Track market-moving stories before they get noisy

Gold (XAU/USD) rebounds from the weekly low, which it touched during the Asian session on Wednesday, and climbs above $4,350 in the last hour. The US Dollar (USD) attracts some sellers, stalling this week's goodish recovery from a two-month low, and helps the commodity reverse a part of the previous day's heavy losses. Traders, however, might opt to wait for more cues about the US Federal Reserve's (Fed) future policy path before placing fresh directional bets on the non-yielding yellow metal.

Hence, the focus will remain glued to the release of FOMC Minutes amid inflationary jitters stemming from rising energy prices due to the Middle East crisis. In fact, crude oil prices climb to a nearly three-week high amid the US-Iran standoff over the Strait of Hormuz. President Donald Trump has asserted that the US is not engaged in talks with Iran and that the naval blockade of Iranian ports remains in full force. Furthermore, Trump posted a map on Truth Social depicting the strategic Strait of Hormuz as the new US territory.

Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said the critical waterway would remain closed until the US fulfills conditions agreed to a June memorandum of understanding. This keeps the geopolitical risk premium in play and supports crude oil prices, fueling inflation concerns and lifting the longer-end 30-year US bond yield to its highest level since June 2007. Furthermore, CME Group's FedWatch Tool indicates that traders are still pricing in around a 68% chance of a Fed rate hike by the year-end.

Analysts at ING highlight that the US Dollar index (DXY) has “rebounded from the range lows at 99.40,” underlining that “the Dollar is not quite ready to make a sustained break lower just yet.” They point to “higher energy prices and rising 30-year Treasury yields” as the two key factors providing near-term support, noting that “both of these, should they extend, could put a September hike from the Fed back on the agenda.”

On the energy side, ING observes that “news that Washington seemingly has little interest in extending the 60-day ceasefire with Iran has seen oil and gas prices creep higher again.” While “in which direction the next big leg for energy prices emerges is anyone's guess,” the bank stresses that “higher energy is a Dollar positive – both through US energy independence and the Fed's reaction function.”

Apart from this, persistent geopolitical uncertainties might hold back bearish traders from placing fresh bets on the safe-haven Greenback, warranting some caution before positioning for any further appreciation in the Gold price.

XAU/USD daily chart

Technical AnalysisFrom a technical perspective, the XAU/USD pair has been struggling to find acceptance above the 50% retracement level of the April-June decline and remains well below the 200-day Simple Moving Average (SMA). This keeps the near-term bias tilted bearish despite the metal consolidating near recent highs.

Meanwhile, the Moving Average Convergence Divergence (MACD) remains above zero, though it has slipped back toward the signal, and the Relative Strength Index (RSI) at 59.24 stays in positive territory. This suggests that bullish momentum is still present but vulnerable to further corrective pressure while the Gold price fails to reclaim the aforementioned resistance levels.

Overhead, the 50% retracement at $4,406 is the first hurdle, with the longer-term SMA at $4,509 and the 61.8% Fibonacci retracement at $4,519.36 reinforcing a broader ceiling. On the downside, initial support emerges at the 38.2% Fibo. retracement at $4,292, guarding the pullback before the 23.6% retracement at $4,152 and the structural floor around $3,925.

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

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

USDEURGBPJPYCADAUDNZDCHFUSD-0.08%-0.04%-0.16%-0.16%0.15%0.09%-0.09%EUR0.08%0.02%-0.09%-0.07%0.21%0.14%-0.02%GBP0.04%-0.02%-0.11%-0.10%0.21%0.12%-0.05%JPY0.16%0.09%0.11%-0.01%0.29%0.22%0.04%CAD0.16%0.07%0.10%0.00%0.29%0.22%0.05%AUD-0.15%-0.21%-0.21%-0.29%-0.29%-0.05%-0.22%NZD-0.09%-0.14%-0.12%-0.22%-0.22%0.05%-0.17%CHF0.09%0.02%0.05%-0.04%-0.05%0.22%0.17% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Trump delays threatened 50% tariffs on Canadian goods
US-Canada deal puts Keystone XL pipeline back on the table
USD/CAD tariff tail risk materially reduced
As alluded to in a separate analysis piece released on Tuesday, one of the key headwinds overhanging USD/CAD was the status of tariff negotiations between the United States and Canada. Well, it looks like Donald Trump has brought TACO to the tariff negotiations.

In a Truth Social post, Trump said the slated 50% tariffs on roughly US$20 billion of Canadian goods, which had been due to kick in tomorrow morning, have now been postponed for three days. More importantly, he said the two sides, subject to the finalisation of documents, “have a DEAL!”

Source: Truth Social

Of note, after repeated setbacks in trying to secure cheaper energy from the Gulf, energy infrastructure looks to be at the centre of the agreement. With talks between the United States and Iran now effectively dead, Trump appears to be looking north for another route to eventually deliver lower US energy prices. He immediately linked the tariff reprieve to the Keystone XL pipeline.

Trump approved the project during his first term, only for the Democrats to pull the plug after returning to power. Now, more than five years later, it looks like it may be back on the table.

Bullish reversal risk recedes

Source: TradingView

Having flagged bullish reversal risks a little over 24 hours ago, USD/CAD did pop higher on Tuesday, with the close roughly in line with the midpoint of Monday’s bearish candle, completing a three-candle morning star reversal pattern in the process.

However, the latest news flow immediately raises questions about the validity of that signal, with USD/CAD pulling back from minor horizontal resistance at 1.3910. The pair remains stuck in a narrow range between that level on the topside and a support zone running from 1.3870 down to the 200-day moving average at 1.3851. Those are the two immediate focal points for traders.

Given the reaction to the tariff news, the risk of a resumption of the broader bearish trend may be increasing, putting the emphasis on a potential break beneath the lower end of that support zone. If that were to occur, 1.3775 is the first level to watch, followed by a more pronounced support zone around 1.3714, the 78.6% Fibonacci retracement of the September 2024 to January 2025 bull move. That area has seen plenty of work over recent months, acting as resistance for lengthy periods earlier this year.

If the bullish price signal proves more prescient, the immediate focal point above 1.3910 is the 100-day simple moving average at 1.3919, where the price bounced on several occasions before breaking lower earlier this week. A break above would put horizontal resistance at 1.3967 in play, with 1.3991 another minor level overhead before the broader downtrend from the July highs comes into play.

