Forex News
- USD/CAD trades flat around 1.3705 in Tuesday’s early Asian session.
- Tariff threats could weigh on the Loonie, but stronger Canadian June job data might cap its downside.
- The CPI inflation data for June from the US and Canada will be in the spotlight later on Tuesday.
The USD/CAD pair holds steady around 1.3705 during the early Asian session on Tuesday. Traders largely shrugged off fresh tariffs ahead of Consumer Price Index (CPI) inflation data from the United States (US) and Canada on Tuesday.
Last week, US President Donald Trump announced a 35% tariff rate for goods imported from Canada, beginning August 1. The new measures come on top of existing 50% tariffs on Canadian steel and aluminum. Additionally, Trump also imposed a new 50% tariff on US copper imports, beginning on the same period. Concerns that US tariffs would impact the Canadian economy could undermine the Loonie, as Canada is a major trading partner and a significant supplier of copper to the US.
On the other hand, the upbeat Canadian June employment data could boost the Canadian Dollar (CAD) against the Greenback. Statistics Canada revealed on Friday that the Unemployment Rate in Canada ticked lower to 6.9% in June from 7.0% in May. This figure came in stronger than the 7.1% expected. Meanwhile, the Canadian economy added 83.1K jobs in June versus 8.8K prior. Economists were expecting no change in employment.
Money markets have priced in nearly an 84% chance that the Bank of Canada will hold the interest rate in the July meeting, according to Reuters. The BoC is anticipated to reduce rates in the second half of the year. Still, it will be difficult for BoC policymakers to chart a rate path, given all the economic uncertainty.
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.
- GBP/USD fell further on Monday, heading toward 1.3400.
- The Pound Sterling has lost over 2.5% top-to-bottom from July’s high of 1.3788.
- Key inflation metrics for both the US and the UK still lie ahead.
GBP/USD sank further on Monday, closing lower for a seventh consecutive market session and slipping back below the 50-day Exponential Moving Average (EMA) for the first time since mid-April. Markets are expecting the latest round of tariff threats from US President Donald Trump to end with yet another delay or a suspension, but rough economic data from the UK, as well as a general level of unease for investors, is keeping risk appetite at bay and bolstering the safe haven US Dollar.
A new deadline for a wide swath of tariffs has been arbitrarily penciled in for August 1, following another delay of Trump’s “undelayable” reciprocal tariffs that were announced in April. On top of the Trump administration’s “liberation day” reciprocal tariffs, Trump is now threatening double-digit tariff increases on some of the US’s closest trading partners, including South Korea, Japan, Canada, and Mexico.
Beginning on Tuesday, the latest round of US inflation data is on the docket. US Consumer Price Index (CPI) inflation data through June is expected to accelerate as the first batch of tariffs that Trump successfully implemented begins to take hold on the US economy and leak through to headline datasets over the coming months. The UK follows up with its own round of headline CPI inflation data early Wednesday. UK CPI inflation is expected to hold steady at previous figures in June.
GBP/USD price forecast
Continued easing in Cable bids has pushed the Pound Sterling to fresh two-week lows. The pair is testing below the 50-EMA for the first time in almost three months as Cable backslides from multi-year highs posted as recently as early July.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling 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, its currency will benefit 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.
Japan and the European Union (EU) plan to issue a joint statement aimed at deepening their economic partnership, with a particular focus on trade, advanced technology, and greater supply chain coordination, per Japanese media Yomiuri.
The move comes as both sides work to strengthen economic resilience in the face of escalating global geopolitical tensions and disruptions.
Market reaction
As of writing, USD/JPY is trading 0.11% higher on the day at 147.88.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- WTI price rises to around $65.90 in Tuesday’s early Asian session.
- The US threatened to hit buyers of Russian exports with sanctions if there's no deal between Russia and Ukraine in 50 days.
- Tariff uncertainty and ongoing trade jitters might undermine the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.90 during the early Asian trading hours on Tuesday. The WTI price edges higher amid concerns over the United States' sanctions on Russia that may affect global supplies.
US President Donald Trump late Monday announced new weapons for Ukraine and threatened sanctions on buyers of Russian exports unless Russia agrees to a peace deal in 50 days. A White House official said Trump was referring to 100% tariffs on Russian exports as well as so-called secondary sanctions, which target third countries that buy a country's exports.
