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. GBP/USD 15m — Short the Retest, Not the Flush | Jul 21Cable just broke down. Price lost the 1.3384 level — where the bulk of recent volume had built and where structure was holding — and is now pressing lower with the anchored VWAP rolling over from above.
Both timeframes are expanding and pointed down, and the trend is well-established rather than fresh. This is a continuation environment. The play is selling rallies, not fading the drop and not trying to pick the bottom.
But I'm not shorting 1.3370.
Price is mid-flush, already extended into the move. Chasing the falling candle here means entering right where a bounce tends to start. The better entry is the retest.
The trade:
Short: A pullback up into 1.3384–1.3390 — the broken level, now flipped to resistance, with the declining VWAP sitting right in the same zone. Three things stacked: old support turned resistance, the point of control, and VWAP overhead. If price bounces back into that band and fails to reclaim — sellers stepping back in, a lower high forming — that's the entry. Target the thinner area below toward 1.3340. Stop above the zone with real room, not jammed under it.
Because the trend is clean and both timeframes are participating, if the retest rejects I'm inclined to hold the runner rather than bank early.
Long: Not interested. Buying into an aligned downtrend at a broken level is exactly the trade my process exists to avoid.
If price never bounces and just keeps sliding, I miss it — and that's fine. A missed trade costs nothing. Chasing an extended flush into a magnet costs real money.
Sell the retest. Let it fail. Respect the level.
Not financial advice. Trade your own plan. EURGBP Week W29-2026: Burnham Becomes PM and Surprise Chancellor# EURGBP Week W29-2026: Burnham Becomes PM and Surprise Chancellor Pick Sparks Sterling Volatility, Pair Tests One-Year Lows Near 0.85021 as Bearish Trend Holds | 21 July 2026
**Reference data** | week 2026-W29
- Symbol: EURGBP
- Week: 2026-W29
- Bias: bearish
- Conviction: skip
- Regime: trending_down
- FX implication: trend_follow
- MTF alignment: all_bearish
- VWAP weekly: 0.85021
- TrendSL weekly: 0.860935
- Close price: 0.85021
- US 10Y yield: 4.55%
- US 2Y yield: 4.18%
- US 10Y real yield: 2.31%
- DXY: bias=bearish, close_price=100.766998
- CPI (EUR): forecast=2.6, actual=2.4 (miss)
## L0 - Regime Identification (current market regime, compare to prior week if market_context_points references it; IF the brief has recent_events, OPEN this section with them as the immediate news backdrop driving current price action -- mandatory, do not skip)
The week's price action in EURGBP was dominated by a rapid-fire sequence of UK political developments. Andy Burnham became UK Prime Minister, and the initial FT report pointing to Shabana Mahmood as Chancellor of the Exchequer briefly drove EURGBP to a one-year low -- equivalent to a one-year high for sterling versus the euro. That move reversed sharply when John Healey was named Chancellor instead, defying market positioning built around the Mahmood expectation. Gilts were broadly steady in the immediate aftermath, but sterling dipped as traders digested the surprise pick, and gilt yields subsequently rose as Burnham's premiership revived fiscal credibility concerns in some parts of the market. The net result: a volatile week that left EURGBP closing at 0.85021, right on the weekly VWAP, with the downtrend structurally intact but near-term momentum muddied by headline risk.
The underlying regime remains trending_down with a rule-engine confidence reading of 0.70. This is consistent with the prior regime: no regime flip has occurred, and the multi-timeframe alignment remains fully bearish across all observed timeframes. The political noise introduced short-term two-way volatility but did not break the technical structure that defines this downtrend.
## L1 - Driver Stack
The scoring system flagged a technical bullish counter-signal (+2.50) that is worth acknowledging even in a bearish write-up -- price closing exactly at VWAP weekly (0.85021) is a point of equilibrium, not a clean bearish continuation print. That said, the dominant weight of evidence sits on the bearish side:
-> Strongest driver: MTF alignment is all_bearish, meaning the downtrend is confirmed across short, medium, and longer timeframes simultaneously. This is the most reliable structural signal in the stack.
-> UK fiscal credibility concern: The Burnham premiership and the Healey Chancellor appointment have introduced uncertainty around UK fiscal policy. Rising gilt yields alongside a weaker pound is a classic 'bad combination' signal -- it suggests the market is pricing in fiscal risk rather than growth optimism, which historically is sterling-negative.