The message from the oscillators still favours selling into strength. RSI (14) continues to trend lower and sits marginally above oversold territory at 32, while MACD confirms the message, continuing to trend lower in negative territory after crossing its signal line from above.

FOMC minutes loom
The FOMC minutes from the July meeting screen as the most likely fundamental catalyst to determine the next move in USD/CAD. With Fed tightening expectations having been pared sharply following the recent run of softer US data, traders will be watching for signs of whether the hawkish dissents seen at the meeting extended more broadly across the committee.

TL;DR: The Hormuz crisis is shifting from an oil-and-bond story to a broader risk-off one, with equities weakening, Copper breaking lower, and Silver losing its rebound structure — a sign its industrial-demand exposure is becoming a liability rather than an advantage.

Silver Is Starting to Feel the Other Side of the Oil Shock For several days, the Hormuz crisis was primarily an oil-and-bond story. Brent climbed, inflation fears returned, and global yields pushed higher. Now the second half of the trade is beginning to appear: equities are weakening, Copper has broken lower, and Silver is starting to lose its rebound structure.

That shift comes as the US-Iran confrontation moves beyond simple diplomatic stalemate. The June 17 ceasefire framework expired August 17 without renewal, but the formal deadline mattered less than the deterioration that followed. Another tanker was struck in the Strait of Hormuz, Tehran laid out sweeping conditions for reopening the waterway, and Washington hardened its own rhetoric. More importantly, US Special Envoy for Peace Jared Kushner indicated Iran is unwilling to compromise on US demands, suggesting current talks are failing to narrow differences rather than merely moving slowly.

Brent has responded by extending its advance toward $92, with WTI around $85. But Silver’s reaction increasingly shows why this is no longer just a commodity-supply story.

Higher Oil Is Lifting Yields — and Starting to Hurt Growth Assets The bond market has taken the escalation seriously. The US 30-year yield has reached approximately 5.33%, its highest in 19 years, while the 10-year is hovering around 4.72–4.75%. Germany’s 10-year Bund has surged to around 3.27%, its highest level since 2011.

That global move gives the current shock a stagflationary character. Hormuz disruption threatens higher oil and freight costs, which keep inflation expectations elevated and reduce room for central banks to ease policy. But the resulting rise in yields also tightens financial conditions and weighs on valuations and demand.

Equities are beginning to show that pressure and have closed down for multiple sessions. The Dow slipped -0.22% overnight, the S&P 500 fell -0.69%, and the Nasdaq lost -1.33%. The Nasdaq’s larger decline is especially consistent with higher-yield pressure.

For Silver, this matters because it sits between two worlds. Gold can still benefit from monetary uncertainty and inflation concerns. Silver shares some of that support, but it also depends much more heavily on industrial demand and risk appetite. The current environment is turning that dual identity into a disadvantage.

Copper Is Giving Silver Bulls a Warning Copper offers one of the clearest cross-checks. The metal surged to a record 6.9247 in early August on structural supply-deficit optimism, but has since reversed to a two-week low. Price has fallen below the 55 4H EMA near 6.66, broken rising trend support, and slipped through the roughly 6.565 retracement area.

RSI around 33 shows momentum has weakened sharply. Some profit-taking after an all-time high is natural, but timing matters — Copper’s selloff is accelerating just as stocks retreat and bond yields climb. That’s exactly what Silver bulls don’t want to see. Copper has much less monetary support than Gold, so its weakness is a cleaner signal that investors are beginning to worry about the demand consequences of higher energy costs and tighter financial conditions.

If Copper keeps falling while Brent stays elevated, Silver’s industrial component becomes an increasingly important drag.

Gold Is Starting to Win the Metals Trade The Gold/Silver ratio is already reflecting that divergence. The correction from roughly 72.55 appears to have completed at 66.23, with the ratio now rebounding sharply toward 69.40. A firm break above 69.40 would confirm another leg higher and point to further Silver underperformance relative to Gold.

That would fit the current macro mechanism almost perfectly. Both metals face high yields, but Gold retains a cleaner monetary bid from policy uncertainty and geopolitical risk. Silver faces those same yields while also absorbing deteriorating industrial sentiment. So if the ratio breaks 69.40 at the same time Copper extends its decline, the market would be delivering two independent confirmations that Silver’s problem is becoming more than a simple short-term pullback.

ActionForex’s Technical View on Silver Silver’s 4H structure has already weakened materially. The rebound from 54.77 extended to 66.79, but price has since broken firmly below the 55 4H EMA around 63.90. The 4H MACD has also broken its rising trendline, signaling a loss of momentum that supported the recovery. This raises the risk that the move from 54.77 was only a three-wave corrective rebound that ended at 66.79.

The bigger picture supports that interpretation. The recovery was rejected below 67.99, the 38.2% retracement of the larger 89.36–54.77 decline. Silver has also fallen through the 55-day EMA near 63.71, leaving the medium-term bearish structure intact unless price can regain that area quickly. In other words, the rebound repaired momentum but never cleared the level required to demonstrate the larger downtrend had ended.

The immediate focus now shifts lower. The first important downside zone is 60.92, resistance turned support. A firm break there would substantially strengthen the view that 66.79 marked completion of the rebound, with a deeper fall then seen back to the 54.77–56.53 support zone. For bulls, the first task is recovering 63.70–63.90, where the daily and 4H moving averages converge — even that would only stabilize the near-term structure. A more meaningful invalidation requires a sustained recovery through 66.79, which would put the 67.99 retracement resistance back into play.

That gives traders a straightforward map:

Below 63.70–63.90: downside pressure dominates. Break below 60.92: the corrective-top case gains confirmation. Below 54.77: the larger bearish trend resumes. Above 66.79: the bearish rebound-completion thesis weakens materially. Key Takeaways The Hormuz crisis is broadening from an oil-and-bond story into a risk-off one, with equities, Copper, and now Silver all showing pressure. Rising global yields (US 30-year at 5.33%, German Bund at 3.27%) give the current shock a stagflationary character that’s starting to weigh on growth assets. Copper’s reversal from a record high to a two-week low offers a cleaner read on deteriorating demand sentiment than Gold, since it carries less monetary support. The Gold/Silver ratio rebounding toward 69.40 signals Silver is starting to underperform Gold as its industrial-demand exposure turns into a liability. 60.92 is the key level to watch: a break would confirm Silver’s rebound from 54.77 topped at 66.79, opening a deeper fall toward the 54.77-56.53 zone.