Last week, Trump said that he would make a "major statement" on Russia on Monday, expressing his frustration with Russian President Vladimir Putin over the lack of progress in ending the war in Ukraine.
Furthermore, firming demand signals from China might contribute to the WTI’s upside. China’s crude imports hit a 10-month high, rising 7.4% on the year in June to 12.14 million barrels per day, according to customs data released on Monday. This figure registered the highest since August 2023.
On the other hand, the uncertainty surrounding Trump’s tariff might weigh on the WTI price. Investors will closely monitor the outcome of US trade negotiations with key trading partners. The European Union (EU) and South Korea said on Monday they were working on trade deals with the US that would soften the blow from looming tariffs as Washington threatens to impose levies from August 1. Intensifying US tariff pressures could undermine the price of black gold, as tariffs can lead to trade wars, slowing down global trade and economic activity.
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.
- Silver retreats from $39.12 peak but maintains bullish long-term structure.
- RSI remains elevated, suggesting buyers still have technical control.
- Break below $37.31 may trigger deeper correction toward $36.69 and $36.00.
Silver price forms a ‘shooting star’ candle chart pattern amid a day in which precious metals were pressured as traders priced in initial risk-off sentiment. However, they faded the move, amid fears that the White House might backpedal, as they could reach trade agreements with Canada, the EU, and Mexico ahead of the August 1 deadline. The XAG/USD trades at 38.14, down 0.66%.
XAG/USD Price Forecast: Technical outlook
The grey metal is upward biased, despite falling below the $39.00 figure after reaching multi-year highs at $39.12. The Relative Strength Index (RSI) depicts that buyers are still in control, even though XAG/USD dipped toward $38.00.
For a bullish continuation, Silver traders need to push prices back above $38.50 and test the $39.00 figure. A breach of the latter would pave the way to refresh yearly highs.
Conversely, if Silver tumbles below the June 18 high of $37.31, expect further downside and a possible test of the 20-day Simple Moving Average (SMA) at $36.69. On further weakness, the $36.00 figure is up next.
XAG/USD Price Chart – Daily
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.
- EUR/USD drops 0.15%, extending losses amid tariff and data-driven volatility.
- Trump hits EU and Mexico with 30% tariffs, lifting haven flows into USD.
- EU pauses retaliatory tariffs until August to maintain diplomatic momentum.
The EUR/USD remains pressured during the North American session, below the 1.1700 figure as the Dollar got boosted by Trump unveiling new tariff letters on two of its largest trade partners, increasing appetite for haven assets. At the time of writing, the pair trades at 1.1667, down 0.15%.
US President Donald Trump revealed levies of 30% on the European Union (EU) and Mexico last weekend. Initially, investors' sentiment deteriorated, but traders seem to be fading from Trump’s decision, amid speculation that Washington could backpedal on trade decisions.
Analysts cited by Reuters revealed that “Markets are really not willing to play the ups and downs of Trump’s communications on tariffs.” Traders are waiting for the release of inflation figures for June in the United States, Federal Reserve speeches, and Retail Sales data.
Across the pond, the EU revealed that it will extend its suspension of retaliatory duties on the United States (US) until early August, to keep communication channels open. The docket in the week would feature Industrial Production and the ZEW Survey Economic Sentiment for May and July, respectively, alongside the release of the Harmonized Index of Consumer Prices (HICP) for June.
In response to the tariff threats, the EU announced on Sunday that it will extend its suspension of retaliatory tariffs against the United States until early August, aiming to keep diplomatic channels open.
Daily digest market movers: Euro pressured as Trump sent tariff letter to EU
- Economic data from the United States will be crucial. The release of June’s Consumer Price Index (CPI) is expected to rise from 2.4% to 2.7% YoY. Core CPI is projected to hit the 3% threshold, from 2.8% to 3% YoY. If the readings come as expected, it justifies the Federal Reserve’s current monetary policy stance, amid speculation that inflation could be persistent.
- Traders are awaiting the release of June’s Consumer Price Index (CPI) in the United States, with annual inflation expected to rise from 2.4% to 2.7%. Core CPI is projected to accelerate to 3.0% year-over-year, up from 2.8%, remaining well above the Federal Reserve’s 2% target. The data is likely to reinforce the Fed’s current cautious stance, especially as officials have warned that tariffs could fuel another wave of inflation.
