Forex News
- USD/CAD softens to near 1.4025 in Tuesday’s early European session.
- Fed's hawkish tilt might cap the downside for the pair.
- Oil rises ahead of potential US-Iran talks, supporting the commodity-linked Canadian Dollar.
The USD/CAD pair declines to around 1.4025 during the early European session on Tuesday. Nonetheless, the potential downside for the pair might be limited amid a hawkish stance of the US Federal Reserve (Fed). Fed officials are scheduled to speak later on Tuesday, including John Williams, Philip Jefferson and Thomas Barkin.
Traders are contending with hawkish signals from the US central bank, reinforcing expectations of further tightening later this year. This, in turn, could underpin the US Dollar (USD) against the Canadian Dollar (CAD).
St. Louis Fed President Alberto Musalem said on Monday that the central bank will likely need to hike interest rates further to lower inflation resulting from strong demand as well as a commodity price shock that has moved beyond oil.
Last week, the Fed raised interest rates by a quarter of a percentage point and penciled in an additional hike later this year, steps aimed at containing inflation.
Meanwhile, a rise in crude oil prices could support the commodity-linked Loonie. Iran and the US exchanged threats on Sunday, though US President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the UN General Assembly, per CNBC.
Uncertainty in the Middle East remains high after Yemen’s Iran-backed Houthis said they attacked Riyadh and a Saudi Aramco facility in Yanbu and stepped up efforts to cut off Saudi-backed forces from the Red Sea coast. It is worth noting that Canada is a major oil-exporting country, and high crude oil prices generally have a positive impact on the CAD.
USD strength and wider US-Canada spreads keep CAD on the back foot
Strategists at Scotiabank note that the Canadian Dollar remains under pressure, with “crude oil prices lower on the day also but wider US/Canada front-end spreads are the biggest drag on the currency.” They add that “spot does remain somewhat overvalued relative to our fair value estimate (1.3910),” and caution that, “at the margin, the weaker CAD is unhelpful for the BoC as it considers building inflation risks.”
On the technical side, Scotiabank describes the backdrop as “bullish”—highlighting that “the USD continues to pressure the 50% retracement resistance of the June/August slide in the USD at 1.3990.” They point out that “USD bullish trend momentum on the intraday and daily oscillators supports the positive USD undertone and a sustained push through 1.40 would bolster the outlook for additional gains towards 1.4050/1.4125.” In this context, “support has shifted higher to 1.3940/50,” underscoring the firm tone in USD/CAD.
Technical Analysis: USD/CAD retains a positive bias above the 100-day SMA
In the daily chart, USD/CAD keeps a bullish near-term bias as spot holds above the 100-day moving average (MA) and the Bollinger middle band. The pair is pressing into the upper half of the recent volatility envelope, with the Bollinger upper band just ahead, while the Relative Strength Index (RSI) at 63 suggests firm but not yet overbought upside momentum.
On the topside, initial resistance is located at the Bollinger upper band near 1.4040, where a clear break would open the way for further gains in the short term. On the downside, support is seen first at the 100-day MA around 1.3955, followed by the Bollinger middle band at 1.3891, with the lower band near 1.3740 acting as a deeper structural floor should a broader pullback unfold.
(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.
- GBP/USD rises to near 1.3385 as the US Dollar faces slight selling pressure.
- The Fed is expected to hike interest rates once again this year.
- Investors keenly await the flash UK S&P Global PMI data for September.
The British Pound (GBP) is 0.15% higher at around 1.3385 against the US Dollar (USD) during the European trading session on Tuesday. The GBP/USD pair gains as the US Dollar is slightly under pressure ahead of meeting between leaders from the United States (US) and Gulf nations.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | -0.11% | 0.06% | -0.05% | -0.07% | -0.40% | -0.10% | |
| EUR | 0.07% | -0.04% | 0.14% | 0.02% | 0.00% | -0.32% | -0.02% | |
| GBP | 0.11% | 0.04% | 0.17% | 0.05% | 0.04% | -0.28% | 0.02% | |
| JPY | -0.06% | -0.14% | -0.17% | -0.11% | -0.12% | -0.47% | -0.14% | |
| CAD | 0.05% | -0.02% | -0.05% | 0.11% | -0.01% | -0.33% | -0.02% | |
| AUD | 0.07% | 0.00% | -0.04% | 0.12% | 0.01% | -0.33% | -0.01% | |
| NZD | 0.40% | 0.32% | 0.28% | 0.47% | 0.33% | 0.33% | 0.32% | |
| CHF | 0.10% | 0.02% | -0.02% | 0.14% | 0.02% | 0.01% | -0.32% |
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 slightly lower to near 100.35.
