Forex News
- EUR/USD ticks lower as concerns about a possible Russian escalation against Europe weigh on the Euro.
- Fed hike bets and escalating Middle East tensions support the USD, further exerting pressure on the pair.
- The downside seems limited ahead of ECB President Christine Lagarde and the crucial Trump-Xi meeting.
The EUR/USD pair struggles to capitalize on Friday's modest bounce from the vicinity of mid-1.1400s, or the lowest level since late July, and edges lower at the start of a new week. Spot prices currently trade around the 1.1475 region and seem vulnerable amid rising geopolitical tensions.
Officials in Europe warned about Russia's drone, missile, sabotage and cyber operations against NATO countries supporting Ukraine in the coming months. The latest warning came from French President Emmanuel Macron on Friday, saying that the Russian hybrid threat facing Europe and France had intensified. This is seen as undermining the Euro, while escalating tensions in the Middle East act as a tailwind for the US Dollar (USD).
In the latest developments, Iran-backed Houthis in Yemen said that they attacked sensitive sites in the Saudi capital of Riyadh on Saturday with missiles and drones. Furthermore, Iran laid out seven conditions for restarting talks with the US. This keeps the geopolitical risk premium in play, which, along with the US Federal Reserve's (Fed) hawkish stance, lends some support to the safe-haven Greenback and weighs on the EUR/USD pair.
In fact, the US central bank raised borrowing costs for the first time in over three years at the end of the September meeting last Wednesday. Moreover, the so-called dot plot revealed that officials expect one more rate hike this year. The European Central Bank (ECB), on the other hand, warned that price pressures could last longer than it had anticipated. This lifted bets on further policy tightening in October, which supports the EUR/USD pair.
ECB President Christine Lagarde is set to speak later this Monday and should provide some impetus to the shared currency. The focus, however, will remain on the incoming geopolitical headlines, which, along with a crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on Thursday, will influence risk sentiment. This, in turn, will drive the USD and determine the EUR/USD pair's near-term trajectory.
EUR/USD daily chart
Technical Analysis
The EUR/USD pair maintains a bearish near-term bias under the 100-day Simple Moving Average (SMA) at 1.1546 and the 61.8% retracement at 1.1486. Immediate support aligns with the 78.6% Fibo. retracement at 1.1426, ahead of a more substantial floor at 1.1350.
On the topside, bulls would first need to reclaim the 61.8% retracement at 1.1486 to ease the current pressure, with subsequent resistance levels emerging at the 50.0% retracement around 1.1529 and the 100-day SMA at 1.1546. A sustained break above these barriers would be required to argue for a more durable recovery toward 1.1571 and 1.1623.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- USD/CHF rises as markets price in a 56.5% chance of another rate increase in October.
- Fed Chair Kevin Warsh stresses that persistent inflation remains too high, signaling further tightening.
- The Swiss Franc weakened due to a wider US interest rate gap and shifting carry-trade dynamics.
USD/CHF gains ground after two days of losses, trading around 0.8230 during the Asian hours on Monday. The pair appreciates as the US Dollar (USD) gains support amid hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. Last week, the US Federal Reserve delivered a 25-basis-point rate hike, its first hike in three years, as officials sought to curb inflation and flagged more hikes in the coming months.
Markets are now pricing in nearly a 56.5% chance of another US rate hike when the Fed meets next in October, compared with nearly 42.5% a week ago, according to the CME FedWatch tool. Fed Chair Kevin Warsh said that "the plain fact is that inflation is too high and has been for too long." "This summer's inflation readings do not tell me that underlying trends have meaningfully improved," he added.
The USD/CHF pair gains support as the Swiss Franc (CHF) has weakened due to a widening interest rate differential with the United States and intense selling pressure driven by new carry trades.
This shift is largely attributed to the Federal Reserve delivering its first-rate hike in three years, which significantly boosted demand for the greenback. At the same time, the Bank of Japan's policy tightening, combined with a historic Washington–Tokyo intervention to support the yen, has reduced the Swiss Franc's appeal as a primary funding source for carry trades.
SNB seen on extended hold as Swiss growth outperforms but inflation stays muted
Economists at ING expect the Swiss National Bank to maintain its current stance, stating that “we expect the Swiss National Bank to keep its policy rate at 0% next Thursday and to remain on hold over the coming quarters.” They argue that stronger-than-expected Swiss growth and a slightly weaker Franc have not yet translated into problematic price pressures, allowing the SNB to keep policy accommodative for longer while inflation remains subdued.
