Canadian Dollar Stuck Between Tariffs and OilUSD/CAD traded with a firmer tone on Tuesday as the Canadian Dollar remained under pressure from the latest U.S. tariff escalation. The U.S. imposed a 50% tariff on a range of Canadian goods tied to disputes over cars, alcohol, and dairy, which immediately complicates Canada’s trade outlook. Normally, elevated oil prices would give the Canadian Dollar a cleaner tailwind, but tariff risk and weaker domestic momentum are making that support less powerful.
For the BOC, the rate path remains a hold story. The central bank kept rates at 2.25% last week and continues to balance elevated inflation against soft growth and trade uncertainty. Canadian inflation already surprised to the downside this week and is expected to ease if oil and gasoline pressures fade, but that forecast now sits against a more complicated trade backdrop. The Canadian Dollar is stuck between two forces: oil supporting Canada’s terms of trade and tariff risk undermining confidence in the growth outlook.
In the above chart, USD/CAD has found follow through in recent weeks after finally breaking out of a multiyear triangle that originated in 2023. In June it was noted that “the first hurdle to validate the bullish breakout is the band of resistance formed by the highs in January, March, and April of this year around 1.3929/66. Through these levels, USD/CAD may have offered the strongest confirmation yet that the near three-year triangle has ceded way to a new bullish trading regime.” Along these lines, USD/CAD’s recent turn higher through its 50-day EMA (exponential moving average) ahead of 1.3929/66 suggests that a series of higher highs and higher lows is emerging. The low carved out by the bullish engulfing bar on July 20 just above 1.4000 may be respected as a turning point in the near-term. That said, a resolution of the fundamental disputes, particularly on tariffs, could override this technical turning point and shift the near-term focus back to the downside. EUR/USD Holding Intact Despite Soft Inflation and Oil SpikeEUR/USD probed the top of its monthlong range on Wednesday, closing at a three-week high just below 1.1470, before easing back under 1.1450 through Thursday's U.S. session. The pair has largely absorbed this week's softer inflation prints and shrugged off the initial lift they provided, leaving it hemmed inside the roughly 1.1350 to 1.1450 band that has contained it for about a month. Rather than pressing the upside, EUR/USD has drifted back toward the middle of the range as the Dollar reasserts a firm tone.
The fundamental backdrop has quietly shifted beneath the price action. This week's CPI and PPI both landed below expectations, softening the near-term inflation picture, but a fresh climb in oil has since begun to overshadow those misses. Heightened geopolitical tension, with U.S. strikes against Iran intensifying and Brent pushing above $85, has revived inflation concerns and firmed the case for further tightening, while also lending the Dollar a safe-haven bid. The same oil shock cuts the other way for the Euro, weighing more heavily on Eurozone growth prospects given the region's reliance on imported energy. With the Fed and ECB otherwise viewed in broadly similar positions, that asymmetry in how the two economies absorb the oil move has been enough to keep the Dollar supported and the Euro capped.
In the above chart, EUR/USD rates continue to respect a monthlong consolidation, with ~1.1450 reasserting itself as former support turned resistance. Wednesday's close just under 1.1470 marked a brief peek above that hurdle, but the failure to hold there and the subsequent slip back below 1.1450 leaves the range unbroken and the breakout unconfirmed. Within the holding pattern, short-term traders can watch the 20-day EMA (exponential moving average), sitting right at today's low, to gauge whether it holds as near-term support. A decisive push through 1.1470 would reopen the path toward 1.16, while a move below 1.1350 would validate what is shaping up as a bear flag and shift focus to the downside. With no major data due between now and next week's ECB meeting, geopolitical developments may prove the most likely catalyst to break the pair out of its range. Sterling Clears 1.35 as Soft PPI Cracks the DollarGBP/USD rallied around 1% over the past seven hours, clearing both 1.34 and 1.35 within the same session to trade above 1.3550 by Tuesday afternoon. The move puts Sterling up more than 1.5% from this week's lows and marks the highest level since May 12. The pace and breadth of the advance stand out against a backdrop in which the U.S. Dollar largely shrugged off softer CPI data yesterday.