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.

Summary:

Rising bets for a September rate hike by the BoJ are capping the recovery move of the CHF/JPY after the sharp intervention-driven slump. Current Setup and Live Chart The CHF/JPY pair is made up of two safe-haven currencies that are currently competing due to recent policy actions by Japanese financial authorities. The geopolitical risk premium has favored the Swiss Franc over the Yen, given the latter’s status as the currency of a country that depends heavily on energy imports. Switzerland, on the other hand, is not directly impacted by the oil price shock, but still benefits due to safe-haven demand that has followed the volatility in the global markets following the onset of the US-Iran war, the escalatory/de-escalatory headlines, and the current deadlock over the status of oil shipping via the closed Strait of Hormuz.

The Yen received massive support from the Bank of Japan’s FX market intervention and the hawkish tone of the statement following the recent BoJ monetary policy meeting. The statement, which expressed a stronger willingness to defend the Yen against extreme weakness, continues to weigh on the pair, as the recovery following profit-taking by Yen bulls has been relatively muted.

For CHF/JPY, this creates a tradable asymmetry: safe-haven demand from the geopolitical situation supporting the CHF, and BoJ hawkishness and intervention risk supporting the Yen. Currently, safe-haven demand in the FX market is weak; markets need a genuinely harsh deterioration on the ground to drive the kind of flight to safety seen during the global financial crisis of 2008 or the 2020 pandemic to see a huge upside in the Swiss Franc. Counteracting this is a market that seems braced for further Yen strengthening, especially if bets increase for a September BOJ rate hike.

Macro Drivers for the CHF/JPY 1) Significantly Hawkish Shift in the BOJ’s Tone

Bank of Japan Governor Ueda’s tone after the BoJ’s last monetary policy meeting was decidedly hawkish. The higher probability of a BoJ rate hike, likely in September, has shifted the pair’s outlook. At 1.0%, the BoJ’s interest rate is at a 31-year high. Market expectations for a rate hike in the September 17–18 meeting have risen sharply, with the probability now at 80% in some quarters. No longer is the CHF’s safe-haven appeal the determinant of price action. Potential BoJ action now sets the tone for the pair. Interestingly, the Yen now finds itself in a reverse-carry position, as its 1% rate yield is higher than the Swiss Franc’s 0.00% yield. If rates rise again in Japan, the Yen vs the Franc becomes more attractive.

2) Intervention risk

The 29 July intervention by Japan and the US to firm the Yen from levels the BoJ now considers hurtful to the country’s economy was decisive. The BoJ’s tone a few days later at the policy meeting was even stronger. The language is clear. For now, the era of simply betting on Yen weakness may be over, especially as Japanese finance officials have indicated a strong desire to intervene again to prevent disorderly downside moves in the Yen. A sudden Yen buying spree by the BoJ as part of an intervention could produce a sharp, rapid move that could heavily impact any Swiss Franc longs.

3) The Swiss Franc’s Safe-haven Appeal

The CHF retains safe-haven appeal and remains one of the best defensive currency plays in disorderly markets. The current geopolitical risk premium keeps any downside moves in the pair constrained. If Fed expectations turn dovish and the USD declines, the Franc’s appeal as a defensive currency will rise.

CHF/JPY Near-Term Price Catalysts 1) BOJ communication: this is the pair’s main price catalyst at the moment. Commentary from BoJ officials leaning toward a September rate hike would be bearish for CHF/JPY.

2) Geopolitics: this is the current source of the CHF’s safe-haven appeal. However, the Yen is also deemed a defensive asset, but its exposure to higher oil prices dulls this effect. A significant deterioration in the Middle East geopolitical landscape would be needed to trigger a severe global risk-off episode that would significantly strengthen the Franc. However, if carry trades unwind as a result (AUD and NZD are risk-associated currencies, and their selloff would drag down other Yen crosses), the Yen could outperform the Franc and instigate a sharp CHF/JPY decline. So ultimately, the degree of geopolitical deterioration is what makes the difference between safe-haven support for the pair, or a carry trade unwinding that pushes the pair over the precipice.

3) Global bond yields: A sharp rise in global bond yields, driven by oil-price-related inflation, could boost Yen tightening expectations beyond current probability levels. This will ultimately be bearish for the pair. However, a drop in global bond yields stabilizes the bond markets, and could have a moderating impact on both the CHF and JPY. This will leave the pair firmly in the hands of monetary policy pathways in both countries, with the Yen currently having the upper hand.

CHF/JPY Technical Outlook The pair’s recovery looks set to challenge resistance at 198.36, the site of former degraded support formed by the lows of 12 February, 1 April and 1 May 2026. If this barrier is uncapped, the recent highs of 30 June and 16 July 2026 at 201.51 become the next upside target. A further advance tests the 2026 highs at 204.42.

Fig 1: CHF/JPY 4-hr chart showing key price levels (snapshot: 19 August 2026) On the flip side, a resumption of the recent selloff tests the 3 August 2026 low at 192.53, which also serves as the prior low of 5 December 2025. A further decline takes out this pivot and brings the 14 October and 5 November 2025 lows at 189.00 into the picture.

Gold price (XAU/USD) holds steady near $4,335 after pulling back from an early-June top near $4,450 during the early Asian trading hours on Wednesday. The precious metal faced some selling pressure in the previous session as Treasury yields surged to their highest levels in decades. 

Long-term borrowing costs from the US to Japan and Germany hit their highest levels in decades, undermining non-yielding gold. Thirty-year bond yields in the US hit their highest since 2007 on Tuesday, while expectations that the Bank of Japan (BoJ) could raise interest rates as early as September pushed 10-year borrowing costs to a three-decade high. In Europe, Germany’s 10-year Bund yield reached its highest since 2011, and French yields were at their highest since 2008. 

Furthermore, rising energy prices on ongoing US-Iran tensions and uncertainty surrounding the Strait of Hormuz could stoke inflation worries and weigh on non-interest-bearing bullion. US President Donald Trump said on Tuesday that no talks are underway or scheduled with Iran, per CNN. MarineTraffic data also showed that commercial vessel traffic through the critical Strait of Hormuz and Bab al-Mandeb channels remains depressed.