High-stake talks between the US and Gulf nations regarding the energy supply from the Middle East will likely take place later in the day at the sidelines of the United Nations (UN) General Assembly in New York.
On the domestic front, the Federal Reserve (Fed) is highly anticipated to deliver one more interest rate hike this year. Fed policymakers have warned that not only elevated oil prices, strong economic growth is also fuelling inflationary pressures.
In the United Kingdom (UK), investors await S&P Global Purchasing Managers’ Index (PMI) data for September, which will be released on Wednesday. The PMI report is expected to show that the overall business activity growth cooled down.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3385, keeping a bearish near-term tone as spot holds beneath the 20-period exponential moving average (EMA) at 1.3467 and the broken upward support trend line, whose break price is located at 1.3495.
The loss of this former structural floor now acting as resistance suggests the pair remains under corrective pressure, while the Relative Strength Index (14) at 37.7 stays just above oversold territory, hinting at weakening downside momentum but not yet signaling a bullish reversal.
On the topside, initial resistance is seen at the 20-period EMA around 1.3467, with a stronger barrier at the trend-line break level near 1.3495, where sellers are likely to defend the broader bearish structure. On the downside, the apir could decline towards 1.3300 if it fails to hold the recent low at 1.3336.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- Silver declines as hawkish Fed remarks reinforce expectations for further interest rate hikes, driving non-yielding asset prices lower.
- Fed's Musalem warns inflation could stay above 2% without earlier, incremental rate increases.
- Falling oil prices and Middle East diplomatic efforts could offer support for Silver.
Silver price (XAG/USD) inches lower after opening at a bullish gap, trading around $66.00 per troy ounce during Asian hours on Tuesday. Non-yielding Silver remains under pressure as hawkish remarks from Federal Reserve (Fed) officials have reinforced expectations for additional US interest rate hikes.
Musalem flags need for earlier, incremental hikes as inflation risks stay elevated
The Fed's Musalem delivers a distinctly hawkish tone, with an FXS Speechtracker score of 8/10, stronger relative to the historical average of 7.4/10. Musalem warns that without further policy restraint, inflation is likely to remain substantially above the 2% target over the next 18 months, arguing that interest rates need to rise further to tackle demand- and supply-driven price pressures, including broader commodity shocks beyond oil such as copper. Despite describing the labor market as stable around full employment and not a key source of inflation, Musalem highlights that underlying inflation remains too high at up to 3%, with business contacts planning price increases closer to 3%, reinforcing a bias toward earlier and incremental rate hikes.
The FXS Fed Sentiment Index rises by 0.42 points to 149.96, signaling a solid reinforcement of hawkish expectations in line with the elevated FXS Speechtracker score. At this level, the FXS Fed Sentiment Index remains deeply in hawkish territory, underscoring market anticipation of additional tightening to contain persistent inflation risks for the Dollar.
Goolsbee flags overheating risks as supply shocks cloud Fed’s path to 2%
Fed’s Goolsbee delivered a more forceful inflation message, with a 7.4/10 FXS Speechtracker score standing notably above the 6.4/10 historical average, underscoring heightened policy sensitivity to upside price risks. The emphasis on being “optimistic” about returning to 2% inflation only if there is no further evidence of demand overheating, combined with a clear warning of “no ambiguity” about the Fed’s response to excess demand, tilts the tone moderately hawkish despite ongoing uncertainty over the split between supply shocks and demand-driven inflation. Goolsbee’s insistence that persistent supply shocks must be explicitly incorporated into policy and that fading supply-side inflation is needed for a “credible path” back to 2% suggests the Fed is wary of easing prematurely, a backdrop that is broadly supportive of the Dollar on balance.
However, the white metal could find some support from declining oil prices, driven by expanding diplomatic initiatives to resolve the Middle East conflict and indications of uninterrupted energy supplies from the region. Crude oil itself faces potential downside risk as supply concerns ease alongside accelerating diplomatic efforts to bring an end to the US-Iran war.
Geopolitical developments are taking center stage as US President Donald Trump addresses the UN General Assembly in New York, with a potential side meeting scheduled with Iranian President Masoud Pezeshkian. Throughout the week, President Trump is also expected to conduct high-level talks with Chinese President Xi Jinping and leaders from various Gulf nations. Adding to the diplomatic push, the Trump administration has proposed a $5 billion fund dedicated to reconstructing Middle Eastern infrastructure damaged during the conflict.