- Cleveland Fed President Beth Hammack reinforced her hawkish stance, stating that she sees the economy as healthy and is open-minded about the July Fed meeting. She noted that inflation has made progress toward the 2% goal, but it remains too high.
- The EU May Industrial Production is expected to improve from -2.4% to 0.9%. The ZEW Survey of Economic Sentiment for July is projected at 37.8, up from 35.3. June Core HICP is expected at 2.3% YoY, unchanged compared to May. Headline HICP is expected to remain unchanged at 2%.
Euro technical outlook: EUR/USD clears 20-day SMA, further downside eyed
In the near term, the EUR/USD is neutral to bearishly biased, as the pair dipped below the 20-day Simple Moving Average (SMA) of 1.1677. As it achieves a daily close below the latter, sellers must clear the next support seen at 1.1650, before testing 1.1600. Up next lies the 50-day SMA at 1.1477.
From a momentum standpoint, the Relative Strength Index (RSI) is approaching its neutral line. Hence, a drop below its 50-neutral line could accelerate the pair’s drop.
For a bullish resumption, buyers must hurdle the 1.1700 figure before the July 10 high of 1.1749, followed by 1.1800 and the YTD high of 1.1829.
Euro FAQs
The Euro is the currency for the 19 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.
- The Dow Jones is holding near 44,400, albeit with a jittery note.
- The Trump administration is back with a fresh round of tariff threats.
- Investors continue to bet that Donald Trump will find a reason to delay tariffs again.
The Dow Jones Industrial Average (DJIA) floated near the 44,400 region on Monday, holding steady in a near-term consolidation zone as global markets bet that a fresh round of tariff threats from President Donald Trump will be delayed, suspended, or otherwise trimmed once again.
New month, new tariff deadline
A new deadline for a wide swath of tariffs has been arbitrarily penciled in for August 1, following another delay of Trump’s “undelayable” reciprocal tariffs that were announced in April. On top of the Trump administration’s “liberation day” reciprocal tariffs, Trump is now threatening double-digit tariff increases on some of the US’s closest trading partners, including South Korea, Japan, Canada, and Mexico.
Most countries have already agreed to continue trade talks with the Trump team, but progress remains slow. Despite a near-constant stream of promises that solid trade deals are just around the corner, very little actual progress has been achieved. China has agreed to an agreement to make new trade terms in the future, and the UK and Vietnam remain the only two countries to have come to a trade agreement, although actual details of the trade deals remain limited.
Trade deals are easy to make, but difficult to deliver
Neither the US nor Vietnam appears to be in a rush to provide an actual explanation of what the trade deal will entail, other than a blanket 20% tariff on all Vietnamese exports to the US. The tentative trade arrangement also includes a 40% tariff on any goods the US decides have been “transshipped” through the Asian country.
Beginning on Tuesday, the next batch of key earnings reports will begin rolling out. Major banks, including JPMorgan Chase, will begin revealing their latest quarterly earnings reports. Also on the docket this week will be the latest round of US inflation data. US Consumer Price Index (CPI) inflation data through June is expected to accelerate as the first batch of tariffs that Trump successfully implemented begins to take hold on the US economy and leak through to headline datasets over the coming months.
Fed is wrong about rates and overspending, says deficit-laden Trump administration
The rift between the Trump administration and the Federal Reserve (Fed) continues to widen as Donald Trump pins all of his fiscal policy woes on Fed Chair Jerome Powell refusing to lower interest rates in the face of potential tariff inflation. Trump has ramped up his near-daily personal attacks on the Fed head via social media posts and media statements, which the Fed’s Powell has broadly ignored. Trump officials who helped pen and pass Donald Trump’s “big beautiful budget bill”, which is set to add trillions of dollars of excess government spending to the US deficit, are set to begin investigating the Fed’s spending on a revamp and renovation of the Fed’s main office building in Washington, DC.
Dow Jones price forecast
The Dow Jones continues to churn the chart paper in a rough consolidation zone, bouncing around the middle ground between the 45,000 and 44,000 handles. A slow grind lower has cropped up in intraday timeframes, pushing intraday swing lows back into median prices. However, overall bullish momentum remains strong, and stretches to the downside are likely to turn into buying opportunities rather than signals to sell further.
Dow Jones 1-hour chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- AUD/JPY bulls fail to break through psychological resistance at 97.00.
