Forex News
- Gold gains some positive traction on Tuesday, though the upside potential seems limited.
- Fed rate hike bets and oil-driven inflation fears keep US bond yields near multi-year highs.
- Geopolitical uncertainties further underpin the USD, which should cap the precious metal.
Gold (XAU/USD) clings to modest recovery gains through the first half of the European session, albeit it lacks follow-through and remains below $4,150. Moreover, the bearish fundamental backdrop keeps the precious metal within striking distance of the lowest level since August 4, around the $4,100 neighborhood touched on Monday, and warrants caution before positioning for any meaningful appreciation. The US Federal Reserve's (Fed) hawkish outlook, elevated US bond yields, and geopolitical risks keep the US Dollar (USD) pinned near a two-month top, which, in turn, is seen capping the bullion.
The US central bank delivered the widely expected 25 basis point (bps) rate hike—its first in over three years—earlier this month and signaled a firm commitment to suppressing sticky inflation. Adding to this, a slew of influential FOMC members stated that another interest rate increase may be appropriate before the end of 2026. According to CME Group's FedWatch Tool, traders are pricing in a 70% chance that the Fed would raise borrowing costs again in October amid inflation risks stemming from higher energy prices due to the Middle East conflict.
Cook flags persistent inflation risks from AI and geopolitics, keeps Fed bias hawkish
Fed’s Cook delivers a slightly more hawkish-than-usual tone, with the FXS Speechtracker score at 7/10, marginally above the established baseline of 6.9/10. Cook highlights continued inflation pressure in coming months from artificial intelligence and Middle East conflict, stressing that any future rate adjustments will depend on incoming inflation and labor data, even as the labor market is described as well positioned to absorb higher rates. While Cook acknowledges that AI-driven productivity should bring modest disinflation over the next few years, the warning that these gains will not arrive in time to offset broadening inflation this year reinforces a near-term hawkish bias and keeps DOLLAR-supportive risks in focus.
The FXS Fed Sentiment Index slipped by 0.63 points to 146.89, indicating a modest pullback in perceived hawkishness despite the speech’s above-baseline score on the FXS Speechtracker. With the FXS Fed Sentiment Index still well above the neutral 100 mark, the Fed remains firmly in hawkish territory, suggesting that any future rate hikes or a prolonged higher-for-longer stance continue to underpin DOLLAR strength even as market expectations cool slightly at the margin.
In the latest development, US President Donald Trump rejected a peace proposal from Iran to resolve their military conflict and reopen the Strait of Hormuz immediately on meeting their terms. Furthermore, Trump denied a report by the news outlet Axios that he offered Iran sanctions relief and the release of frozen funds in return for concrete Iranian steps regarding the nuclear program. This keeps the geopolitical risk premium in play and continues to support crude oil prices, fueling inflationary concerns and pushing US bond yields to multi-year highs.
In fact, the yield on the 30-year US government bond shot to its highest level since mid-May 2004, while the benchmark 10-year Treasury yield touched its highest since mid-June 2007 and the rate-sensitive 2-year yield rose to the highest since May 2024. This, in turn, favors USD bulls and makes it prudent to wait for strong follow-through buying before confirming that the Gold price has bottomed out. Traders might also opt to wait for this week's important US macro releases before placing aggressive directional bets on the XAU/USD pair.
The US Personal Consumption Expenditures (PCE) Price Index – the Fed's preferred inflation gauge – is due on Wednesday, along with the final Q2 GDP print. This will be followed by the US ISM Manufacturing PMI on Thursday, though the focus will remain glued to the closely watched US Nonfarm Payrolls (NFP) report on Friday. Apart from this, speeches from influential FOMC members would be scrutinized for more cues about the Fed's future policy path, which, in turn, will drive USD demand and provide some meaningful impetus to the Gold price.
XAU/USD daily chart
Technical Analysis
The XAU/USD pair maintains a bearish near-term tone following the recent breakdown below the 200-day Exponential Moving Average (EMA) at $4,310 and the mid-range Fibonacci retracement levels. The metal has slipped back under the 61.8% retracement at $4,227, keeping it confined within the lower half of the recent range. Meanwhile, the Moving Average Convergence Divergence (MACD) shows a negative reading at 26.21, and the Relative Strength Index (RSI) at 36.40 hovers just above oversold territory, hinting at persistent downside pressure but with scope for intermittent corrective bounces.