The rally reflects a combination of forces working in Sterling's favor. On the domestic side, fading U.K. political uncertainty has lifted the pound, while on the U.S. side, a softer than expected PPI print has weighed on the Dollar. That second leg is the more notable development: the Dollar had held up reasonably well through June even as both CPI and PPI came in soft, so today's reaction looks like the clearest crack yet in an otherwise resilient Dollar. Whether the move has legs will depend on whether it is underpinned by a genuine shift in the Dollar or simply a burst of political optimism that fades once positioning settles.
In the above chart, GBP/USD has broken decisively higher through 1.35, exposing a fresh range with the next resistance sitting above 1.36. Price has also pulled clear of its major moving averages, which had been clustered around 1.340 and now sit below as potential support. Momentum is firmly to the upside, but the scale of the move warrants some caution: today's range is running at roughly double the pair's average true range (ATR), and with RSI approaching 70 a near-term pullback would not be surprising even if the broader uptrend holds. A single strong session does not confirm a trend, and some consolidation may be needed before the durability of the breakout can be judged. USD/CHF Rises as Dollar Yield, Safe-Haven Demand ReturnsUSD/CHF rose 0.63% on Monday as the U.S. Dollar caught a fresh bid from renewed geopolitical stress and rising energy prices. The latest escalation between the U.S. and Iran pushed oil higher and put inflation risk back at the center of the market. Higher energy prices complicate the Fed’s job, keeping markets focused on whether U.S. rates need to stay higher for longer. Even with the broader Dollar Index only modestly firmer, the U.S. Dollar outperformed the Swiss Franc as traders leaned into U.S. rate support and safe-haven liquidity.
Switzerland’s setup is different. The SNB left its policy rate at 0% in June and kept its inflation forecast low, with average inflation projected below 1% through 2028. Higher oil prices have lifted near-term Swiss inflation, but the SNB still views medium-term price pressure as contained. That gives policymakers little reason to follow the Fed higher. The SNB has also signaled a willingness to intervene if Swiss Franc appreciation becomes excessive, which limits the currency’s safe-haven upside. Today’s USD/CHF move underscored that policy split: U.S. inflation risk is keeping the Fed conversation alive, while Switzerland still looks like a low-rate, low-inflation economy.
In the above chart, USD/CHF rates are taking another crack at resistance in what has become a very familiar area near 0.8100, which has be the major unclearable hurdle for advance for the past 13 months. When USD/CHF rallied to this area at the end of June, it was noted that “while a pause in this area wouldn’t be a surprise, the context of the Dollar Index (DXY) breaking above 100 suggests a meaningful low in the USD-complex has been found.” Price action has reinforced this view, with USD/CHF indeed failing to break above 0.8100 but DXY was able to sustain its breakout above 100, confirming the attempt at a major USD bottom. A push through the August 2025 high at 0.8171 would offer a strong signal that USD/CHF has turned the corner, perhaps for the next several months. Conversely, a failure at resistance would leave the range intact and tilt the risks lower, particularly if inflation cools enough to sideline the case for near-term Fed hikes or if fading geopolitical tensions erode safe-haven demand for the Dollar. NZD/USD Falls as RBNZ Hike Path Gets MessyNZD/USD fell as much as half of one percent to start the week as the U.S. Dollar regained ground coming out of the holiday weekend. U.S. yields were mixed, but the broader dollar tone improved as markets wait for Wednesday’s Federal Reserve minutes and reassessed how much room the Fed really can ease – or worse yet, have to tighten – while inflation remains sticky. That left the New Zealand Dollar exposed, especially after a rough stretch where global growth concerns, softer commodity sentiment, and fading risk appetite have weighed on higher-beta currencies.
In New Zealand, the focus is squarely on the RBNZ’s July 8 policy decision. The Official Cash Rate (OCR) sits at 2.25%, but the debate has shifted from easing risk to whether the central bank needs to gradually remove accommodation as inflation stays above target. The limiting factor for delivering a rate hike is growth. The IMF recently warned that New Zealand’s recovery has been delayed by the oil shock and global uncertainty, with inflation expected to stay above the RBNZ’s target band through year-end. That leaves the RBNZ with an ugly, almost stagflation-like mix: inflation too high to turn dovish, growth too soft to sound aggressive.