“The steepening of the yield curve poses a headwind for gold, while firmer oil prices are also a factor behind today’s weakness,” said Peter ‌Grant, vice president and senior metals strategist at Zaner Metals.

On the other hand, the run of softer US inflation data has led investors to scale back expectations of a rate hike by the US Federal Reserve (Fed). This, in turn, could drag the US Dollar (USD) lower and support the USD-denominated commodity price. 

Markets are now pricing in for a September quarter-point hike flipped to a near-65% chance of a hold, after softer consumer price inflation, and weaker retail sales.

Gold demand hinges on inflation hedging as rising yields pose near-term riskBNY’s strategists observe that investors “appear to prefer explicit inflation protection through gold rather than positioning for a broader reflationary upswing,” with the metal increasingly favoured as a direct hedge against rising price pressures. At the same time, they caution that “with yields moving sharply higher, the metal could struggle in the near term, unless monetary policy remains far more dovish than expected,” underscoring the delicate balance between inflation hedging demand and the headwind from higher rates.

Technical Analysis: GoldIn the daily chart, XAU/USD remains under a bearish near-term bias as price holds below the 100-day simple moving average (SMA), keeping the broader uptrend context out of reach. At the same time, spot is trading above the 20-day Bollinger middle band, suggesting a corrective bounce within a still-capped structure, while the Relative Strength Index (14) around 58 points to firm but not overextended bullish momentum.

On the topside, initial resistance is seen at the 100-day SMA near $4,385, ahead of the upper Bollinger band at roughly $4,500, where rallies would likely meet stronger supply. On the downside, immediate support comes from the 20-day Bollinger middle band around $4,210, with deeper demand parked near the lower Bollinger band at about $3,915; a daily close below the mid-band would reopen a slide toward the lower envelope, whereas a sustained break above $4,385 would be needed to soften the current bearish bias.

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

Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

The GBP/JPY consolidates at familiar levels on Tuesday, virtually unchanged near 216.00, with the cross-pair seesawing within the 215.85-216.22 range, as neither buyers nor sellers are able to clear key resistance/support levels during the day.

GBP/JPY Price Forecast: Technical OutlookThe GBP/JPY is neutral to upward biased, though the last intervention between US and Japanese authorities prevented investors from opening fresh long or short bets. Bullish momentum has faded even though the Relative Strength Index (RSI) remains bullish. Nevertheless, as it turned flat, a potential consolidation lies ahead.

Upwards, the first key resistance is 217.00, followed by a downward resistance trendline near 217.50/65. Above this area, up next is the July 9 high of the day (HOD) at 218.01.

On the flip side, a drop below the 50-day SMA at 215.56 opens the door to further downside. Below lies the 100-day SMA of  214.71, ahead of the 200-day SMA at 212.35.

GBP/JPY Price Chart – Daily

GBP/JPY daily chart Japanese Yen Price This week The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHFUSD-0.09%-0.07%0.18%0.16%0.05%0.26%0.03%EUR0.09%0.17%0.28%0.25%0.10%0.35%0.13%GBP0.07%-0.17%0.17%0.10%-0.07%0.18%-0.09%JPY-0.18%-0.28%-0.17%-0.01%-0.19%0.06%-0.17%CAD-0.16%-0.25%-0.10%0.01%-0.16%0.08%-0.17%AUD-0.05%-0.10%0.07%0.19%0.16%0.25%-0.01%NZD-0.26%-0.35%-0.18%-0.06%-0.08%-0.25%-0.27%CHF-0.03%-0.13%0.09%0.17%0.17%0.01%0.27% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Central bank gold buying was one of the pillars supporting the gold bull market last year, and it has continued to bolster the market even as it faced significant headwinds due to expectations of a higher interest rate environment.

But why are central banks piling into gold even as they minimize their exposure to the dollar?

There are four key reasons.

Geopolitical riskThe weaponization of the dollar.Worries about the U.S.’s deteriorating fiscal situation.Regime uncertaintyIn an op-ed published by Reuters, financial journalist Jamie McGeever said that none of these events on their own would necessarily spark the current revival in gold.

“But throw them all together, and it’s a pretty compelling checklist. Especially for central banks, which had already started to ramp up their purchases in the second quarter after a lackluster first quarter.”

McGeever is referring to the resurgence of central bank gold buying in the second quarter of this year. Facing price pressure in Q1, central bank purchases slowed, but things started picking up in April. Central banks bought 289 tonnes of gold in the second quarter, nearly five times more than the Q1 total.

Following is an overview of these four factors and why they're incentivizing gold accumulation and de-dollarization. 

Geopolitical riskThe war between the U.S. and Iran has had an oversized impact on the markets. After a brief safe-haven bid at the outset of hostilities, gold sold off and has traded sideways due to the oil price shock and worry that higher inflation will mean higher interest rates.

And the war is starting to look like a problem that won’t go away. McGeever called it “an unnerving geopolitical and policy backdrop that has reminded the world of gold’s underlying appeal.”

“Hopes of a peace ‘deal ’-however unsatisfactory that deal might be - are evaporating. U.S. President Donald Trump’s off-ramp ahead of November’s midterm elections is narrowing. Escalation or capitulation is not the only choice Trump faces, but it is a black-and-white scenario some analysts are now beginning to contemplate.”

As expectations for a Fed rate hike fade, gold’s safe-haven appeal is growing in this uncertain environment.

Dollar weaponizationWhen the world sees the U.S. moving aggressively on the world stage, it increases worries about the weaponization of the dollar.

After Russia invaded Ukraine, the U.S. and its Western allies aggressively sanctioned Russia, effectively cutting the Russians off from the global financial system.

Other countries sat up and took notice.

While it may make sense from a Western foreign policy perspective, it has made many countries wary and sped up efforts to minimize dependence on the greenback. After all, if you have something that can be leveraged against you, it’s only natural to try to minimize your exposure to that thing. If the U.S. can pull the dollar rug out from under you, why not try to get that rug out of the room?

This is one of the primary dynamics driving central bank gold accumulation.

Notably, they are decreasing their exposure to dollars at the same time. Earlier this year, the European Central Bank confirmed gold has surpassed Treasuries as the top reserve asset.

