Forex News
- The Indian Rupee weakens further against the US Dollar due to multiple headwinds.
- FIIs are trimming their stake in Indian stock markets due to higher bond yields.
- Analysts at MUFG expects the RBI to leave its Repo Rate steady on Wednesday.
The Indian Rupee (INR) trades lower against the US Dollar (USD) on Tuesday due to the continuous surge in global bond yields. The USD/INR pair rises to near 96.43, the highest level seen in over two months.
As of writing, 10-year United States (US) Treasury Yields are up 0.24% to near 5.32. On Monday, US bond yields posted a fresh two-decade high near 5.35%. Generally, higher bond yields lead to a risk-off environment, a scenario that diminishes the appeal of riskier assets, such as the Indian Rupee.
Apart from rallying bond yields, the continuous outflow of foreign funds from the Indian stock market is also weighing on the Indian currency.
In the first two trading days of October, Foreign Institutional Investors (FIIs) have offloaded their stake worth Rs. 14,183.36 crore.
What has strengthened US bond yields?
Yields on US-backed securities are rallying significantly for months. Fears of persistent global inflationary pressures due to energy supply shocks induced by the Middle East war are supporting the rally.
The advance in the US Treasury Yields seems not taking a pause even as soft United States (US) Nonfarm Payrolls (NFP) data for September has forced traders to scale back hawkish Federal Reserve (Fed) interest rate expectations.
According to analysts at Societe Generale, though the softer US payrolls report has reinforced the recent pullback in expectations for near‑term Fed tightening, the bank stresses that it is “not a game changer for the hawkish predisposition of the Fed – inflation is the bogeyman.” In their view, the latest jobs print instead “justifies caution over cadence and quantity of future policy adjustments.
RBI’s policy announcement awaited
Going forward, the major trigger for the Indian Rupee will be the Reserve Bank of India’s (RBI) monetary policy announcement.
Analysts at MUFG/BTMU reiterate that they are “officially forecasting RBI to keep rates on hold,” but emphasize that “more importantly we have already been calling for the central bank to start its hiking cycle from December so ultimately we think it’s just a matter of time before policy rates move higher.” They “see a good chance RBI will also move its stance away from neutral to signal a tightening bias,” underscoring a shift in the policy signal even if the near-term decision is unchanged.
In terms of the projected magnitude, MUFG/BTMU note that “we have 50bps of rate hikes in our forecast profile, and have mentioned that there could be a risk of 75bps in total this cycle,” pointing to a backdrop where “growth is strong, liquidity is abundant, credit growth is picking up, fiscal policy is supportive, while higher commodity prices and adverse weather conditions lend inflation risk to the upside in India.” They add that “we are forecasting RBI to hike rates by 50bps this cycle with some risk of 75bps, although we note pricing in the rates market is quite rich already,” suggesting that markets may already be pricing in a relatively aggressive tightening path.
Technical Analysis: USD/INR aims to revisit all-time high near 97.00
In the daily chart, USD/INR trades at 96.42, extending its advance above the 20-period exponential moving average (EMA) at 95.91 and keeping a near-term bullish bias intact. The pair is supported by this rising EMA, while the Relative Strength Index (14) at 68.07 hovers just under overbought territory, suggesting strong but increasingly stretched upside momentum.
On the downside, initial support is seen at the 20-period EMA around 95.91, where a pullback could attract fresh buying interest as long as the level holds. With no nearby technical resistance levels from the current dataset, further gains would likely be driven by momentum until new highs begin to establish fresh topside reference points.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann highlight that GBP/USD traded sideways on Monday, closing slightly lower near 1.3225, with intraday price action lacking clear momentum. They expect near-term range trading to persist. On a 1–3 week basis, they maintain a mildly negative Pound view, looking for a drift toward the major 1.3140 support, while longer-term technicals still point to further downside risk toward prior lows.
Pound range but downside risk
"24-HOUR VIEW: GBP dipped to 1.3184 and then rebounded to a high of 1.3256 last Friday. When it was at 1.3245 yesterday, we indicated that “while there is scope for the rebound to extend, given that there has been no clear increase in upward momentum, any advance is likely to remain within a 1.3215/1.3265 range.” The subsequent price movements did not unfold as expected. GBP fluctuated between 1.3191 and 1.3242 before closing modestly lower by 0.11% at 1.3224. There has been no clear shift in either downward or upward momentum. Today, GBP is likely to range-trade between 1.3195 and 1.3245."
"1-3 WEEKS VIEW: We turned slightly negative on GBP last Friday (02 Oct, spot at 1.3195). We indicated that “while downward momentum is building again, it is not strong for now.” We were of the view that GBP “is likely to edge lower toward the major support at 1.3140.” After GBP rebounded to 1.3256, we highlighted yesterday that “while the buildup has eased somewhat with the subsequent rebound in GBP, we will continue to hold the same view as long as the ‘strong resistance’ at 1.3265 is not breached.” There is no change in our view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver price recovers to near $61.00 as the US Dollar retreats.