In the above chart, NZD/USD is struggling to establish a bottom after hitting fresh yearly lows within the past two weeks. The rebound has seen a bearish evening star candlestick pattern emerge against the 1-month moving average, suggesting that recent gains haven’t been significant enough to confidently call a durable low. Similarly, a close below 0.5681 would mean failure to retake the April swing low and would offer greater confidence that a return to the yearly low at .5627 could be revisited soon. USD/CHF Slips as Fed Hike Bets Lose SteamUSD/CHF fell 0.2% midway through Monday, June 29 as the U.S. Dollar softened after a strong June run, perhaps profit taking at the end of month and quarter. The key shift has been the retracement in Fed hike odds over the past few sessions. Markets had aggressively priced a more hawkish Federal Reserve after firmer inflation pressure, resilient U.S. data, and the Iran oil shock, but that trade is starting to cool as oil stabilizes and Treasury yields lose some momentum. Once the rate impulse faded, the U.S. Dollar lost its cleanest source of support.
For Switzerland, the setup remains steadier. The Swiss Franc is still backed by defensive demand and a Swiss National Bank that has little reason to fight currency strength while inflation remains contained. The SNB’s inflation outlook remains low by global standards, giving policymakers flexibility even as imported price pressures fluctuate. Today’s move was less about a sudden Swiss catalyst and more about the U.S. side of the equation: when Fed hike expectations stop rising, USD/CHF becomes vulnerable to a pullback.
In the above chart, USD/CHF rates have found resistance at a familiar area near 0.8100, which has capped rallies since late-June 2025. While a pause in this area wouldn’t be a surprise, the context of the Dollar Index (DXY) breaking above 100 suggests a meaningful low in the USD-complex has been found. To this point, USD/CHF’s downtrend from the 2025 high has likewise broken, adding another piece of technical evidence that major lows have been established. For the time being, USD/CHF’s overall bullish momentum profile should keep dip buyers intrigued, with support coming near the June 11 swing high and 1-month EMA (exponential moving average) around 0.8010/30. That said, the longer the pair lingers without a meaningful push to the topside, the greater the risk that momentum fades and the wider 2026 range comes back into play to the downside. Sterling Slips Below 1.3200 as Fed Hike Bets Outweigh Political GBP/USD traded lower on Tuesday, slipping around 0.5% to trade back under 1.3200, a level that has come to define the floor of the pair's 2026 range. Sterling first tested this area last Thursday in the immediate fallout from the FOMC and Bank of England decisions, but it found its footing over the following sessions, bouncing on both Friday and Monday before today's renewed selling. The move owes largely to a firmer U.S. Dollar, with the USD drawing support from an aggressive repricing of the Federal Reserve's policy path. Notably, the pound's lack of standout moves on the crosses (little changed against the Euro, firmer against the Aussie, softer against the Yen) is exactly what a risk-off backdrop would produce, reinforcing that today is a dollar and risk story rather than anything sterling-specific.
That repricing has been the week's dominant force. Last week's FOMC, compounded by fresh tech-driven jitters across risk assets in recent sessions, has nudged markets toward pricing in one or more Fed rate hikes before year-end, a shift squeezing bond markets and lifting the cost of capital, both dollar-supportive. On the U.K. side, Prime Minister Keir Starmer's surprise resignation initially weighed on the pound, only for the reaction to reverse as markets coalesced around expectations that Andy Burnham would assume the leadership uncontested. The prospect of an orderly handover rather than the turmoil some had feared, paired with optimism over steadier governance, has tempered the domestic risk premium. Attention now shifts to Thursday's PCE inflation report as the key test: a hotter print would validate the hawkish Fed narrative and extend the dollar's bid, while a cooler reading could reopen the path for risk assets, Sterling included, to recover.
In the above chart, GBP/USD is back to pressing 1.3200, the level that increasingly looks like the floor of the broader 2026 range. Until last week, price action had the look of a consolidating triangle, drawn off the early-April lows and the May highs near 1.3600, with the pair chopping around 1.3400, but last week's break lower has reframed that structure as a test of the range bottom rather than a coil within it. The early-April lows, which double as the year-to-date lows, held firm on their brief test then and are doing the heavy lifting again now, having absorbed Thursday's initial probe before Friday's and Monday's bounces. A decisive close below 1.3200 would turn attention toward the November 2025 low near 1.3000 as the next downside reference; until then, the repeated defenses of recent sessions keep the range intact. Loonie Treads Water Ahead of BOC DecisionUSD/CAD was mostly unchanged on Tuesday as traders largely stayed on the sidelines ahead of the Bank of Canada’s policy announcement. The Canadian Dollar found support from improving risk sentiment after tensions in the Middle East eased, but gains were limited as investors remained focused on the domestic outlook. With oil prices off their recent highs and recession concerns lingering in Canada, the currency market spent the session waiting for guidance from Governor Tiff Macklem rather than reacting to geopolitical developments.