- The Relative Strength Index falls from overbought conditions as AUD/JPY bulls retreat.
- A Harami pattern on the AUD/JPY daily chart highlights market indecision.
The Australian Dollar (AUD) is weakening against the Japanese Yen (JPY) on Monday, as the steep bullish rally pertaining to the AUD/JPY pair shows clear signs of slowing.
At the time of writing, AUD/JPY is consolidating near 96.70, with the formation of a Harami candlestick pattern on the daily chart, reflecting market indecision.
This potential reversal signal arises as the pair approaches a critical resistance zone. AUD/JPY has recently broken above the 61.8% Fibonacci retracement of the November 2024 to April 2025 decline, located at 96.15, a level considered technically significant.
Additionally, the pair is trading just above the 200-day Simple Moving Average (SMA), currently set at 95.80. This long-term trend indicator, which has historically served as a dynamic resistance, may now be providing initial support.
AUD/JPY daily chart
Despite the near-term pause, the broader uptrend remains intact. The 50-day SMA is trending upward at 94.10, while the 100-day SMA continues to rise around 93.20, reflecting sustained medium-term bullish momentum.
However, the Relative Strength Index (RSI) is hovering just below the 70 threshold, suggesting that the pair remains near overbought territory and may be vulnerable to a technical pullback.
The appearance of the Harami pattern below the 97.00 resistance level underscores the growing hesitation among buyers. While the formation alone does not confirm a reversal, it does highlight reduced bullish conviction at a key technical juncture. Should the pair break decisively above 97.00, it could trigger further gains toward the 78.6% Fibonacci retracement level near 98.90.
Conversely, if downside pressure persists, initial support is expected at 96.15, followed by the 50-day SMA at 94.10. A break beneath these levels may open the door to a deeper correction toward the 50% retracement level at 94.21 or the 100-day SMA at 93.20.
While the prevailing trend remains upward, short-term technical signals are flashing caution. Without a clear breakout above 97.00, the pair may enter a consolidation phase or face a moderate correction as bullish momentum temporarily fades.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The FX galaxy remained cautious ahead of the release of the key US inflation readings on Tuesday, although the Greenback managed to outperform its main competitors on the back of persistent trade concerns and the widespread offered bias in the risk-linked space.
Here's what to watch on Tuesday, July 15:
The US Dollar Index (DXY) climbed to new highs, piercing the 98.00 hurdle although running out of steam afterwards. The US Inflation Rate will take centre stage, seconded by the NY Empire State Manufacturing Index and the API’s weekly report on US crude oil inventories. In addition, the Fed’s Bowman, Barr, and Collins are due to speak.
EUR/USD experienced decent losses, which were sufficient to reach new three-week lows in the 1.1650 zone. The ZEW’s Economic Sentiment will be released for Germany and the euro area, followed by Industrial Production figures in the region. The ECB’s Buch is due to speak.
GBP/USD kept the trade in the lower end of its recent range, opening the door to a potential challenge of the 1.3400 area sooner rather than later. The BRC Retail Sales Monitor will be the only data release across the Channel alongside the speech by the BoE’s Bailey.
USD/JPY has started the week in a positive mood, extending its march north and retargeting the 148.00 barrier. The Reuters Tankan Index is next on tap in Japan on July 16.
AUD/USD could not sustain the early bullish attempt, losing impetus and receding to the mid-0.6500s as the NA session drew to a close. The Australian docket includes the Westpac Consumer Confidence index.
President Trump’s renewed threats targeting buyers of Russian oil weighed on the commodity, dragging prices of the American WTI to daily lows in the sub-$67.00 zone.
Prices of Gold briefly climbed to three-week peaks past $3,370 per troy ounce, although the Dollar’s resilience seems to have prompted the yellow metal to surrender some of its gains later. Silver prices extended their rally and advanced north of the $39.00 mark per ounce for the first time since September 2011.
Bank of England (BoE) Governor Andrew Bailey warned finance ministers of the G20 group of countries that despite overall sturdy global market conditions, downside economic and political risks have likewise hardened recently.
Key highlights
Since April, market conditions have improved and asset prices have recovered.
We have seen further economic and geopolitical risks crystallise and global debt vulnerabilities remain high.
Uncertainty continues to weigh on growth expectations.
We need to remain vigilant to the risk of disruptive market moves.
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