Technical Analysis:
In the daily chart, XAG/USD trades at $66.11. The pair holds above both the 9-day exponential moving average (EMA) at $65.37 and the 50-day EMA at $64.92, keeping a constructive bullish bias while price consolidates near recent highs. The Relative Strength Index (14) at 53.37 stays in neutral territory with a slight positive tilt, suggesting that upward pressure is intact but not overstretched, while the elevated FXS Fed Sentiment Index at 149.96 hints that broader policy expectations remain supportive for silver.
On the downside, immediate support is seen at the $66.11 area, followed by the short-term 9-day EMA at $65.37 and then the medium-term 50-day EMA at $64.92, forming a layered demand zone beneath spot. With no clear resistance levels derived from the current indicator set, further gains would likely depend on how price reacts to this support stack, as a sustained break below the 50-day EMA would start to weaken the bullish near-term structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
- WTI stages a modest recovery from a nearly two-week low, touched on Monday.
- The geopolitical risk premium remains in play, lending support to the commodity.
- The technical setup favors bulls as focus remains on geopolitical developments.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts some buyers during the Asian session on Tuesday, snapping a four-day losing streak to sub-$91.00 levels, or a nearly two-week low touched the previous day. The commodity currently trades just below the $93.00 mark, up around 1.40% for the day, as the focus remains on the Middle East crisis.
In the latest developments, Iran's Islamic Revolutionary Guard Corps (IRGC) warned on Monday that it would change the geography of the war if the US escalates the conflict. This keeps the geopolitical risk premium in play and acts as a tailwind for crude oil prices. Meanwhile, improving shipments through the Strait of Hormuz and rising hopes for US-Iran talks at the UN General Assembly might cap the upside for the black liquid.
Crude oil prices hold a bullish bias above the 100-day simple moving average (SMA) at $85.05 and a Fibonacci support band between the 61.8% retracement at $84.27 and the 38.2% retracement at $90.96. That said, momentum indicators have eased, with the Relative Strength Index (RSI) hovering near a neutral 54 and the Moving Average Convergence Divergence (MACD) slipping below its signal line and turning negative on the histogram.
The technical setup, in turn, suggests the latest pullback is more a consolidation within an uptrend than a full-fledged reversal while oil prices stay supported over these structural levels. Meanwhile, weakness below the 38.2% Fibo. level at $90.96 would expose the 50.0% retracement at $87.61 and the deeper 61.8% level at $84.27, all reinforcing the underlying demand zone ahead of the 100-day SMA at $85.05 and lower Fibonacci anchors at $79.51 and $73.44.
On the topside, immediate resistance emerges at the 23.6% retracement at $95.10, with a break above this threshold exposing the cycle high region near $101.79, where buyers could begin to face more pronounced profit-taking pressures.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI daily chart
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.
- EUR/USD gains traction to near 1.1475 in Tuesday’s early European session.
- The negative tone of the pair remains intact below the 100-day SMA, with bearish RSI momentum.
- The initial support level is located at 1.1445; the first upside barrier emerges at 1.1545.
The EUR/USD pair trades in positive territory around 1.1475 during the early European session on Tuesday. The Euro (EUR) edges higher against the US Dollar (USD) amid improved risk sentiment as traders pinned their hopes on US-Iran talks. Federal Reserve (Fed) policymakers are scheduled to speak later on Tuesday, including John Williams, Philip Jefferson and Thomas Barkin.
Market participants await developments on potential US-Iran talks at the United Nations General Assembly this week. Washington and Tehran exchanged threats on Sunday, though US President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the UN General Assembly.
On the other hand, political instability in Germany could undermine the shared currency in the near term. The far-right Alternative for Germany took first place in state elections in northeastern Germany on Sunday, with Chancellor Friedrich Merz's conservative party suffering its worst regional election defeat in postwar Germany, leaving him clinging to power.
Euro confidence tested as German political risks rise
Analysts at MUFG highlight rising political risk in Germany after Chancellor Merz’s CDU suffered a historic setback in the north-eastern state of Mecklenburg-Vorpommern, where the party “won just 4.9% of the vote … the party’s worst result in any state election in Germany’s postwar history.” They argue that “the latest results will embolden CDU critics who blame Chancellor Merz’s low personal ratings to seek a change at the top of the party,” adding that, “at the same time, the latest political and fiscal developments in European could contribute to undermining confidence in the euro in the near-term.”