The consensus expectation is that the BOC will leave its overnight rate unchanged at 2.25%, extending a pause that has been in place since late 2025. Policymakers continue to face competing forces: inflation has moved higher due to energy prices, but underlying demand remains soft and the economy has struggled to generate sustained momentum. Markets increasingly believe the BOC will remain on hold for most, if not all, of 2026, leaving USD/CAD caught between a relatively resilient U.S. economy and a Canadian economy still searching for firmer footing.
In the above chart, the sheer scale of the consolidation is noteworthy, insofar as USD/CAD may finally be breaking out of a multiyear triangle that arguably began in 2023. Triangle resistance from the February 2025 and March 2026 highs has been breached. The first hurdle to validate the bullish breakout is the band of resistance formed by the highs in January, March, and April of this year around 1.3929/66. Through these levels, USD/CAD may have offered the strongest confirmation yet that the near three-year triangle has ceded way to a new bullish trading regime.
Failure here to confirm the breakout would increase the possibility that the triangle interpretation is invalid, and instead a sideways consolidation between 1.3480 and 1.3970 would be a more proper framing for price action. Euro Rebounds as ECB Hawkish Shift Meets Softer Dollar EUR/USD rose by 0.2% on Thursday as traders continued to shift expectations around the European Central Bank ahead of next week’s policy meeting. Persistent inflation concerns tied to energy, tariffs, and services pricing have pushed markets toward expecting a more hawkish ECB stance, with growing speculation that policymakers may need to tighten further rather than move toward easing. That repricing helped support the euro despite uneven growth conditions across the Eurozone, as investors focused more heavily on inflation persistence and the potential for higher rates.
On the U.S. side, weaker jobless claims and services data weighed on Treasury yields and softened the dollar ahead of Friday’s nonfarm payrolls report. Markets are increasingly debating whether the U.S. economy is beginning to slow after a prolonged period of resilience, particularly as higher oil prices, tariffs, and tighter financial conditions work through the economy. The combination of a firmer ECB outlook and softer U.S. macro momentum helped lift EUR/USD, with the pair driven primarily by shifting relative rate expectations between the Eurozone and the United States.
In the above chart, EUR/USD has consolidated into a triangle since January, with price action producing a narrowing range that may be nearing its breakout point. Triangle support is holding for now, off the uptrend from the March and May lows, but EUR/USD is still pinned below its exponential moving average (EMA) envelope. A loss of recent swing lows near 1.1577 would suggest that a bearish breakout has begun. Otherwise, bulls won’t find technical confirmation until a breach of the May high at 1.1796. Sterling lags peers as Markets Reassess U.K. Outlook GBP/USD found its footing midway through Thursday, May 28 but remained down around -0.15% on the week as Sterling continues to struggle for momentum amid growing concern about the U.K. economic outlook. Recent U.K. data has pointed toward slower activity across consumer-facing sectors while elevated borrowing costs and persistent inflation continue tightening financial conditions. Investors remain cautious toward U.K. assets following recent volatility in Gilt markets, with concerns lingering that weaker growth and sticky inflation leave policymakers with limited flexibility.
In the United States, a comparatively firmer economic backdrop and stable Treasury yields helped keep the U.S. Dollar supported, though risk‑on sentiment following Thursday’s Iran‑related headlines erased much of its early‑week strength. Markets continue to view the Federal Reserve as patient but not yet prepared to pivot aggressively, particularly as inflation risks tied to energy and supply chains remain present underneath the surface. For Sterling, the challenge remains balancing slowing domestic momentum against a U.S. Dollar still benefiting from relative macro resilience, leaving GBP/USD stuck in a subdued and range-bound environment to close the week.