- BBH sees the US Dollar outperforming as strong US business data supports hawkish Fed bets.
- Investors keenly await FOMC minutes of the September policy meeting.
Silver price (XAG/USD) holds its recovery move seen in the early European trade from $60.30 to near $61.00 ahead of the opening of United States (US) markets on Tuesday. The white metal bounces back as the US Dollar Index (DXY) retreats after hitting a fresh annual high near 102.54 on Monday to near 101.95, at press time.
Technically, some correction in the US Dollar (USD) offers relief to the Silver price.
However, market experts see the US Dollar outperforming amid the US economic resilience.
Strategists at Brown Brothers Harriman (BBH) argue that the latest US business surveys continue to underpin the Federal Reserve’s (Fed) hawkish stance and the Dollar. They note that the "US September ISM indexes back the Fed’s tightening bias and is USD supportive," with the headline services and manufacturing readings "point[ing] to resilient growth" while the "Prices Paid indexes signal inflation pressures are intensifying."
In the BBH view, this backdrop is reflected in market pricing, as "Fed funds futures continue to price in a full 25bps hike to 4.00-4.25% in December."
For fresh cues regarding the US interest rate outlook, investors await Federal Open Market Committee (FOMC) minutes of the September policy meeting, which will be released on Wednesday. In the policy meeting, the Fed hiked policy rates by 25 basis points (bps) to the 3.75%-4.00% and signaled at least one more this year.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $61.21, holding a bearish near-term bias as it remains below the 20-day exponential moving average (EMA) at $62.99. The pair has retreated from recent highs and is now capped by this short-term trend indicator, while the Relative Strength Index (RSI) at 42.27 stays in a subdued, mildly bearish territory that hints at persistent downside pressure rather than outright oversold conditions.
On the topside, immediate resistance is located at the 20-day EMA at $62.99, and a sustained break above this barrier would be needed to ease the current bearish tone and open the way for a more constructive recovery. On the downside, momentum conditions reflected by the RSI suggest sellers retain control, leaving XAG/USD vulnerable to further slippage as long as price trades beneath the $62.99 cap.
(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.
Elias Haddad at Brown Brothers Harriman highlights that the Dollar has trimmed some recent gains but retains support from strong US data and Fed expectations. September ISM services and manufacturing indexes point to resilient growth, while Prices Paid suggest intensifying inflation. Fed funds futures still discount a full 25 bps hike to 4.00–4.25% in December, underpinning the Dollar outlook.
ISM data backs Fed tightening bias
"The US September ISM indexes back the Fed’s tightening bias and is USD supportive. The headline services and manufacturing indexes point to resilient growth and the Prices Paid indexes signal inflation pressures are intensifying. Fed funds futures continue to price in a full 25bps hike to 4.00-4.25% in December."
"The Atlanta Fed GDPNow model estimates annualized real GDP growth of 3.7% in Q3. Sustaining that pace alongside fiscal consolidation could help the US grow its way to a lower debt burden."
"But that’s highly unlikely. US real GDP growth has average 2.5% in the past 10 years and the Congressional Budget Office projects the primary budget deficit (overall budget balance excluding interest expense) to average -2.1% over the next ten years, pushing federal debt to a record 120% of GDP by 2036."
"US August trade balance which will feed into the Atlanta Fed’s updated GDPNow estimate. Fed speakers include: Fed New York Fed President John Williams, St. Louis Fed President Alberto Musalem (non-voter), Fed Vice Chair Michelle Bowman, and Kansas City Fed President Jeffrey Schmid (non-voter)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/USD edges up to the mid-1.1200s after bouncing from 17-month lows at 1.1160 on Monday.
- Eurozone Retail sales missed expectations, and German Factory Orders plunged in August.
- Oil prices have declined about 5% from last week's highs amid news that exports from Gulf countries are recovering.
The Euro (EUR) posts a mild recovery against the US Dollar (USD) on Tuesday, with the EUR/USD pair trading a few pips below 1.1250 at the time of writing, extending its rebound from the 17-month low, near 1.1160, hit on Monday. Eurozone Retail Sales and German Factory Orders data have disappointed, but a broader US Dollar pullback and a further decline in Crude Oil prices are providing some respite to the ailing single currency.
Eurozone Retail Sales bounced up 0.1% in August, after a 0.6% contraction in July, undershooting market expectations of a 0.2% gain, according to figures released by Eurostat earlier in the day. Year-over-year, retail consumption increased 0.8%, above the previous month’s 0.4% reading but also below the 1% market forecast.