-> EUR-side softness: Eurozone Core CPI (YoY) came in at 2.4% against a 2.6% forecast and a prior reading of 2.6%, a clear miss. Softer inflation reduces pressure on the ECB to maintain a hawkish stance, which is modestly EUR-negative. However, this factor competes with the GBP-specific political risk, so it does not add a clean directional amplifier to the bearish EURGBP thesis -- softer EUR and softer GBP partially offset each other.
-> Counter-signal (technical, bullish): Price at VWAP weekly suggests short-term equilibrium. This is not a reversal signal on its own, but it does mean sellers are not yet in clear control at current levels. Size discipline is warranted.
## L2 - Macro Snapshot
The US rates backdrop provides important context even for a cross pair like EURGBP. The US 10Y yield stands at 4.55%, the 2Y yield at 4.18%, and the 10Y real yield (inflation-adjusted) at 2.31%. A real yield above 2% is historically restrictive territory -- it signals that USD-denominated assets continue to offer meaningful carry (the income advantage from holding a higher-yielding currency), which keeps pressure on risk-sensitive and lower-yielding currencies broadly.
For EURGBP specifically, the EUR side faces a freshly confirmed inflation miss: Eurozone Core CPI for the reference period printed at 2.4% YoY versus the 2.6% consensus forecast, down from the prior 2.6% reading. The surprise direction is a miss. This erodes the ECB's justification for a prolonged pause or further tightening, and modestly weakens the EUR's rate-support argument. Meanwhile, the GBP side faces its own headwinds from political uncertainty and the fiscal credibility questions raised by the new Burnham government. The net macro picture for EURGBP is therefore a pair where both legs have independent bearish inputs, but the GBP political risk story is the more acute near-term driver.
## L3 - Technical Structure
Close price is 0.85021, which is identical to the weekly VWAP at 0.85021. When price closes exactly at VWAP, it signals that buyers and sellers reached equilibrium over the full weekly session -- neither side achieved a decisive close above or below the volume-weighted mean. This is a neutral-to-cautious read for short-term momentum.
The TrendSL weekly sits at 0.860935, approximately 110 pips above current price. This level defines the boundary of the bearish structural thesis. As long as weekly closes remain below 0.8609, the downtrend is technically intact. The distance between current price and TrendSL provides a reasonable buffer, meaning the trend has not been challenged at the structural level despite this week's political volatility.
Multi-timeframe alignment is all_bearish -- this is the most important technical confirmation available. When all timeframes agree directionally, mean-reversion trades against the trend carry elevated risk of failure, and trend-following approaches have a higher base-rate of success historically.
## L4 - Intermarket Cross-Check
DXY (US Dollar Index) is referenced with a bearish bias and a close price of 100.766998 for week W29-2026, though conviction on that view is listed as low. A weakening USD environment broadly supports risk assets and non-USD currencies, which would typically provide some cushion for both EUR and GBP against the dollar. However, for EURGBP as a cross rate, DXY weakness is a second-order influence -- what matters more is the relative performance of EUR versus GBP.
The FX implication from the MTF alignment for EURGBP is explicitly trend_follow. This means the intermarket setup does not contradict the primary bearish bias for the pair. DXY weakness could lift both legs simultaneously, but if GBP benefits more from any USD softness (as UK rates remain elevated and gilt yields are rising), that dynamic would actually reinforce the EURGBP downtrend. There is no intermarket signal here that contradicts the bearish thesis.
## L5 - Event Risk
The primary event risks for the coming weeks center on UK political and fiscal developments following the Burnham government's formation, as well as ongoing ECB policy signals in the context of the Eurozone inflation miss.
-> UK fiscal announcements or Budget signals from Chancellor Healey: Any dovish fiscal signals (spending increases without clear funding) could reignite gilt yield pressure and sterling weakness, potentially creating two-way volatility in EURGBP.
-> ECB communication: Following the CPI miss, any ECB speakers leaning toward earlier rate cuts would be EUR-negative, potentially adding bearish pressure to EURGBP from the EUR side -- which would actually support the downtrend.