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.
- Silver price wobbles at around $66.35 in the opening trade on Monday.
- US President Trump expresses openness to talk Iranian President Pezeshkian in UN General Assembly.
- Fed’s Kashkari warns that inflation is too-high and broad-based.
Silver price (XAG/USD) trades in a tight range at the start of the week near $66.35 during the Asian trading session. The white metal consolidates while investors remain focused on developments in Middle East regarding the oil supply and the United States (US) interest rate outlook.
Oil prices extend their decline in Monday’s Asian trade as hopes of US-Iran diplomacy have increased, following remarks from President Donald Trump that he would probably be open to meeting Iranian President Masoud Pezeshkian this week on the sidelines of the United Nations (UN) General Assembly in New York, TimesNow reported.
Lower oil prices ease fears of high inflation expectations, a scenario that diminishes high interest rate projections. This bodes well for non-yielding assets, such as Silver.
Meanwhile, investor seek fresh cues regarding how long the Federal Reserve (Fed) will continue the monetary-tightening cycle, which started last week in an attempt to counter inflationary pressures.
Over the weekend, Minneapolis Fed Bank President Neel Kashkari said that “inflation is too high across all sectors of the US economy”. Kashkari clarified that high inflation is not only driven by rising oil prices, adding that resilient economic growth is also boosting price pressures.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $66.35, holding a modest bullish bias as price remains above the 20-day Exponential Moving Average (EMA) at $65.22. The short-term trend tone is constructive while the metal sustains this break, with the Relative Strength Index (RSI) hovering near 54, suggesting steady rather than overstretched upside momentum.
On the downside, immediate support is seen at the 20-day EMA around $65.22, where a daily close below would hint at fading bullish pressure and a deeper corrective phase toward prior lows. Looking up, the major hurdle for the Silver price seems the August 28 high at $71.12
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- US Dollar Index gains as markets price in a 56.5% chance of another rate increase in October.
- Fed Chair Kevin Warsh stresses that persistent inflation remains too high, signaling further tightening.
- Kashkari stressed that persistent inflation remains too high despite robust growth and a strong labor market.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is gaining ground after two days of losses and trading around 100.30 during Asian hours on Monday.
The Greenback holds ground amid hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. Last week, the US Federal Reserve delivered a 25-basis-point rate hike, its first hike in three years, as officials sought to curb inflation and flagged more hikes in the coming months.
Fed Chair Kevin Warsh said that "the plain fact is that inflation is too high and has been for too long." "This summer's inflation readings do not tell me that underlying trends have meaningfully improved," he added. Markets are now pricing in nearly a 56.5% chance of another US rate hike when the Fed meets next in October, compared with nearly 42.5% a week ago, according to the CME FedWatch tool.
Strategists at Scotiabank note that the US Dollar ended the previous week on a solid footing, with the “USD … mixed to slightly firmer on Friday so far to round off the week of broad gains.” They highlighted the Japanese Yen as “the main mover overnight,” pointing out that the JPY “has weakened more than 1% in the wake of the BoJ policy decision (25bps hike, as expected, but with two dissenters) and Governor Ueda’s mixed press conference.” Scotiabank adds that the pressure on the currency has been sustained, with the “JPY has slipped more than 2% on the week to a two-week low,” underscoring the contrast between a generally firm Dollar and a notably softer Yen into the weekend.
Technical Analysis:
In the daily chart, Dollar Index Spot trades at 100.30, keeping a constructive bullish tone as price holds above both the nine- and 50-period Exponential Moving Averages (EMAs). The short-term EMA runs above the longer one, and both slope gently higher, suggesting an advancing trend, while the Relative Strength Index (14) at 62.6 sits in positive territory without yet signaling overbought conditions, hinting that upside momentum remains supportive.
On the downside, initial support is seen at the nine-day EMA near 99.85, with the 50-day EMA at 99.73 providing a deeper layer of demand if a pullback extends. As long as the index defends this moving-average band, dips are likely to be viewed as corrective within the broader upmove, and only a clear break below the 50-EMA would start to undermine the current bullish bias.