Before that, data released by Destatis revealed that German Factory Orders plunged 10.6% in August, following a 3.2% increase in July, largely exceeding the 1% decline seen in the previous month. The report highlights the decline in sales of transport equipment, such as aircraft, ships, trains and military vehicles, which fell 61% on seasonally adjusted terms after having doubled in July as the main reason for August's decline. Excluding large-scale orders, sales of all other items fell a mere 0.1%.
The Euro, however, is drawing some support from a reversal in Oil prices. Brent Crude has extended its decline below $98.00, nearly 5% below last week’s highs. Reports that Oil flows from Gulf countries have recovered sharply over the last few weeks have eased concerns about supply disruptions and provided some relief to the Eurozone's oil-importing economies.
Growing debt concerns and political uncertainty likely to limit Euro rallies
The Euro remains under pressure amid rising concerns about public finances, with the gap between France’s OAT yield and the German Bund at levels unseen since the 2009 crisis. France is also facing a political gridlock that discards any significant savings plan, at least until the presidential elections in 2027, and to make things worse, Spanish President Pedro Sanchez announced a snap election in November. If we add to this the fragility of Frederich Merz's cabinet in Germany, we obtain the picture of the uncertain political scenario that is keeping investors away from the Euro.
Against this backdrop, the European Central Bank (ECB) remains between a rock and a hard place, having to fine-tune its monetary policy. Further monetary tightening might add fuel to the government bonds sell-off. Inflation, on the other hand, is running at levels well above the 2% target and does not seem to retreat unless the Middle East improves radically, which adds a layer of uncertainty to the Eurozone's economic outcome.
In the US, ISM Services Purchasing Managers Index data released on Monday showed that business activity slowed down beyond expectations in September, as prices paid by businesses increase with demand still at high levels. The US Dollar, however, remains drawing support from the high US Treasury yields, which hit fresh multi-decade highs.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by Eurostat on a monthly basis, measures the volume of retail sales in the Eurozone. It shows the performance of the retail sector in the short term, which accounts for around 5% of the total value added of the Eurozone economies. Retail Sales data is widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the prior month. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish
Read more.Last release: Tue Oct 06, 2026 09:00
Frequency: Monthly
Actual: 0.1%
Consensus: 0.2%
Previous: -0.6%
Source: Eurostat
Economic Indicator
Retail Sales (YoY)
The Retail Sales data, released by Eurostat on a monthly basis, measures the volume of retail sales in the Eurozone. It shows the performance of the retail sector in the short term, which accounts for around 5% of the total value added of the Eurozone economies. Retail Sales data is widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the YoY reading comparing sales volumes in the reference month with the same month a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Last release: Tue Oct 06, 2026 09:00
Frequency: Monthly
Actual: 0.8%
Consensus: 1%
Previous: 0.6%
Source: Eurostat
Deutsche Bank strategists highlight broad resilience across global equities, led by record-setting US tech stocks and steady gains in Europe. Asian markets are also mostly firmer, while mainland Chinese markets remain closed for the Golden Week holidays and US and European equity futures point to further modest gains.
Stocks hold up against bond selloff
"Once again, US tech stocks helped power the equity resilience, with the S&P 500 (+0.66%) closing within half a percent of its record high, whilst the NASDAQ (+1.05%) and the Mag 7 (+1.23%) both hit new records."
"And for Europe there was also a fair amount of resilience, with the STOXX 600 (+0.36%) ending the day around 4% beneath its own record high from August. Indeed, apart from France there was a steady performance, with gains for the FTSE 100 (+0.34%), the DAX (+0.09%) and the FTSE MIB (+0.66%)."
"Meanwhile, China’s onshore financial markets remain shut for the National Day and Golden Week holidays and will resume trading on Thursday. US equity futures are up around a tenth of a percent with European equivalents up four-tenths."
"Asian equities are broadly firmer this morning, with the Hang Seng (+0.77%), the Nikkei (+0.82%) and the S&P/ASX 200 (+0.51%) all trading moderately higher but with the KOSPI (-1.44%) turning lower after opening higher. The index was closed yesterday for holidays."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
MUFG’s Lee Hardman highlights that the Euro remains under selling pressure, with EUR/USD testing support at 1.1200 as Spanish Prime Minister Pedro Sanchez calls an early election for November 29. Opinion polls point to gains for the People’s Party, potentially in coalition with VoX. Hardman limited additional downside from Spain, with Euro performance into year-end driven more by French government bond market developments and contagion risks.
Euro pressured by Spain and France risks
"The euro continues to remain under selling pressure at the start of this week with EUR/USD testing support at the 1.1200-level overnight."
"The latest opinion polls have been indicating that the centre-right People’s Party are well positioned to positioned to become the biggest party after the election although would require support from other parties without a majority."
"While the snap election adds to political uncertainty in the euro-zone in the near-term, we do not expect the outcome to materially add to downside risks for the euro."