In the above chart, GBP/USD rates consolidated into a symmetrical triangle since the start of the year: resistance is defined by the downtrend from the January and May 2026 highs, while support is defined by the uptrend from the January 2025 and March 2026 lows. Contextually, the consolidation marks a continuation of sideways, choppy price action that has keep GBP/USD rangebound between 1.3000 and 1.3800 since last April. In the short-term, the lack of direction leaves GBP/USD in a relatively unappealing setup; in the long-term, the consolidation (akin to a coiling spring) will ultimately lead to a breakout. Traders should be open-minded about either a move higher or lower, though patience may be required. Aussie Jumps as Trade Relief Boosts Risk AppetiteAUD/USD rose by 0.6% on Wednesday, May 20 as the Australian Dollar benefited from a broad improvement in global risk sentiment tied to stabilizing trade relations between the United States, China, and the European Union. Markets responded positively to signs that tariff tensions may be easing and that supply-chain pressures tied to industrials, semiconductors, and commodities could stabilize in the months ahead. For Australia, whose economy remains deeply linked to Chinese demand and global trade flows, the shift supported commodity-sensitive currencies and helped drive renewed buying interest in the Aussie.
On the U.S. side, the greenback softened modestly as Treasury yields stabilized and investors rotated back toward higher-beta currencies following several weeks of defensive positioning. Australia’s domestic backdrop also remained relatively supportive, with markets continuing to price a cautious but steady Reserve Bank of Australia policy stance as inflation risks tied to energy and housing remain elevated. The result was a strong session for AUD/USD, driven less by domestic economic surprises and more by improving global macro sentiment and easing trade-related stress.
In the above chart, AUD/USD has found support at its 50-day exponential moving average (EMA), holding the broad uptrend that’s defined calendar year 2026 thus far. While base metal prices have subsided in recent days, as well as precious metals, the continued yield advantage held by the Australian Dollar thanks to the RBA’s hawkish bias are helping to reinforce the push to the upside. If the next leg higher is beginning, then the lows seen over the past few sessions around 0.7079 should hold. Failure to sustain prices above 0.7150, on the other hand, could open the pair to renewed weakness within the broader range of 0.6900 - 0.7100. Sterling Slides as Gilts React to Inflation and Political RiskGBP/USD dropped again on Friday to fall over 2% on the week as investors pulled back from UK assets amid a renewed surge in gilt yields driven by persistent inflation concerns and escalating political uncertainty around Prime Minister Keir Starmer. Markets are increasingly questioning the government’s ability to maintain fiscal discipline while navigating a slowing economy and elevated price pressures, particularly as internal political tensions build. The sharp rise in long-dated gilt yields reflected both inflation risk and a broader deterioration in investor confidence, drawing comparisons to prior episodes where political instability fed directly into UK financial markets.
The pound also faced pressure from a comparatively firmer U.S. backdrop, where Treasury yields stayed elevated and the Federal Reserve maintained a steady, data-dependent stance. For the Bank of England, the current environment is becoming increasingly difficult to manage. Sticky inflation limits flexibility to ease policy, but tighter financial conditions driven by rising gilt yields threaten to weigh further on growth and credit conditions. Sterling’s decline today reflected that tension, as markets reassessed the UK outlook through the combined lens of inflation risk and political instability.
In the above chart, GBP/USD rates have rapidly priced in the difficult political path, with the pair dropping through the entirety of its moving average envelope in the span of three sessions. Momentum has turned sharply negative, with Slow Stochastics in oversold territory and MACD slipping through its signal line. A challenge to the uptrend from the April 2025 and March 2026 lows appears in short order. Beyond there, GBP/USD rates have largely traded between 1.3100 and 1.3800 for the better of the past year; a drop into range lows amidst ongoing political turmoil wouldn’t be the most surprising outcome. Dollar Rebounds as BOJ Intervention Fears FadeUSD/JPY rose modestly as the second full week of May trading commenced, with markets settling down after last week’s sharp volatility surrounding suspected Japanese intervention efforts. With no fresh signs of official action from Tokyo, traders refocused on the underlying macro backdrop, where higher U.S. Treasury yields (thanks to the latest rally in oil) and relatively resilient U.S. economic data helped stabilize the greenback. With intervention fears at the margin and the Federal Reserve still maintaining a relatively firm stance, USD/JPY continues to reflect the broader divergence between U.S. and Japanese rate expectations, with 160.00 acting a ceiling of sorts before intervention fears become legitimized anew.