Any further recovery, however, might face initial resistance at the 61.8% Fibo. retracement at $4,227, ahead of a dense barrier formed by the 200-day EMA at $4,310 and the 50% retracement at $4,316. Further hurdles emerge at $4,406 and $4,517 before the recent cycle high near $4,696. On the downside, immediate support appears at the 78.6% retracement at $4,099, with a deeper floor at the prior swing low around $3,937. A decisive break below the latter would reinforce the prevailing bearish bias, while sustained trading above $4,227 would be needed to start easing the downside pressure.
(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.
- EUR/CAD drops ahead of European Commission data and ECB President Lagarde's Frankfurt address.
- ECB President Lagarde signaled a measured policy stance, noting energy costs have not boosted wage growth.
- Canadian Dollar gains support from rising oil prices driven by ongoing US-Iran geopolitical uncertainty.
EUR/CAD halts its three-day winning streak, trading around 1.6100 during the European hours on Tuesday. The currency cross experiences downward pressure as the Euro (EUR) softens ahead of key economic data releases from the European Commission and an upcoming address by European Central Bank (ECB) President Christine Lagarde at the 2026 ECB/ESCB Legal Conference titled "Independence, not isolation: central banks and their connections with other authorities" in Frankfurt.
ECB President Lagarde previously told a European Parliament committee that a measured monetary policy remains appropriate, citing a lack of evidence that rising energy prices are driving wage growth.
Meanwhile, the Canadian Dollar (CAD) is finding strength on higher crude oil prices, compounding losses for the cross. Oil markets gained traction as ongoing uncertainty surrounding US-Iran negotiations overshadowed news that oil flows have resumed through Saudi Arabia's East-West pipeline.
Geopolitical risks remain high, with Iranian officials expressing skepticism about resolving to halt Middle East hostilities or reopen the strategic Strait of Hormuz before the US midterm elections in November. While recent talks in New York saw limited progress—highlighted by President Donald Trump's rejection of Tehran’s latest proposal—reports suggest Trump may still consider sanctions relief and the unfreezing of Iranian assets if meaningful strides toward a nuclear agreement are achieved.
CAD positioning turns more negative as Rabobank flags renewed net shorts
Strategists at Rabobank highlight a notable shift in investor positioning, observing that "CAD net shorts have picked up again, after collapsing the prior two weeks." This renewed build‑up in bearish bets on the Loonie underscores a more cautious stance toward the currency following its recent respite.
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.
Christopher Wong at OCBC notes Gold has extended its decline to a seven-week low, pressured by higher Oil prices, firm US Treasury yields and a stronger Dollar. The break below $4,200 has intensified technical selling, with near-term direction tied to Oil and rates. OCBC sees risks skewed to the downside.
Oil and yields drive bearish bias
"Gold extended its decline, falling to a 7-week low as the recent rise in oil prices reinforced inflation concerns and expectations for further Fed tightening. Higher US Treasury yields and a firm USD added to the pressure, while the break below $4,200 likely exacerbated technical selling."
"Softer US data (such as core PCE, NFP) or some easing in yields could help Gold stabilise, while another leg higher in oil and yields would keep downside pressure intact."
"Mild bearish momentum on daily chart intact while RSI fell. Risks remain skewed to the downside."
"Failure to reclaim back above $4,300 – $4,350 (21, 50, 100 DMAs) may see bearish pressure continue. Next support at $4,100, $4,000 and $3,944 (previous low). Resistance at $4,300/50, $4,460 levels."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Iran's parliament speaker Mohammad Bagher Qalibaf says during the European trading session on Tuesday that no one in the region shall sell its oil if Iran cannot sell its oil, according to state media, Reuters report. Qalibaf added, “If Iran has no security, then no regional infrastructure shall be safe.”
Market reaction
A slight buying interest is observed in the WTI Oil price near its day's low at around $91.60 following remarks from Iran's parliament speaker Qalibaf.
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.
- USD/CAD rises to near 1.4190 as the US Dollar trades higher.
- The Fed is expected to deliver two more interest rate hikes this year.
- Investors await Canadian GDP data for July and the US JOLTS Job Openings data for August.