Kashkari keeps hawkish bias as resilient growth sustains inflation risks
Kashkari’s latest remarks score 6.2 on the FXS Speechtracker, essentially in line with the 6.3 historical average and signaling a steady hawkish tone. Emphasis that inflation “remains too high,” extends beyond oil, and must be addressed even as growth, productivity and the labor market stay robust underscores a message of persistent price pressures amid resilient activity. By stressing that the bond market is the Treasury’s responsibility while hoping growth can help reduce inflation, the speech leans toward sustained policy vigilance rather than a quick pivot.
The FXS Fed Sentiment Index fell by 1.47 points to 150.61, indicating a modest pullback in perceived hawkishness even as the gauge remains firmly above the neutral 100 line. This keeps the overall stance in clearly hawkish territory, suggesting that despite a slight softening in tone, markets still see the Fed as biased toward tighter policy according to the FXS Fed Sentiment Index and FXS Speechtracker.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- AUD/USD fills a modest gap down on Monday, though it lacks follow-through buying.
- Traders seem hesitant and opt to wait on the sidelines ahead of this week’s key events.
- The mixed technical setup further warrants caution before placing fresh bullish bets.
The AUD/USD pair attracts some dip-buyers following a modest gap-down open on Monday and holds comfortably above the 0.7100 mark through the Asian session. The upside, however, remains capped as traders await Reserve Bank of Australia (RBA) Governor Michele Bullock's speech on Tuesday ahead of Australian employment details and the Trump-Xi meeting during the latter part of the week.
In the meantime, rising expectations for an imminent RBA rate hike this month continue to lend some support to the Australian Dollar (AUD). Meanwhile, the US Federal Reserve's (Fed) hawkish outlook, along with escalating tensions in the Middle East, helps the US Dollar (USD) stall Friday's retracement slide from its highest level since late July and keeps a lid on any meaningful upside for the AUD/USD pair.
From a technical perspective, spot prices keep a modestly constructive near-term tone after defending the 100-day Simple Moving Average (SMA) at 0.7078 and above the 38.2% Fibonacci retracement level of the June-September upswing. Meanwhile, the Relative Strength Index (RSI) around 48 suggests neutral momentum, while the Moving Average Convergence Divergence (MACD) remains slightly negative, hinting that upside attempts may be gradual rather than impulsive despite the AUD/USD pair’s position above its primary trend floor.
The next relevant resistance emerges at the 23.6% retracement around 0.7149, with a subsequent barrier at the recent swing high near 0.7237. A break above the latter would reinforce the broader constructive bias. On the downside, initial support is seen near the 38.2% Fibo. retracement at 0.7095, followed by the 50.0% retracement at 0.7051 and the 100-day SMA around 0.7078, with deeper demand levels at the 61.8% retracement at 0.7007 and the 78.6% level at 0.6944.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/USD daily chart
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
- Gold price declines to around $4,365 in Monday’s early Asian session.
- Iran issued a warning after reportedly learning that the US is planning to resume military action.
- Fed’s Schmid supported a rate hike as inflation broadens beyond 3%.
Gold price (XAU/USD) edges lower to near $4,365 during the early Asians session on Monday. The precious metal loses momentum amid escalating tensions in the Middle East and hawkish remarks from Federal Reserve (Fed) officials. Traders await the Fedspeak later this week for fresh impetus.
Reuters reported that governments across the Middle East are bracing for an escalation of violence after Iran claimed it had received intelligence that Washington was preparing for a renewed bombing campaign against the Islamic Republic. Rising tension in the Middle East could raise oil-driven inflation concerns, weighing on the Gold price.
The Fed raised interest rates by a quarter of a percentage point to the 3.75%-4.0% range last week and flagged more hikes in the coming months. Traders now see a 56.5% odds of another US rate hike when the central bankers meet next in October, according to the CME FedWatch tool. Higher interest rates typically weigh on gold because the precious metal does not pay interest, making yield-bearing assets relatively more attractive.
Meanwhile, hawkish comments from Fed policymakers might cap the upside for the Gold price. Kansas City Fed President Jeffrey Schmid said on Friday that he supported the rate hike, as “recent data suggest inflation trending above 3%.”
Minneapolis Fed President Neel Kashkari stated on Sunday that US inflation remains elevated across multiple economic sectors and is not solely driven by rising energy and oil prices.