US fiscal malfeasanceThe national debt is only a few billion dollars away from $40 trillion. Meanwhile, federal spending keeps speeding up. The U.S. ran the biggest monthly budget deficit in five years last month.

The world has financed America’s spending spree for decades, but it might be getting wary of loaning Uncle Sam money. Treasury yields have been pushing higher in what some analysts believe is the beginning of a secular bear market in bonds.

McGeever pointed out that yields on the benchmark 10-year Treasury note have climbed to their highest level in 18 months. Meanwhile, yields on 30-year bonds and 30-year inflation-protected bonds are at their highest since 2007 and 2008, respectively.

This indicates a sagging demand for U.S. debt.

Economist Phil Suttle explained the ramifications.

“The U.S. is now in a phase where its global seigniorage benefits of supplying the world’s reserve currency have now been exhausted; the next phase (which may already be underway) is what happens when the foreign official holders of your liabilities become more antsy about holding them.”

Regime uncertaintyMarkets are forward-looking. They don’t function very well when the future gets hazy.

For an economy to operate at peak efficiency, market participants need to be able to anticipate future developments. They need stability in policy and regulation.

We have none of that today.

The tariff situation is a prime example. Nobody knows what the tariff landscape will look like next month, much less a year from now. How does one plan for the unknown?

Meanwhile, many people on the international stage question Federal Reserve independence. They worry that pressure from the administration could drive monetary policy. It’s a legitimate concern because Fed independence is a myth.

While new Federal Reserve Chairman Kevin Warsh has talked a good game on tackling inflation, he hasn’t actually done anything. This is causing the markets to question his commitment to reining in inflation.

McGeever noted that it also appears Trump is in Warsh’s year.

“Media reports suggest Trump has repeatedly called Warsh since his appointment, and Trump has revived his attempts to fire Governor Lisa Cook. All this has unnerved the bond market.”

All these factors are driving central bank gold buying. BNY analysts say they should also incentivize renewed investor interest, especially with the price below all-time highs.

“Gold is not a pure Fed signal, but persistent official-sector demand and renewed investor interest are reinforcing the value of inflation, currency and geopolitical hedges.”

McGeever argued that this is a setup for a long-term gold bull run.

“As confidence in the world’s reserve assets frays, gold’s allure is unlikely to dim.”

Spot gold daily chart shows larger trend structure. Source: TradingView

$4,311 Defines Downside Risk Last week’s higher swing low at $4,311 is key support since a decline below it puts gold in a position to possibly test lower support levels. Several potential support areas stand out if a deeper pullback occurs. The 38.2% Fibonacci retracement is at $4,273 and supported by an uptrend line. A bullish reversal signal occurred during the recent advance above the lower swing high of $4,203 from early July, and it now may represent support. Then there is the 61.8% Fibonacci retracement of the prior advance at $4,167. These levels provide progressively lower areas where buyers could attempt to regain control if $4,311 fails.

200-Day Moving Average Holds Bigger Clue The current advance is the first notable pullback to test the 200-day moving average as resistance since gold broke below it in early June. Therefore, signs of resistance are anticipated on the first approach. However, given the signs of sustained strength in the current rally, there is also the possibility that the 200-day moving average is reclaimed. There has been only one leg up from the recent bottom so far, and a measured move for a second leg up before a notable pullback would suggest a target clearly above the 200-day moving average. That possibility keeps the bullish case alive despite Tuesday’s reversal, making $4,311 the key level to watch as the consolidation resolves.

The USD/CHF pair recovers some ground on Tuesday after testing the 50-day Simple Moving Average (SMA) of 0.7866 along with the bottom trendline of the ‘bearish flag’, which so far contained price action amid the lack of conviction of buyers and sellers, regarding the trend’s direction. The pair trades at 0.7960, near the day's highs, up 0.82%.

Per market structure, USD/CHF is neutral to upward-biased, with momentum favoring buyers, as depicted by the Relative Strength Index (RSI), which is above its 50 neutral level and trending higher.

For a bullish continuation, the USD/CHF must surpass August’s 17 high of 0.8135. Once cleared, it opens the path to challenge the top trendline of the ‘bearish flag'. A breach of the latter will negate the ‘bearish’ chart pattern and pave the way towards 0.8200, followed by the yearly high of 0.8207.

On the downside, if USD/CHF fails to clear 0.8135 and finishes the session below 0.8100, this could exacerbate a move to the 50-day SMA at 0.8084. A move beneath clears the path to the July 30 swing low of 0.8049, ahead of 0.8000.

Swiss Franc FAQs The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.

The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.

The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.

Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.

As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.

Daily October Brent Crude Oil Futures Brent crude moved above $91 a barrel Tuesday, its strongest level since late July. WTI also pushed higher. The ceasefire arrangement has ended. Iran has threatened a more offensive posture. The Strait of Hormuz remains restricted and Washington is not extending the deal.

The Middle East risk can put a protective bid under precious metals on the breaks. Tuesday’s trade showed the other side. Higher crude is feeding into inflation expectations and giving bond sellers another reason to hold the long end at these levels. Gasoline remains above $4 per gallon and the next round of price data has a better chance of capturing the recent move in energy costs. The inflation side of the oil trade won on Tuesday.

FOMC Minutes and Jackson Hole Are Keeping Buyers on the Sideline Wednesday’s minutes from the July meeting land with three officials already on record voting for a quarter-point increase. The market cut September hike odds sharply over the past week on softer data. The minutes tell you whether that repricing went too far. Jackson Hole follows next week with policymakers sitting between weaker growth numbers and crude above $91. Silver just reversed $3 off its session high, and neither event is offering buyers a reason to step back in ahead of the data.

What to Watch The 30-year yield at 5.31% is doing the damage. The front end can price a September hold all it wants. Silver is trading the long bond, and the long bond is trading deficits, debt supply and inflation that has not come back to target. Crude above $91 is making that worse by feeding the energy cost story into every forward inflation estimate.

Silver reversed $3 off its session high and is sitting just above a swing bottom that changes the minor trend if it breaks. The 50-day moving average is not far below. FOMC minutes Wednesday and Jackson Hole next week are the events that can reset the rate debate. Until the long bond stops overriding the front end, silver rallies are selling opportunities.

More Information in our Economic Calendar.