Fed’s Musalem leans more hawkish, backing earlier incremental rate hikes
The FXS Speechtracker score of 8/10 marks a modest hawkish tilt relative to the historical average of 7.4/10, underscoring stronger-than-usual emphasis on further policy restraint. Musalem’s warning that without additional tightening inflation is likely to remain substantially above the 2% target in 18 months, alongside the view that interest rates “likely need to rise further” despite a labor market around full employment and broad-based commodity shocks, signals a clear preference for earlier, incremental hikes to prevent entrenched price increases near 3%. The characterization of inflation as still “too high” even after stripping out supply factors, and business contacts planning price rises closer to 3%, reinforces a bias toward continued restrictive policy that is supportive for the Dollar on a relative rates narrative.
The FXS Fed Sentiment Index rose by 0.42 points to 149.96, keeping overall Fed tone firmly in hawkish territory well above the neutral 100 threshold. This incremental uptick, aligned with the stronger FXS Speechtracker reading, confirms that Musalem’s remarks marginally intensify expectations for sustained higher policy rates, a backdrop that tends to underpin the Dollar versus lower-yielding peers.
Technical Analysis: EUR/USD retains a negative tone below the 100-day SMA
In the daily chart, EUR/USD keeps a bearish near-term bias as spot holds beneath the 100-day simple moving average (SMA) and the Bollinger middle band. The pair is sliding along the lower half of the Bollinger envelope, while the 14-day Relative Strength Index at 36 stays just above oversold territory, which suggests selling pressure is still dominant even if downside momentum is not extreme.
On the downside, immediate support is offered by the Bollinger lower band near 1.1445, where sellers could start to take some profit on stretched intraday moves. A breach of this level could expose the July 14 low of 1.1378, followed by the July 28 low of 1.1353.
On the topside, initial resistance appears at the 100-day SMA at 1.1545. Any follow-through buying above the mentioned level could pave the way to the Bollinger middle band at 1.1575, en route to the September 9 high of 1.1654, and then the Bollinger upper band up at 1.1700.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Gold prices fell in India on Tuesday, according to data compiled by FXStreet.
The price for Gold stood at 13,355.52 Indian Rupees (INR) per gram, down compared with the INR 13,374.26 it cost on Monday.
The price for Gold decreased to INR 155,776.20 per tola from INR 155,994.80 per tola a day earlier.
Unit measure | Gold Price in INR |
|---|---|
1 Gram | 13,355.52 |
10 Grams | 133,555.20 |
Tola | 155,776.20 |
Troy Ounce | 415,410.20 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
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.
(An automation tool was used in creating this post.)
- AUD/JPY trades with a positive bias for the seventh straight day amid a combination of supporting factors.
- The BoJ’s dovish rate hike continues to undermine the JPY, while the RBA’s hawkish tilt benefits the AUD.
- Intervention fears might cap spot prices amid a mixed technical setup, warranting some caution for bulls.
The AUD/JPY cross attracts fresh buyers following a modest Asian session dip to the 111.80 area on Tuesday and turns positive for the seventh consecutive day. Spot prices, however, remain below last week's swing high and currently trade around the 112.15-112.20 region, up nearly 0.15% for the day.
The Japanese Yen (JPY) continues with its relative underperformance on the back of the Bank of Japan's (BoJ) surprisingly dovish decision last Friday. The Australian Dollar (AUD), on the other hand, draws support from the Reserve Bank of Australia (RBA) Governor Michele Bullock's hawkish remarks and turns out to be another factor acting as a tailwind for the AUD/JPY cross. That said, JPY intervention fears might hold back traders from placing fresh bullish bets on the currency pair.
From a technical perspective, spot prices hold marginally above the 100-day Exponential Moving Average (EMA) at 112.16, which lends a tentative constructive tone. The AUD/JPY cross, however, remains capped beneath a dense Fibonacci stack – the 50.0% retracement at 112.34 and the 61.8% level at 112.96. This highlights the nearby overhead supply and further warrants some caution before positioning for an extension of a well-established uptrend witnessed over the past week or so.
Meanwhile, the Moving Average Convergence Divergence (MACD) has turned positive, and the Relative Strength Index (RSI) hovers around 52, together suggesting modest recovering momentum rather than a decisive trend shift. Hence, any further move up is likely to face initial resistance at the 50.0% retracement at 112.34. This is followed by the 61.8% level at 112.96 and then 113.85 at the 78.6% retracement before the cycle high zone near 114.99.