In the above chart, USD/JPY continues to cling to the uptrend from the April 2025, October 2025, and February 2026 swing lows following the confirmed intervention on April 30. Momentum is losing its bearish luster, with MACD’s waning slide below its signal line countered by Slow Stochastics’ shift towards overbought territory. While it remains the case that “a loss of the aforementioned uptrend would suggest a major top in place for USD/JPY,” the backdrop of elevated energy prices and Treasury yields makes for a difficult case for a sustained move to the downside. Kiwi Shrugs Off U.S. Noise as RBNZ Keeps Policy in PlayNZD/USD is rallying on Thursday as the New Zealand Dollar found modest support from stable domestic rate expectations and a softer demand for U.S. Dollar liquidity. Markets continue to anchor around the Reserve Bank of New Zealand’s steady policy stance, as officials continue to signal patience as they assess the balance between inflation persistence and slowing growth. The RBNZ’s guidance remains broadly data-dependent, with little urgency to either tighten or ease aggressively, which has helped stabilize the currency after recent volatility tied to global energy markets.
While geopolitical risks tied to energy markets remain in the background, they have been less disruptive today compared to earlier in the week, allowing risk-sensitive currencies like the Kiwi to recover slightly. For now, NZD/USD is being driven less by domestic surprises and more by relative policy steadiness between the RBNZ and the Federal Reserve, with markets still looking for clearer signals on whether global growth is slowing enough to alter that balance.
In the above chart, NZD/USD is quickly advancing towards its late-February swing high at 0.6013, the next swing high in the sell-off sequence that defined price action from February through early-April. Momentum is bullish, with Slow Stochastics in overbought territory and MACD continuing to rise above its signal line. Further advances may prove more challenging, however, insofar as NZD/USD has been trading in a range since the start of 2025. A move up towards 0.6100 is not out of the cards, but additional gains beyond highs that have been in place over the past 18-months will require a more substantive shift in rate differentials between the RBNZ and the Fed. Yen Climbs Again as Intervention Fears BiteUSD/JPY fell by over -1% on Wednesday after another sharp reversal as markets reacted to suspected Japanese interventions in FX markets, this time against the backdrop of a rapid collapse in oil prices. The drop in crude has eased global inflation fears and reduced the earlier tailwind that had been supporting the U.S. Dollar, but the scale and timing of the Yen move pointed to active policy involvement from Japanese authorities seeking to prevent further currency weakness. The combination of a falling oil complex and direct intervention amplified volatility and forced a fast unwind of long USD/JPY positioning.
For Japan, the move underscores the sensitivity of the exchange rate channel in a period where the BOJ is still navigating a gradual normalization path. Lower oil prices ease some import-driven inflation pressure, but they also complicate the policy signal as the central bank balances currency stability, inflation dynamics, and fragile domestic demand. The BOJ remains cautious about tightening too aggressively, preferring a measured approach while monitoring external shocks. In the U.S., easing Treasury yields added marginal pressure to the greenback, reinforcing the reversal in USD/JPY as rate differentials narrowed slightly into the session.
In the above chart, USD/JPY rates are acting as if a false breakout higher has transpired. While the pair traded above former multi-year resistance (the swing highs at the start of 2025 and early-2026) around 160.00, the failure to sustain such a move against the backdrop of intervention has seen USD/JPY fall back to the uptrend from the April 2025, October 2025, and February 2026 swing lows. Momentum has turned bearish, with MACD sliding below its signal line while Slow Stochastics hold near oversold territory. For technicians, a loss of the aforementioned uptrend would suggest a major top in place for USD/JPY. Aussie Slips Ahead of RBA as Oil Tensions Boost DollarAUD/USD dropped on Monday ahead of the May Reserve Bank of Australia rate decision as renewed escalation around Iran and the Strait of Hormuz pushed oil prices higher and reignited demand for the liquidity of the U.S. Dollar. The move in oil has reinforced global inflation concerns and lifted U.S. Treasury yields, giving the greenback a bid while weighing on risk-sensitive currencies like the Australian Dollar. Despite Australia’s commodity linkage, the broader market tone shifted toward caution, with geopolitical risk driving flows rather than traditional terms-of-trade support.
For the RBA, the backdrop remains increasingly complex. Markets are heading into the next policy decision with expectations for further tightening as inflation remains elevated and energy prices threaten another leg higher. The oil shock is feeding directly into Australia’s inflation outlook, strengthening the case for keeping policy restrictive even as growth risks build. But this is known; overnight index swaps have been fully discounting the RBA’s third rate hike of the year for some time now. The result is a session where AUD/USD weakness reflects global macro pressure rather than a shift in the underlying RBA trajectory.