-> Further UK political developments: The Burnham government is new and untested. Additional surprise appointments or policy announcements carry event risk in both directions.
| Scenario | Probability |
|---|---|
| Bearish continuation: all_bearish MTF holds, price drifts toward new lows below 0.8502 VWAP support | Moderate |
| Range consolidation: Political noise keeps pair oscillating near 0.8502 VWAP for 1-2 weeks before trend resumes | Moderate |
| Bullish reversal risk: Healey delivers credible fiscal plan, sterling recovers, EURGBP rallies toward 0.8609 TrendSL | Lower |
Note: These are qualitative scenario assessments based on the available data. Explicit probability figures are not supported by the brief.
## L6 - Conviction Scorecard
Overall bias: bearish. Conviction level: skip.
The 'skip' conviction designation is important to communicate clearly. It does not mean the bias has reversed -- the regime is still trending_down and MTF alignment is all_bearish. What it signals is that current conditions do not meet the threshold for a high-confidence entry. The primary reason is the combination of: (1) price closing exactly at VWAP weekly, indicating near-term equilibrium rather than momentum; (2) elevated political headline risk from the UK government transition, which introduces unpredictable two-way volatility; and (3) the technical bullish counter-signal flagged by the rule engine, suggesting the bearish case is not yet clean enough for full commitment.
For traders already short from higher levels, the structure supports holding with stops above TrendSL (0.8609). For new entries, the skip conviction means waiting for a cleaner setup -- ideally a weekly close that re-establishes separation below VWAP, or a failed rally toward TrendSL that offers a defined-risk short entry.
## L7 - Time Horizon
**Near-term (1 week):** The immediate focus is whether EURGBP can establish a clean close below 0.85021 (VWAP weekly) or whether the political volatility around the Burnham/Healey appointment keeps the pair pinned at equilibrium. No high-conviction directional trade is recommended until the dust settles on the new UK government's initial policy signals.
**Timeline (3 weeks):** The stated analysis horizon is 3 weeks. Within this window, the bearish structural case -- supported by all_bearish MTF alignment and the trending_down regime -- remains the base case. If the Burnham government introduces credible fiscal policy, GBP could strengthen further and drive EURGBP lower, extending the one-year low seen earlier this week. If fiscal concerns dominate, sterling weakness could temporarily interrupt the trend.
**Medium-term:** Beyond the 3-week window, the Eurozone CPI miss introduces a longer-dated question about ECB policy direction. If ECB rate cuts accelerate while the Bank of England holds, the rate differential (the gap between UK and Eurozone interest rates, which influences currency flows) would widen in GBP's favor -- structurally bearish for EURGBP over a multi-month horizon.
## L8 - Invalidation Conditions
-> If weekly close above TrendSL weekly (0.8609): Bearish structure invalidated -- exit shorts, reassess
-> If price sustained above VWAP weekly (0.8502): Short-term momentum against thesis -- reduce size
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*This analysis is for informational and educational purposes only and does not constitute financial advice.*
#EURGBP #ForexTrading #GBP #EUR #PoundEuro #SterlingOutlook #FXAnalysis #TrendFollowing #UKPolitics #GiltMarket #ECBPolicy #CurrencyTrading #MacroFX #BankOfEngland #ForexWeeklyOutlook GBP/USD | FVG and Supply Zone retestBy examining the 4H chart of GBPUSD we can see that by reaching the 1.3558 level, it swept away all the liquidity pools on its way, broke above the supply zone, and then after testing the 4H FVG, it dropped all the way to an old supply zone, and after reaching it, it bounced back up from 1.3446 to 1.3481, and is currently being traded at around 1.3461 level.
Same as other pairs, Cable is also under the influence of the war between US-IR, which has strengthened the USD, causing massive dropdowns. As long as the war continues and the end or another ceasefire has not been announced, this situation continues.
Now I expect GBPUSD to retest the 4H FVG once more, should it break above it, I'd expect it to go towards the Supply Zone to retest it once more, and then a move towards the 1.3558 to sweep the minor BSL there, as well as retesting the FVG between the 1.3553 to 1.3580 levels.
However, if GBPUSD is rejected by the 4H FVG at 1.3480 to 1.3493 level, it can drop back again towards the old supply zone, if then it doesn't stabilize above the supply zone, further drop towards the 4H FVG High at 1.3384 is expected.
Long