Gold (XAU/USD) retreats on Tuesday as US Treasury yields keep their momentum, while energy prices rise further amid a lack of progress in talks between the US and Iran. XAU/USD trades at $4,364, down over 1.10%.

XAU/USD falls as high yields and Oil risks pressure bullionThe US Dollar Index (DXY), which tracks the performance of the buck’s value against a basket of six currencies, is flat at 99.60. The US 10-year Treasury yield has fallen by more than 1 basis point to 4.712%. Worth noting that US Treasury yields hit their highest levels since 2007, earlier in the session, a headwind for Gold, which bears no interest.

A de-escalation of the conflict seems far from happening after US President Donald Trump said that Iran is unlikely to accept Washington's terms to end hostilities. Meanwhile, Iran is adopting an offensive stance, adding that the Strait of Hormuz will remain closed if Washington doesn’t accept their terms.

Oil prices remained underpinned by uncertainty in the Middle East, which favors a Federal Reserve (Fed) interest rate hike. A weaker-than-expected jobs report and inflation data edging lower forced investors to price out rate hikes in 2026.

Data-wise, US Housing Starts in July fell 12.4% MoM, from June’s 1.415 million to 1.239 million, due to higher mortgage rates, which have spiked since the beginning of the Middle East conflict, and elevated home prices. At the same time, the Federal Reserve reported that Industrial Production for July dipped from the expected 0.3% to 0.2% MoM.

Investors are currently awaiting Wednesday's release of the Federal Reserve's policy meeting minutes for insights into the expected path of future interest rates.

XAU/USD technical analysis: Gold fell below 100-day SMA, eyes on $4,200Gold prices are once more below the $4,400 mark and fell under the 100-day Simple Moving Average (SMA) of $4,384. Bullish momentum seems to be fading as the Relative Strength Index (RSI) dips lower, an indication that sellers are stepping in.

If XAU/USD dives beneath $4,350, expect a test of $4,300, followed by a drop to the July 6 high at $4,202, followed by the 50-day SMA at $4,146 and $4,100.

For a bullish resumption, the first resistance is the $4,400 mark. Up next lies the $4,450 psychological level, followed by the $4,500 milestone.

Gold daily chart Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Sterling is pressing to fresh multi-month highs after an outside-week reversal reignited the recovery from the July pullback. The advance has carried GBP/USD back toward a dense technical resistance zone where both price and momentum are approaching important inflection thresholds.

The Pound Sterling steadies on Tuesday as geopolitical tensions rise in the Middle East, while housing data misses estimates and US Industrial Production decelerates. The GBP/USD trades at 1.3547. Read More...

British Pound trades lower against US Dollar after soft UK employment dataThe British Pound (GBP) is down 0.1% to near 1.3530 against the US Dollar (USD) during the European trading session on Tuesday. The British currency comes under pressure after the release of the United Kingdom (UK) employment data for three months ending June. Read More...

British Pound dips to fresh lows near 1.3520 after mixed UK employment dataThe British Pound (GBP) extends its reversal against the US Dollar (USD) on Tuesday as June’s UK unemployment data fails to convince investors in an already risk-off market, as tensions in the Middle East rise. The GBP/USD trades at 1.3522 at the time of writing, following rejection at the 1.3570 area on Monday. Read More...

The rally has extended more than 3.8% from the June low with the bulls now facing the pivotal resistance. Battle lines drawn.

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Gold pulls back from major resistance barrier on Tuesday, as we continue to see a lot of interest rate noise as well.

With rising rates, it does make non-yielding assets like silver a little less attractive, and I also am looking at the US dollar depending on the currency you’re measuring it against. It could be trying to make a little bit of a comeback. That might work against silver as well.

200-Day EMA Barrier and Macro Drivers The next candle that’s impulsive, I think, probably tells the story at this point as we’re just waiting for something. That something is probably the bond market or the situation in the Middle East to gain more clarity, which is something that is lacking at the moment to say the least.

Longer-term, I love silver. I think silver has a bright future ahead of it as the demand for electrification will continue to drive silver higher over the longer term. Same thing with copper. But right now, there are so many other things going on; most traders aren’t worried about the AI trade or the electric trade or the supply and demand. It’s all about interest rates currently, at least that’s how the market’s behaving.

Chris Turner at ING describes EUR/USD as contained after a rally stalled just above 1.16, with investors cautious due to high natural gas prices and upcoming FOMC minutes. He expects a 1.1520–1.1580 range near term, while higher energy supports ECB hike expectations. ING maintains forecasts for EUR/USD at 1.17 by end-September and 1.18 by year-end.

Euro capped by energy and Fed risk"Yesterday's EUR/USD rally stalled shortly above 1.16, and investors will be reluctant to push it much higher given energy price developments and ahead of the FOMC minutes tomorrow night."

"Despite recent positive economic surprises in the eurozone, the fact that natural gas prices are close to their highs for the year merits some caution."

"Higher energy prices are firming up expectations of a 25bp hike from the European Central Bank in September and keeping views alive of another 25bp hike by early next year."

"We could see EUR/USD trade out a 1.1520-1.1580 range today. And a reminder that we have a forecast for 1.17 by the end of September on the view that the Fed does not hike and 1.18 for year-end."

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

Referenced assets

Key takeaways FOMC Policy: Markets await the August 19 minutes for clarity on whether the Fed will prioritize cooling labor market momentum or persistent inflation risks.Canada CPI: Headline inflation accelerated to 3.0% on energy costs, while core inflation remained steady. The BoC is expected to hold rates at 2.25% on September 2.USD/CAD Technicals: Price action is testing a critical support confluence (long-term SMA200, monthly S2, weekly S1) with the RSI indicating oversold conditions at 29.24. FOMC meeting minutes Market participants are looking ahead to the publication of the July FOMC meeting minutes on Wednesday, August 19, seeking insight into the central bank’s debate on future interest rate moves following its 9–3 decision to keep the benchmark target range at 3.50%–3.75%. Although these discussions occurred before the August 7 non-farm payrolls (NFP) report, analysts will examine the text to determine whether persistent inflation risks or cooling labor market momentum—underscored by slowing hiring and an unexpected drop of 23,000 jobs in July—will play a larger role in shaping the Fed’s decision at the September meeting.