On the downside, immediate support is provided by the 100-day EMA at 112.16, with further cushions at the 38.2% Fibo. level at 111.71 and the 23.6% retracement at 110.94. A deeper slide would expose the structural anchor of the current move around 109.68.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
AUD/JPY daily chart
Japanese Yen Price Last 7 Days
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 7 days. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.63% | 0.86% | 2.02% | 0.88% | 0.27% | 0.63% | 0.38% | |
| EUR | -0.63% | 0.23% | 1.37% | 0.21% | -0.40% | 0.12% | -0.27% | |
| GBP | -0.86% | -0.23% | 1.16% | 0.00% | -0.60% | -0.11% | -0.47% | |
| JPY | -2.02% | -1.37% | -1.16% | -1.12% | -1.82% | -1.05% | -1.61% | |
| CAD | -0.88% | -0.21% | 0.00% | 1.12% | -0.67% | 0.05% | -0.51% | |
| AUD | -0.27% | 0.40% | 0.60% | 1.82% | 0.67% | 0.48% | 0.10% | |
| NZD | -0.63% | -0.12% | 0.11% | 1.05% | -0.05% | -0.48% | -0.35% | |
| CHF | -0.38% | 0.27% | 0.47% | 1.61% | 0.51% | -0.10% | 0.35% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- USD/CHF depreciates as the US Dollar loses ground amid improved risk-on sentiment.
- UOB Group strategists note strong momentum, but state it's too early to confirm a USD/CHF break above 0.8300.
- Fed's Musalem warns inflation could stay above 2% without earlier, incremental rate increases.
USD/CHF loses ground for the fourth consecutive day, trading around 0.8200 during Asian hours on Tuesday. The pair depreciates as the US Dollar (USD) declines on increased risk-on sentiment due to trade and diplomatic prospects: traders are closely monitoring an upcoming US-China summit for signs of improving relations between the world’s two largest economies.
Additionally, hopes for a diplomatic breakthrough in the Middle East have improved investor mood following news that Iranian President Masoud Pezeshkian will lead a delegation at the UN General Assembly, alongside comments from US President Donald Trump indicating he would likely be open to a side meeting.
USD/CHF outlook stays constructive as UOB flags key support level
Strategists at UOB Group maintain a constructive 1–3 week outlook on USD/CHF, having “turned positive on USD almost two weeks ago.” They note that, as of September 17, with spot around 0.8250, “while momentum remains strong, it was too early to tell whether it was sufficient for USD to break above 0.8300,” and emphasize that this assessment “remains unchanged.” In their view, “only a breach of 0.8185 (no change in ‘strong support’ level) would indicate that 0.8300 is not coming into view.”
However, the Greenback may regain ground due to ongoing hawkish sentiment surrounding the Federal Reserve (Fed) policy stance.
Musalem flags need for earlier, incremental rate hikes to curb stubborn inflation
The Fed's Musalem delivers a distinctly hawkish message, with an 8/10 FXS Speechtracker score standing above the 7.4/10 historical average and underscoring a stronger-than-usual tightening bias relative to the established baseline. Musalem warns that without further policy restraint, inflation is likely to remain substantially above the 2% target even 18 months ahead, highlighting broad-based commodity shocks beyond oil, still-elevated underlying inflation near 3%, and business pricing plans anchored closer to 3%, all consistent with a preference for earlier and incremental rate increases despite a labor market judged to be around full employment but not the main source of price pressures.
The FXS Fed Sentiment Index rises by 0.42 points to 149.96, reinforcing that Fed rhetoric remains firmly in hawkish territory well above the neutral 100 threshold. The combination of a higher-than-baseline FXS Speechtracker score and an index level near 150 signals a policy stance that continues to favor additional rate hikes, a backdrop typically supportive of the Dollar against lower-yielding peers.
Goolsbee flags persistent supply shocks, keeps Dollar bulls wary of overheating demand
Fed’s Goolsbee delivered a relatively more impactful speech, with an FXS Speechtracker score of 7.4 versus a historical average of 6.4, underscoring heightened market relevance. The emphasis on being “optimistic” about returning to 2% inflation only if demand does not overheat, alongside the admission that the Fed is still parsing supply versus demand drivers, signals a conditional and data-dependent stance that leans cautiously hawkish. By stressing that strong demand, energy, tariffs, and other supply shocks are all feeding inflation and that supply-side pressures must fade to restore a “credible path” to 2%, the remarks reinforce the risk that policy may need to stay tighter for longer, a supportive backdrop for the Dollar.
The FXS Fed Sentiment Index slipped by 1.07 points to 149.54, indicating a modest pullback in perceived hawkishness even as the gauge remains firmly above the neutral 100 mark. This configuration shows that, despite a slight softening in tone, the Fed is still viewed as operating in clearly hawkish territory, and the stronger-than-baseline FXS Speechtracker score suggests markets will continue to price in a vigilant stance on inflation, with implications for Dollar resilience versus the Euro and Yen.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
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