The US Dollar (USD) is up 0.12% at around 1.4190 against the US Dollar (USD) during the European trading session on Tuesday. The Loonie pair trades higher as the US Dollar outperforms, with financial markets becoming increasingly confident that the Federal Reserve (Fed) will deliver two more interest rate hikes this year.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.18% | 0.14% | -0.02% | 0.09% | 0.40% | 0.25% | 0.16% | |
| EUR | -0.18% | -0.05% | -0.20% | -0.11% | 0.22% | 0.06% | -0.03% | |
| GBP | -0.14% | 0.05% | -0.17% | -0.03% | 0.25% | 0.11% | 0.01% | |
| JPY | 0.02% | 0.20% | 0.17% | 0.11% | 0.40% | 0.24% | 0.15% | |
| CAD | -0.09% | 0.11% | 0.03% | -0.11% | 0.29% | 0.14% | 0.06% | |
| AUD | -0.40% | -0.22% | -0.25% | -0.40% | -0.29% | -0.15% | -0.24% | |
| NZD | -0.25% | -0.06% | -0.11% | -0.24% | -0.14% | 0.15% | -0.08% | |
| CHF | -0.16% | 0.03% | -0.01% | -0.15% | -0.06% | 0.24% | 0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.16% higher to near 101.35.
The CME FedWatch tool also shows a 60% probability of the Fed delivering a quarter-to-a-percent interest rate hike in both policy meetings remaining this year.
Later in the day, investors will focus on the Canadian monthly Grioss Domestic Product (GDP) data for July and the United States (US) JOLTS Job Openings data for August.
Economists expect the Canadian economy to have remained flat after expanding 0.3% in June.
The US Job Openings report will likely show that US employers posted 7.23 million fresh jobs, marginally lower than 7.271 million in July.
USD/CAD Technical Analysis
In the daily chart, USD/CAD trades at 1.4190, extending its advance well above the 20-period exponential moving average (EMA) at 1.4016 and reinforcing a bullish near-term bias. The pair has pushed into overbought territory, with the 14-period Relative Strength Index (RSI) at 75.45, which suggests that while buyers remain in control, the risk of a corrective pullback is rising as the latest leg higher stretches away from its dynamic support.
On the downside, immediate support is located at the 20-period EMA around 1.4020, where a deeper retracement could find underlying demand and preserve the broader positive structure as long as price holds above this level. With no clearly defined resistance levels in the current dataset, any further topside extension would be driven by momentum, though the elevated RSI hints that fresh gains from here could be more gradual and vulnerable to short-term consolidation phases.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Gross Domestic Product (MoM)
The Gross Domestic Product (GDP), released by Statistics Canada on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in Canada during a given period. The GDP is considered as the main measure of Canadian economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.Next release: Tue Sep 29, 2026 12:30
Frequency: Monthly
Consensus: 0%
Previous: 0.3%
Source:
MUFG’s Lee Hardman notes that Japanese Yen strength has persisted as USD/JPY pulled back toward 156.50 on Monday, with policymakers stepping up verbal warnings on currency weakness and signalling readiness to intervene. Coordination with US officials and a faster Bank of Japan hiking cycle are seen limiting further USD/JPY gains, helping the Yen outperform other G10 currencies in the near term.
Yen supported by policy signals
"Overall, the comments from Japanese officials at the start of this week continue to send a strong signal that Japan is prepared to intervene against to support the yen."
"They are also encouraging speculation that Japan will also make other policy adjustments to provide more support for the yen such speeding up the pace of BoJ rate hikes under pressure from the US."
"The BoJ has already sped up the pace of hikes this month (every three months) and signalled that a faster pace of hikes is likely to continue heading into year end."
"We expect the next hike to be delivered in December while the Japanese rate market is attaching a higher-than-normal probability (~36%) to a back-to-back hike next month."
"The latest developments are helping to cap further upside for USD/JPY even as the US Dollar strengthens broadly."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
DBS Group Research economist Eugene Leow analyses how rapidly rising US Treasury yields are complicating financing for the US government as the Federal Reserve hikes rates. He highlights the growing reliance on short-term bills, now around a quarter of marketable debt, and warns that refinancing at higher front-end and 10-year yields could significantly increase interest costs for the US Treasury.
Fed hikes strain US bill financing
"Rapidly rising US Treasury yields is a problem for Treasury Secretary Bessent. The US’s fiscal issues are well known. Sticky and rising spending across Social Security and Medicare, declining corporate tax revenues and the hiccup over tariff collections."
"Beyond all these, there is also the USD 82bn increase in interest spending over the past year (interest payments make up about 4.6% of GDP) to contend with as debt gets refinanced at higher rates."
"The most direct implication of Fed hikes is that bills financing will not work as well."
"A 75bps jump in frontend financing costs (when all the bills roll over and assuming the Fed hold at 4.5%) would cause financing costs to balloon by around USD 54bn, all else equal."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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