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Market expectations for the federal reserve policy rates Source: CME Group - CME Fedwatch tool, conditional meetings probabilities. Past performance is not indicative of future results As of August 17th, 2026, market expectations for Federal Reserve policy rates reflect a shift toward a higher-for-longer regime driven by persistent inflation concerns and economic resilience. According to the CME FedWatch Tool, traders are pricing in conditional meeting probabilities that favor maintaining or slightly adjusting the benchmark interest rate target range. For the September 16, 2026, meeting, the market indicates a 63.4% probability that the target rate will settle in the 350–375 basis points (3.50%–3.75%) range, with a 36.6% probability that it will settle in the 375–400 basis points range. Moving toward the end of the year, the highest probability shifts slightly upward to the 375–400 basis points range, coming in at 45.3% for the December 9, 2026, meeting (with a 31.7% chance remaining at 350–375 bps and 20.3% at 400–425 bps). Looking further out into 2027, the central tendency of market expectations remains firmly anchored around the 375–400 bps target rate—holding probabilities near 35% to 43% through late 2027—suggesting that market participants foresee limited monetary easing and expect interest rates to remain relatively steady rather than returning to lower levels.

Canada consumer price index (CPI) Source: Bloomberg Finance L.P. - Canada CPI - All items, weighted median and trimmed mean Past performance is not indicative of future results. Canada’s Consumer Price Index (CPI) report, released by Statistics Canada, showed that while the headline inflation accelerated to 3.0% year-over-year in July, up from 2.8% in June, the Bank of Canada’s preferred core inflation metrics remained largely muted, suggesting that the headline increase was driven by volatile factors rather than broad-based price pressures. Specifically, the CPI-Median rose slightly to 2.0% from 1.9%, while the CPI-Trim held steady at 1.9%, both filtering out extreme price volatility to provide a clearer view of underlying trends.

The jump in headline inflation to 3.0% reduces the immediate likelihood of a rate cut or a hike at the Bank of Canada’s (BoC) upcoming September 2nd meeting. With Canada’s unemployment rate sitting around 6.5%, raising interest rates in a cooling labor market to combat oil shocks may risk over-tightening. According to the Montreal Exchange, BoC is expected to keep the interest rate at its current level of 2.25%.

USD/CAD daily chart technical analysis Source: Tradingview.com - USD/CAD daily chart Past performance is not indicative of future results. Following a breakout below an ascending channel in early 2025, the USD/CAD price action traded within a narrowing formation, as marked by the red lines on the chart.Price action continued to find support and resistance along the formation’s lower and upper boundaries throughout its duration till June 2026.In May 2026, price action began a sharp trend, as marked by the black line on the chart. In June 2026, the price broke above the upper boundary of the narrowing price action, reaching a high of 1.4240. However, in July, it broke below the trend and completed a pullback to its extension, followed by a steep decline that pierced multiple critical support levels.The break took the price below the monthly PP of 1.4081, the monthly S1 of 1.3923, the weekly PP of 1.3901, the fast EMA9, and the intermediate SMA 50.Currently, price action is attempting to hold above a key technical support confluence formed by the long-term SMA, the monthly S2 at 1.3833, and the weekly S1 at 1.3837.A secondary support level sits below, defined by the extension of the aforementioned formation’s upper red border line.The 14-period RSI moves in tandem with price action, sitting in oversold territory at 29.24. Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
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About the Author

Moheb Hanna Market Analyst

With over 15 years' experience in the forex markets, on both the research and client relations sides, Moheb specialises in technical, trade-focused market analysis. He has worked at a number of top financial institutions, publishing daily commentary and driving sales for retail and institutional clients. A CMT Charter member, Moheb holds a globally recognised CFTe designation.

With over 15 years' experience in the forex markets, on both the research and client relations sides, Moheb specialises in technical, trade-focused market analysis. He has worked at a number of top financial institutions, publishing daily commentary and driving sales for retail and institutional clients. A CMT Charter member, Moheb holds a globally recognised CFTe designation.

The New Zealand Dollar (NZD) trades lower against the US Dollar (USD) on Tuesday, weighed by a moderate risk-averse sentiment as tensions in the Middle East grow. The NZD/USD pair has reversed Monday’s gains and pulled back to the 0.5880 area ahead of the US session opening, after rejection at 0.5926.

Risk appetite waned on Tuesday as the US-Iran Memorandum of Understanding expired without advances in the peace process. Washington and Tehran have ramped up their threats, and the key Strait of Hormuz remains effectively closed, buoying Oil prices and adding pressure on the risk-sensitive Kiwi.

Technical Analysis: Key support is at 0.5830

NZD/USD trades at 0.5879, holding a mildly bullish bias while above the 200-day simple moving average (SMA) at 0.5834, yet with momentum indicators hinting at waning upside pressure. The daily Relative Strength Index (RSI) has retreated below 60 and trends towards the 50 midline, and the Moving Average Convergence Divergence (MACD) has ticked below the zero line, suggesting that bulls are losing conviction.

Immediate support is seen at the ascending trendline from late June lows, now around 0.5860, although the key support level is the 200-day SMA at 0.5834. A break below that level would confirm a deeper correction, aiming for the late July lows just above 0.5760.

On the topside, bulls would need a clear break of the 78.6% Fibonacci retracement of June's downtrend at 0.5916 to curb bears' hopes and shift the focus towards the six-month highs in the 0.600 area (May 7, 29 highs).

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

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

USDEURGBPJPYCADAUDNZDCHFUSD0.06%0.16%0.18%-0.00%-0.02%0.39%0.21%EUR-0.06%0.10%0.11%-0.07%-0.07%0.31%0.16%GBP-0.16%-0.10%-0.02%-0.16%-0.18%0.23%0.06%JPY-0.18%-0.11%0.02%-0.17%-0.19%0.21%0.05%CAD0.00%0.07%0.16%0.17%-0.02%0.39%0.22%AUD0.02%0.07%0.18%0.19%0.02%0.40%0.24%NZD-0.39%-0.31%-0.23%-0.21%-0.39%-0.40%-0.15%CHF-0.21%-0.16%-0.06%-0.05%-0.22%-0.24%0.15% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

  The Euro managed to resume the advance to close towards the first target  at 1.1620. As we see from the chart, prices face support around 1.1470-80 while as long as the market holds above it, the advance may could continue towards 1.1685 and above.