In the above chart, AUD/USD achieved a fresh closing high for the year by the end of last week. A loss of the 5-day EMA (exponential moving average), coupled with the drop in Slow Stochastics from overbought territory, indicates that a small setback in the context of a broader uptrend is developing. The move above the 2023 high at 0.7158 has previously validated the bull flag breakout, so a loss of that level plus the one-month EMA, which has served as support on a closing basis since April 7, would indicate a more meaningful top is developing. Until such levels are crossed, bulls appear to remain in control. Yen Roars Back on Reported Intervention
USD/JPY dropped sharply on Thursday following a Nikkei report that Japan had intervened in the FX market, capping a session that saw escalating verbal warnings from Tokyo and the most significant move in the pair in weeks. Earlier in the day, Japanese Finance Minister Satsuki Katayama said the time to take "decisive action" in the market was nearing — her strongest signal yet of potential currency intervention — while top currency official Atsushi Mimura echoed that "the timing for taking bold steps is nearing," framing his remarks as a "final advisory." Those warnings alone pulled USD/JPY roughly 100 pips below the 160.00 handle before a subsequent 300-pip leg lower dragged the pair through 156.00 in spot at one point, registering a decline of as much as 3% within hours. Comparable moves rippled through EUR/JPY and GBP/JPY before price action began to stabilize.
While Japanese officials have not formally confirmed an intervention, the scale and speed of the move – combined with the Nikkei report – leaves little doubt in the market that official flows were involved. Yet the episode does little to alter the underlying fundamental picture. Outside of the direct buying flow that surfaced above 160.00, structural support for the yen remains limited, leaving the move more reflective of official action than a broader repricing of relative policy paths. Traders are now weighing whether Tokyo will follow through with additional operations to defend these levels, or whether USD/JPY longs will be tempted to call Japan's bluff – a familiar dynamic that has historically invited further intervention rather than discouraged it.
In the above chart, USD/JPY rates have decisively broken below the two-month range that had defined recent price action, with a clean move through 158.00 – the prior range low – marking the most important technical development in weeks. The pair is now trading at levels not seen since early March, having reversed from a brief eclipse of the 2026 highs into a sharp leg lower in a matter of hours. Today's low tagged the ascending trendline off the 2025 swing lows, putting the broader uptrend itself on trial for the first time in months. Former resistance around 157.50 now becomes the level to watch: a pullback that holds below 157.50 would suggest these new lows are sticky and the broader range has shifted lower, while a recovery back above would point to today's move being more of an exaggerated swing within the prior sideways structure than a genuine trend break. With the threat of further intervention hanging over the pair, bulls would like to reclaim 157.50 to argue today's move was an overshoot rather than a trend break. Loonie Lifted as BoC Hold NearsUSD/CAD fell by 0.5% at the start of trading on Monday as the Canadian Dollar gained ground ahead of this week’s Bank of Canada and Federal Reserve decisions. Higher crude prices continued to underpin the Loonie, with energy markets still elevated after the Iran-related supply shock. For Canada, stronger oil prices improve export revenues and terms of trade, giving the currency a natural tailwind even as broader global uncertainty lingers. At the same time, the U.S. dollar eased modestly as Treasury yields stabilized and markets awaited fresh U.S. inflation data later this week.
For the BOC, the base case remains a hold at 2.25% as policymakers assess whether the recent rise in gasoline prices feeds into broader inflation or proves temporary. Canada’s inflation backdrop remains manageable, but growth has been soft enough to keep officials cautious about tightening further. That leaves the BOC in a wait-and-see posture, balancing an oil-driven inflation pulse against a still-fragile domestic economy. USD/CAD’s move lower today reflects that relative mix: supportive commodity dynamics for Canada and a central bank expected to stay patient rather than turn more hawkish.
In the above chart, it’s worth recognizing the timescale: there has been a multiyear triangle forming in USD/CAD. The uptrend from the 2023 and 2026 swing lows is providing support while the 2025 and 2026 highs are creating resistance, and a funneling effect is taking place as USD/CAD moves towards the vertex of the consolidation. For now, momentum is pointing lower with each of the exponential moving average (EMA) envelope, Slow Stochastics, and MACD in comfortable bearish postures. A break of 1.3500 would raise the possibility of a more significant top having been carved out with broader implications for U.S. Dollar weakness. Sterling Slips as BOE Bets BuildGBP/USD dropped by as much as half of one percent Tuesday as Sterling came under pressure from a widening policy contrast between the U.K. and the United States. Markets continue to reassess the U.K. growth outlook after a run of softer activity data and signs that labor market momentum is cooling, reinforcing the view that the Bank of England may have greater scope to cut rates in coming meetings. That softer domestic backdrop left the pound vulnerable, particularly as the U.S. Dollar found support from firmer Treasury yields and a still-resilient U.S. macro picture. Those firmer Treasury yields arose from the rally in oil, with Brent crude back above $100 per barrel.