Gold capped by yields and USD even as medium-term case stays intact
Strategists at OCBC note that “near term, elevated yields and a firmer USD may continue to cap gold,” with the recent Fed outcome reinforcing the headwinds from higher US rates and a strong Dollar. However, they stress that this does not “necessarily undermine the broader mediumterm case,” arguing that “with a fairly hawkish rate path already in the price, softer US data could pull yields and the dollar lower again,” potentially restoring support for the metal.
Fed’s Schmid backs hike as inflation seen stuck above 3%, reinforcing hawkish bias
Fed’s Schmid delivered a distinctly hawkish message, with an FXS Speechtracker score of 8/10, above the historical average of 7.2/10 and signaling a firmer tightening bias relative to the established baseline. The emphasis that recent data point to inflation trending above 3%, that the latest rate hike is a step toward restoring the 2% target, and that price pressures are “hot” across a broad set of goods and services underscores concern that the inflation problem is broad-based rather than confined to energy. By stressing that high inflation reflects a supply-demand imbalance even as the broader economy and labor market remain solid, the speech tilts the policy narrative toward further restraint and supports the Dollar on expectations of a higher-for-longer path.
The FXS Fed Sentiment Index rose by 0.42 points to 152.09, keeping the gauge deeply in hawkish territory and confirming that Schmid’s remarks added incremental tightening pressure to the policy outlook. With the index far above the neutral 100 mark and the FXS Speechtracker score elevated, markets are likely to price in a reduced probability of near-term cuts and a firmer Dollar bias versus the Euro and Yen.
Technical Analysis: Gold is well-supported above the 100-day SMA
In the daily chart, XAU/USD holds a constructive near-term bias as it trades above the 100-day simple moving average (SMA), keeping the broader uptrend technically supported, while price sits just under the Bollinger middle band. The Relative Strength Index (RSI) at 51.13 hovers close to neutral but slightly favors the bulls, suggesting consolidation with a mild upside tilt rather than aggressive trend exhaustion.
On the topside, initial resistance is aligned with the Bollinger middle band around $4,410, and a daily close above this area would open the way toward the upper Bollinger band near $4,615 as the next resistance zone. On the downside, immediate support emerges at the 100-day SMA at $4,320, with the lower Bollinger band near $4,200 acting as a deeper cushion if selling pressure extends, keeping the broader bullish structure intact while above these levels.
(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.
- USD/CAD kicks off the new week on a positive note as sliding oil prices undermine the Loonie.
- The widening US-Canada rate gap and US-Canada trade tensions further weigh on the CAD.
- The Fed’s hawkish stance and geopolitical risks offer some support to the USD and the pair.
The USD/CAD pair attracts some dip-buyers at the start of a new week, stalling Friday's modest pullback from levels beyond the 1.4000 psychological mark, or the highest since August 7. Moreover, the supportive fundamental backdrop backs the case for an extension of a nearly two-week-old uptrend.
Crude oil prices slide to an over one-week low as a recovery in shipments from Saudi Arabia eases supply concerns. Adding to this, the widening US-Canada interest rate gap and US-Canada trade tensions contribute to the Canadian Dollar's (CAD) relative underperformance against its American counterpart. In fact, the Bank of Canada (BoC) maintained its key policy interest rate at 2.25% earlier this month, while the US Federal Reserve (Fed) hiked rates for the first time in over three years last Wednesday.
On the trade-related front, the US imposed steep 50% tariffs on approximately $20 billion worth of Canadian goods on August 22. Canada, on the other hand, implemented retaliatory tariffs ranging from 15% to 50% on roughly $20 billion worth of US goods on September 8. Apart from this, the underlying US Dollar (USD) bullish tone, bolstered by the Fed's hawkish stance and escalating Middle East tensions, lends some support to the USD/CAD pair and validates the near-term constructive outlook.
In fact, the so-called dot plot revealed that Fed officials expect at least one more follow-up rate hike this year. Meanwhile, Iran laid out seven conditions for restarting talks with the US. Moreover, Iran-backed Houthis in Yemen said that they attacked sensitive sites in the Saudi capital of Riyadh on Saturday with missiles and drones. This keeps the geopolitical risk premium in play and favors USD bulls, suggesting that the path of least resistance for the USD/CAD pair remains to the downside.