  The Yen gave back some of its recent advance that was triggered by US and Japanese intervention. The pair printed above the 158.05 resistance which indicated a wider range for rebound towards the 160.85 resistance.

USD/JPY Price Forecast: Aims to extend rally above 160.00

Gold Price Forecast: XAU/USD eases below $4,400 as US yields rally

TL;DR: Brent’s break above $90 is doing double duty for CAD/JPY — strengthening Canada’s terms of trade while pushing global bond yields higher and deepening Yen funding pressure — and this time Canada’s own data are contributing too, unlike June’s Yen-only rally.

CAD/JPY Has Found a Rare Double Tailwind Brent’s break above $90 is doing more than lifting Canadian Dollar. It is also pushing global inflation expectations and bond yields higher, adding pressure to Yen. For CAD/JPY, that creates an unusually clean setup: same US-Iran shock strengthens one side of cross while weakening other.

June 17 ceasefire framework formally expired on August 17 without renewal, leaving no clear diplomatic settlement in sight. Higher oil improves Canada’s terms of trade and supports petro-currency, while renewed energy and freight inflation keeps global yields elevated. For Yen, still one of market’s principal funding currencies, wider yield differentials reinforce carry pressure. Instead of two separate narratives, CAD strength and JPY weakness are being driven by same underlying shock.

This Time Canada Is Contributing Too That is important because CAD/JPY has rallied on Yen weakness before. Late-June advance eventually stalled because Canadian Dollar itself offered limited independent support. Current move starts from a stronger domestic backdrop.

May GDP rose 0.3% m/m, beating 0.2% forecast and expanding across 13 of 20 sectors. July labor data then surprised decisively, with employment jumping 75K against 15K expected and unemployment dropping to a two-year low of 6.4%. July CPI followed with headline inflation accelerating from 2.8% to 3.0% y/y, above 2.9% consensus, while Trimmed and Median CPI firmed to 1.9% and 2.0% respectively.

Gasoline was a substantial part of headline inflation surge, rising 25.7% y/y, and part of that effect is linked to tax treatment that rolls off in September. That argues against treating CPI as proof that BoC has already returned to a tightening path. But combined with stronger growth and employment, data have at least reopened hike discussion after it had largely disappeared. For CAD, that is enough to distinguish current rally from June’s mostly Yen-driven move.

Oil Shock Is Also Hurting Yen Through Bonds Global bond market supplies second leg. US 30-year yield has climbed to around 5.31%, highest in 19 years, while 10-year is near 4.74%. Germany’s 10-year Bund has reached about 3.22%, highest since 2011, and Canada’s 10-year recently touched 3.75%, a 26-month high.

Current rise in yields carries a stagflationary flavor rather than a straightforward growth signal. Hormuz disruptions and higher energy and freight costs are lifting inflation concerns and encouraging investors to price restrictive rates for longer. That is exactly environment in which Yen’s yield disadvantage becomes harder to ignore.

BoJ normalization may eventually narrow that gap, but global yields are moving higher in meantime. Until Japanese rates catch up more substantially, higher overseas yields continue to reinforce Yen-funded carry trades. Brent above $90 therefore creates a double effect for CAD/JPY: stronger Canadian terms of trade and greater funding pressure on Yen.

Brent Consolidation Will Tell Us Whether CAD Strength Is Real Best test of this rally may come when oil stops rising.

If Brent consolidates around $90–91 and CAD/JPY continues holding or extending gains, that would be strong evidence that Canadian Dollar’s domestic improvement is doing meaningful work. GDP, employment and CPI would then be providing enough support for CAD to carry rally even without another daily oil breakout.

If CAD/JPY instead stalls immediately whenever crude stops climbing, move would look more like June again: predominantly Yen weakness with limited independent CAD follow-through.

That gives current trade a falsifiable fundamental test. A durable move toward 120 should increasingly survive without requiring Brent to make new highs every session.

Japan Can Still Interrupt the Trade Main risk does not currently come from Canada. It comes from Japan.

USD/JPY is moving back toward 160 intervention-sensitive zone, reviving possibility of verbal or direct action from Japanese authorities. September 18 BoJ meeting also approaches with substantial probability of another rate increase already priced.

Either development could hit CAD/JPY even if oil remains high. Actual intervention would likely trigger broad Yen buying across crosses, while a BoJ hike would challenge carry mechanism more fundamentally.

That makes 120 a plausible target, but not a low-volatility one. Stronger oil and global yields are pushing Yen in exactly direction that increases likelihood of Japanese response.

ActionForex’s Technical View on CAD/JPY: Break of 117.50 Would Put 120.86 on Map Technical structure supports bullish case. CAD/JPY has decisively reclaimed 55-day EMA around 114.52, adding to argument that correction from 117.50 ended at 110.82 in a three-wave structure. That low held around 111.28, 38.2% retracement of larger rise from 101.24 to 117.50, preserving medium-term uptrend.

Near-term bias stays higher while 113.86 holds. 116.45 is first resistance and a firm break would strengthen case that rebound has enough momentum to retest 117.50. Decisive break of 117.50 would be more important, signaling likely resumption of broader uptrend and opening 120 psychological level, followed by 120.86, 61.8% projection of 101.24 to 117.50 from 110.82.

Break below 113.86 would postpone that bullish scenario and suggest correction from 117.50 is extending. But while oil stays elevated, Canadian data remain firm and global yields keep Yen under pressure, CAD/JPY has a stronger foundation than during June’s failed advance. This time, both sides of cross are helping.

Key Takeaways Brent’s break above $90 is strengthening CAD/JPY from both sides: improving Canada’s terms of trade while pushing global yields higher and pressuring the Yen’s carry-funding role. Unlike June’s Yen-only rally, Canada’s own data are now contributing, with a 75K jobs beat, firmer May GDP, and CPI reopening the BoC hike discussion. Global bond yields are rising with a stagflationary character, with the US 30-year at a 19-year high and German and Canadian yields at multi-year highs. Brent stabilizing around $90-91 is a falsifiable test: continued CAD/JPY strength without new oil highs would confirm the domestic Canadian story is real. 117.50 is the key resistance for a run toward 120 and then 120.86, but USD/JPY nearing the 159.6-160.6 intervention zone and the September 18 BoJ meeting remain the main risks to that path.

ActionForex

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