In the above chart, GBP/USD is sitting back at the uptrend of the January and November 2025 lows, reacting erratically to the recent spat of news regarding a potential ceasefire. Nevertheless, even with the pullback, GBP/USD remains above the series of ‘lower highs’ carved out in recent weeks near 1.3500. And, to the point of support being held, the pair’s daily 5-, 20-, 50-, and 100 EMAs (exponential moving average) remain in bullish sequential order. Bulls may be sweating a bit but bears have much more work to do before a technical change in the chart perspective is considered. Euro Flatlines as Rate Paths DominateEUR/USD edged higher by just 0.2% from Friday’s close midway through trading on Monday, reflecting a market with little appetite for conviction ahead of fresh macro catalysts. The muted move came as investors weighed a still-resilient U.S. economic backdrop against softer Eurozone momentum, leaving neither currency with a clear fundamental advantage on the day. U.S. rate expectations remain anchored by a labor market that has slowed but not broken, while Treasury yields held relatively stable, limiting broader dollar volatility.
For the Euro, the focus remains squarely on the ECB’s rate path. Growth indicators have been uneven and disinflation trends continue to progress, reinforcing expectations that policymakers retain room to ease further if incoming data cooperates. At the same time, officials remain cautious about moving too aggressively given lingering services inflation and external geopolitical risks. The result is a narrow trading environment where EUR/USD is being driven less by today’s data and more by rate differential expectations between the U.S. and Europe.
In the above chart, EUR/USD remains above the longstanding inflection point near 1.1600 but has run into trouble on approach to its inverse head and shoulders target closer to 1.1900. A bearish engulfing bar/key reversal on Thursday last week has seen the pair fall back to its daily 5-EMA (exponential moving average) and get pinned near the January and February swing lows. While MACD remains above its signal line, Slow Stochastics have dropped from overbought territory suggesting a loss of near-term momentum, even if bulls remain broadly in control. It remains the case that fundamental risks remain two-sided as traders refocus on Fed-ECB rate differentials. AUD/USD eyes multi-year highs as risk assets surgeAUD/USD continued its run higher on Tuesday, rising just over 0.5% through mid-day trading to push its weekly advance above 1% as the currency looks set to record a third weekly gain. Now back above 0.7100, AUD/USD is roughly 50 pips away from 3-year highs hit earlier this year.
The risk-sensitive currency is benefiting from a broader stroke of risk taking across global financial markets as traders look forward to a resolution of the conflict in the Middle East, which is being reflected by falling energy prices and stabilization in metal prices.
Earlier this week, Reserve Bank of Australia Deputy Governor Andrew Hauser expressed concerns about stagflation amid the rise in energy prices caused by the war. Still, AUD/USD is benefiting from the risk-on tone in the market versus the dollar losing its safe-haven appeal.
Australia’s economy continues to chug along. Last month, the economy added nearly 50,000 jobs, beating expectations. The next monthly jobs report is scheduled to cross the wires later this week, and traders want to see a recovery in full-time employment, which was lacking in the last jobs report despite broader strength like an increasing participation rate. If the labor market strengthens amid increasing price pressures, that could give the Reserve Bank of Australia more justification to keep hiking rates. The RBA last hiked rates in March to 4.1% on inflation concerns. A shuddering labor market, on the other hand, may weaken the currency if it causes the RBA to hold off with additional rate hikes already priced in.
AUD/USD momentum has picked up, with positive slopes on the 9- and 21-day exponential moving averages (EMAs). Tuesday’s move above the 0.71 handle cleared resistance from last week’s trading, opening the door for a potential run toward the March swing high that sits at 0.71878. Meanwhile, the relative strength index (RSI) is gaining ground and nearing entry above 70. Even so, an initial cross above the threshold is usually followed by additional strength before the trade truly becomes overbought.
