Although policymakers continue to acknowledge inflation risks, there have not yet been equally strong signals pointing toward a more aggressive policy stance. Market expectations for the October 28 meeting remain broadly split between another rate hike and an unchanged decision, highlighting a greater degree of uncertainty surrounding the bank's next move. As a result, the Federal Reserve continues to stand out as the institution with the greatest potential to maintain a restrictive monetary policy over the coming months.

This divergence also has important implications for bond markets. Although 10-year bond yields in both countries have moved higher recently, the yield differential continues to favor the United States. While U.S. Treasury yields remain around the 5.00% area, Canadian bond yields continue to trade below 4.00%. This gap remains important because it supports the relative attractiveness of U.S. assets and could widen further if the Federal Reserve maintains a more aggressive stance than the Bank of Canada.

Source: TradingEconomics

This advantage is already beginning to show up in the performance of the U.S. dollar. Recent movements in the DXY, the index that measures the dollar against its main rivals, continue to reflect strength above the 100-point level. This suggests that demand for the U.S. dollar remains well supported, backed both by the appeal of the bond market and expectations of a more restrictive monetary policy. As a consequence, the Canadian dollar continues to struggle to regain lost ground consistently.

Source: TradingEconomics

Taking all of this into account, the difference in outlook between the two central banks continues to favor the U.S. dollar. As long as markets continue to price in a more aggressive Federal Reserve than the Bank of Canada, capital flows may continue to favor USD-denominated assets and limit a stronger recovery in the Canadian dollar. Under this scenario, buying pressure around USD/CAD could remain relevant during the coming sessions.

Is There Still No Progress in the Trade Dispute?
Since September 15, when revised 50% tariffs on selected Canadian products came into effect, there have been no significant developments pointing toward a quick resolution of the trade conflict. In addition, beginning on September 29, the United States may start applying import restrictions on products from sectors such as automobiles and dairy. On the Canadian side, the countermeasures announced on September 8 remain in place, including tariffs ranging from 15% to 50% on U.S. goods. So far, both countries have maintained firm positions, and negotiations have failed to alter the overall direction of the dispute.

This situation remains highly relevant for the Canadian dollar because the currency has repeatedly shown weakness whenever trade tensions escalate. Moreover, the conflict directly affects an economy where more than 70% of exports are destined for the United States, creating uncertainty around future growth prospects. Until more meaningful diplomatic progress emerges, caution is likely to remain a dominant theme around the CAD and could continue supporting buying pressure in USD/CAD over the coming weeks.

USD/CAD Technical Forecast

Source: StoneX, Tradingview

Bullish momentum starts to emerge: Over recent months, USD/CAD had been developing a medium-term downtrend that became one of the chart's most important technical structures. However, the recent recovery has already generated a meaningful break above this trendline. If buying pressure remains in place over the coming sessions, a more established bullish structure could begin to emerge in the short term.

 
RSI: The RSI remains above the 50 neutral level, a reading that reflects growing bullish momentum within the chart. As long as this dynamic remains intact, the bullish bias may continue strengthening over the coming sessions.

 
MACD: A similar picture can be observed in the MACD, whose histogram continues to trade above the 0 neutral line. This reading suggests that short-term moving averages continue to favor bullish price action and supports the possibility that the current upward bias remains relevant.

 
Key Levels:

1.40504 – Key Resistance: The last major upside barrier on the chart, coinciding with the most relevant 61.8% Fibonacci retracement level. Price action that manages to consolidate above this area could signal stronger bullish control and open the door to a more developed upward structure in the weeks ahead.

 
1.39406 – Near-Term Barrier: A level that coincides with the 50-period moving average and the 38.2% Fibonacci retracement zone. It remains the most important reference to monitor in the event of short-term bearish corrections.

 
1.38378 – Critical Support: This level represents the most important downside barrier on the chart as it coincides with the 200-period moving average. A move back toward this area could undermine the credibility of the recent recovery, revive concerns about a lack of direction, and favor the development of a broader consolidation range.

 
Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25