USD/CAD daily chart
Technical Analysis
The USD/CAD pair keeps a bullish near-term bias above the 100-day Exponential Moving Average (EMA) at 1.3924 and the 38.2% Fibonacci retracement at 1.3932. Spot prices have also reclaimed the 50% retracement at 1.3992, suggesting buyers retain control. The next relevant resistance is aligned at the 61.8% Fibo. retracement near 1.4052, ahead of a stronger barrier at the 78.6% level around 1.4137 and the 1.4246 swing high.
On the downside, the 50% retracement at 1.3992 offers immediate support, followed by the 38.2% level at 1.3932 and the 100-day EMA at 1.3924. A deeper break would expose the 23.6% retracement at 1.3858 before the structural floor around 1.3738.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Ukraine carried out a large-scale overnight drone and missile attack targeting Moscow and the surrounding region on Sunday, BBC reported.
Russian officials reported widespread air defense activity and damage in the capital’s orbit. Moscow Mayor Sergei Sobyanin said 450 of those drones were headed toward the capital, hitting the city's main oil refinery and a residential building.
Ukraine's President Volodymyr Zelensky stated that Kyiv had hit a "key" Russian oil facility and a logistics site in the region with drones and missiles, representing "billions of dollars that sustain the war machine.”
European intelligence officials have raised the possibility of an imminent Russian test of NATO, with one saying a potential attack could come in a matter of “months, not years,” per the Guardian.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 1.74% on the day at $93.60.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Yemen’s Houthis said that they attacked “sensitive” sites in the Saudi capital Riyadh with missiles and drones, hours after flames and a large plume of smoke were seen near the city’s main airport, the Guardian reported on Saturday.
Saudi Arabia sent alerts overnight warning of potential danger around Riyadh. This marks the first time the government has issued such alerts for Riyadh since fighting with the Iran-backed Houthis escalated in July.
Meanwhie, governments across the Middle East are preparing for an escalation of violence after Iran claimed it had received intelligence that Washington was preparing for a renewed bombing campaign against the Islamic Republic.
The Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that if an attack does take place, “all US bases and interests in the region will become targets of continuous, effective and painful attacks without any limitations or considerations”.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is down 1.74% on the day at $93.60.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- WTI slips as Trump signals potential talks with Iran's president at the UN General Assembly this week.
- Qatari Prime Minister urges Gulf cooperation as messages pass between the US and Iran.
- Overnight drone and missile strikes hit Moscow and Riyadh, with residential, refinery, and airport areas targeted.
West Texas Intermediate (WTI) oil price continues its losing streak for the fourth successive day, trading around $93.60 per barrel during the Asian hours on Monday. Crude oil prices fell on growing hopes that increased diplomatic efforts could help end the Middle East conflict and restore stable energy flows from the region.
A significant factor behind this optimism is US President Donald Trump stating he would "probably" be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the United Nations General Assembly in New York this week. Alongside this potential encounter, Trump may meet with other Persian Gulf leaders and is scheduled to hold a summit with Chinese President Xi Jinping.
Adding to the diplomatic momentum, Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al-Thani urged Gulf states to cooperate in restoring regional stability, noting that active messages are currently being exchanged between the US and Iran.
Reflecting these easing tensions on the ground, US Central Command chief Admiral Brad Cooper reported that oil and liquefied natural gas shipments through the Strait of Hormuz over the past two weeks have reached their highest level in six months.
However, the downside of oil prices could be restrained amid ongoing geopolitical tensions. Ukraine launched a massive overnight drone and missile assault targeting Moscow and its surrounding region, according to BBC reports. Russian officials confirmed intense air defense operations across the capital's vicinity, with Moscow Mayor Sergei Sobyanin stating that 450 drones were directed at the city, striking a major oil refinery and a residential building. Meanwhile, Yemen’s Houthis claimed responsibility for missile and drone strikes against "sensitive" locations in the Saudi capital of Riyadh, as reported by the Guardian on Saturday, following sightings of flames and heavy smoke near the city's main airport.
Oil pass-through seen limited as higher fuel costs squeeze margins
Economists at Royal Bank of Canada highlight that the recent rise in energy prices has not yet translated into a broad-based inflation surge. According to RBC, “evidence of pass-through to broader inflation has been limited so far,” and they “expect the impact in coming months will remain constrained as higher fuel costs erode margins across business supply chains before reaching final consumer prices.”
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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