"The performance of the euro heading into year-end will depend more on the fallout from the French government bond market sell-off including evidence of contagion and how policymakers react with risks currently skewed towards further weakness."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Silver prices (XAG/USD) broadly unchanged on Tuesday, according to FXStreet data. Silver trades at $61.14 per troy ounce, broadly unchanged 0.11% from the $61.08 it cost on Monday.
Silver prices have decreased by 13.99% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 61.14 |
1 Gram | 1.97 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 67.98 on Tuesday, up from 67.78 on Monday.
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.
(An automation tool was used in creating this post.)
ING’s Francesco Pesole notes that the Dollar remains supported early in the week, helped by Euro-specific weakness and higher global bond yields, even as strong equities cap gains. The ISM services data were slightly hawkish but not enough to shift expectations for an October Federal Reserve hold. ING’s macro team still sees a December hike as the base case, with DXY risks skewed to the upside.
Greenback underpinned by yields and Fed
"The dollar has continued to find support at the start of this week. The euro’s idiosyncratic weakness is still playing a role, and so are global bond yields that keep pushing higher. Strong equity performance likely capped USD gains and allowed some high-beta currencies to outperform, but the domestic backdrop remains constructive for the greenback."
"Yesterday, the ISM services index eased to 54.9 from 55.4 (consensus 55.0), but remained firmly in expansion territory. Business activity and new orders softened, though stronger employment and order backlogs, alongside a fresh high in prices paid, helped offset the decline."
"Overall, slightly hawkish news if anything (especially on jobs and prices), but not enough to materially alter the Fed narrative. Markets are likely to remain comfortable with an October hold provided September core CPI (released on 14 October) prints at 0.2% MoM, which is where consensus is converging. But a hike in December remains the base case, also for our macro team."
"For DXY, developments in the French bond market may matter more than domestic US factors this week. Risks remain skewed to the upside, although the Fed story may not change materially over the next few days given the light calendar. Tomorrow’s FOMC minutes may have a relatively contained impact given the soft-ish US data of the past couple of weeks."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD remains close to an 18-month high of 1.4293 as the Canadian Dollar (CAD) struggles amid lower oil prices.
- JPMorgan reports Middle East crude exports reached 17.5 million barrels daily, near 98% of pre-war volumes, while refined products hit 58%.
- Softer employment data hurts the US Dollar by lowering expectations for a Federal Reserve interest rate hike in October.
USD/CAD extends its gains for the third consecutive day, trading around 1.4270 during European hours on Tuesday. The pair remains close to freshly reached 18-month highs as the commodity-linked Canadian Dollar (CAD) struggles amid lower oil prices. Crude oil prices are under pressure as evidence builds that Middle East crude exports are rebounding toward pre-war levels.
According to JPMorgan, crude shipments from the region have recovered to 17.5 million barrels per day, roughly 98% of pre-war volumes, while refined product flows like diesel and gasoline have reached 3 million barrels per day, or 58% of normal capacity. Gulf producers continue to move expanding supply through the Strait of Hormuz despite ongoing maritime risks, with Iraq actively seeking extra vessels to transport its cargoes through the strategic transit route.
Further underscoring the easing supply constraints, Kuwait reported that its oil production has returned to approximately 75% of pre-conflict levels. Meanwhile, Saudi Arabia has sharply slashed official selling prices for its flagship crude grade to Asian buyers, signaling growing physical availability and a progressively loosening global oil market.
However, the upside of the USD/CAD pair could be restrained as the US Dollar (USD) faces challenges amid softer US employment data, which has significantly dampened expectations for a Federal Reserve (Fed) interest rate hike in October.
A drop in crude oil prices further relieved inflation concerns and eased pressure on monetary policy tightening. Reflecting this shifting sentiment, the CME FedWatch Tool shows that traders are currently pricing in more than a 78% probability that the Fed will keep interest rates on hold at its upcoming meeting.
Technical Analysis:
In the daily chart, USD/CAD trades at 1.4270, extending its advance with a clear bullish near-term bias as price holds above both the nine- and 50-period Exponential Moving Averages (EMAs). The alignment of shorter and longer EMAs below spot reinforces a supported tone, while the 14-day Relative Strength Index (RSI) at 78.96 signals overbought conditions, suggesting the rally is stretched but still driven by strong upside momentum. The FXS Fed Sentiment Index at 137.58 remains elevated, hinting that broader policy expectations continue to underpin demand for the pair.
On the topside, the next significant resistance is the horizontal barrier at 1.4794, which stands as a medium-term upside objective should buyers keep control. On the downside, initial support is seen at the nine-period EMA at 1.4202, ahead of a deeper structural floor at the 50-period EMA near 1.4022, where a pullback could find fresh buying interest as long as the broader bullish configuration remains intact.
(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.
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