Forex News

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) retains a soft undertone despite a first modest gain versus the US Dollar (USD) in eight sessions, helped by firmer May Consumer Price Index (CPI) and steadier US–Canada spreads. They doubt a reversal in yield differentials is likely soon, implying CAD underperformance persists. Technically, they see an overbought USD bull trend that could still extend toward the 1.43–1.45 area if 1.41 breaks.

Overbought rally eyes 1.43–1.45

"The CAD retains a soft undertone but the it did manage to close a little higher on the USD yesterday—its first net gain in eight sessions."

"The trend in wider US/Canada spreads may be steadying, allowing a minor reprieve for the CAD, following yesterday’s higher than expected May CPI data. A reversal in yield differentials is unlikely any time soon, however, and that likely means the CAD will continue to languish—absent a broader reconsideration of the USD outlook. "

"Neutral/bullish—The USD bull trend remains strong and technically overbought, according to various technical studies. The daily RSI at 87 is higher now than in both early 2025 and 2020 when the USD surged to 1.47/1.48."

"Yesterday’s minor rebound in the CAD may signal a temporary pause in the USD bull trend but, aside from overbought signals, there is little in price action at the moment to suggest a significant CAD recovery."

"Rather, USD gains through the upper 1.41s may see the rally extend to 1.43-1.45 range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

ING analysts Warren Patterson and Ewa Manthey say Oil prices fell sharply after the US granted a 60-day waiver allowing Iranian exports, adding to pressure from rising flows through the Strait of Hormuz. They highlight uncertainty over how quickly Persian Gulf production and transit can normalise, stressing that fragile US-Iran ceasefire dynamics keep significant upside risk for Oil volatility.

Iran waiver and Hormuz flows weigh

"Oil prices came under further pressure yesterday, with ICE Brent settling 3.3% lower."

"The real downward price pressure yesterday came from the US issuing a 60-day licence, which allows Iran to export oil."

"Looking ahead, the key uncertainty remains how quickly oil flows through the Strait of Hormuz can normalise."

"While the consensus is that this normalisation will take months rather than weeks, price action in the oil market suggests a more rapid recovery."

"Clearly, the evolution of US-Iran talks will be crucial to how quickly energy flows resume."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Silver slides more than 4% on Tuesday as hawkish Fed bets push the US Dollar to its highest level in nearly a year.
• XAG/USD's technical outlook remains bearish, with key support seen at the $60.00 psychological level.
• A break below $60.00 would expose deeper losses, while holding above the level would keep the broader range-bound structure intact.

Silver (XAG/USD) slides more than 4% on Tuesday as the US Dollar (USD) climbs to near one-year highs after the Federal Reserve's (Fed) hawkish tilt at last week's monetary policy meeting reinforced expectations that interest rates will remain higher for longer. At the time of writing, XAG/USD is trading around $61.96, near three-month lows.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is hovering around 101.24, its highest level since May 2025.

The white metal remains in a correction phase following an extraordinary rally last year and is down nearly 50% from the all-time high near $121 reached in late January. However, in recent months, price action has been largely confined to a broad $60-$90 range.

Multiple rebounds from just above the $60 psychological level suggest buyers are attempting to defend the zone, although a stronger US Dollar and rising Treasury yields are threatening that support as markets price in the possibility of a Fed rate hike later this year.

A stronger US Dollar makes the metal more expensive for overseas buyers, while elevated Treasury yields increase the opportunity cost of holding non-yielding assets such as Silver.

US Personal Consumption Expenditures (PCE) inflation data due on Thursday could act as the next catalyst for Silver. A stronger-than-expected reading would likely boost the US Dollar further and strengthen bets on Fed rate hikes, leaving the white metal vulnerable to an extension of its downtrend. A softer reading, meanwhile, could pause the Greenback's advance and trigger a short-term recovery in XAG/USD.

Technical Analysis:

In the daily chart, XAG/USD is extending a bearish tone as price holds well beneath the 50-, 100- and 200-day Simple Moving Averages (SMAs), which all fan out overhead as a cap on recovery attempts.

Momentum remains weak, with the Relative Strength Index (RSI) hovering near the oversold band around 33, while the Average Directional Index (ADX) near 30 suggests a maturing but still active downtrend rather than capitulation.

On the topside, initial resistance is aligned with the 200-day SMA around $69.33, followed by the 50-day SMA near $74.33 and the 100-day SMA at about $76.70, before a more distant horizontal barrier at $90.00.

On the downside, the next key support is the horizontal floor at $60.00, where a break would open the way to further losses, while holding above it would merely signal consolidation within the broader bearish structure.

(The technical analysis of this story was written with the help of an AI tool.)

TD Securities’ Global Strategy Team reports that June Eurozone PMIs confirm a divergence between stabilizing German manufacturing and still weak French services. German manufacturing hovers around 50 with improving sentiment and bottoming new orders, while French services remain in contraction as demand and new orders fall, forcing discounting despite cost pressures and leaving employment and confidence only tentatively recovering.

German manufacturing steadies as French services lag

"June PMIs point to a continued two-speed dynamic between manufacturing and services sectors."

"Germany’s manufacturing sector hovers at stabilization with PMI read at 50.0 (TDS: 50.0; mkt: 50.2; prior: 50.1)."

"Sentiment is improving and new orders are broadly bottoming out, which is helping to support output, even as employment continues to fall as firms remain cautious and wait for a more durable recovery in demand."

"By contrast, French services remain firmly demand-constrained with the PMI at 47.4 (TDS: 45.5; mkt: 46.0; prior: 44.3)."

"There, activity is still contracting, albeit at a slower pace, as new orders continue to decline amid weak client appetite and lingering uncertainty, leaving firms reliant on discounting despite input cost pressures to try to stimulate activity, while employment merely stabilizes and confidence only tentatively recovers with the Middle East conflict resolution."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

National Bank of Canada (NBC) Economics and Strategy team, led by Taylor Schleich, Ethan Currie and Vy Le, argues that Kevin Warsh’s Federal Reserve (Fed) is deliberately increasing policy ambiguity by stripping out forward guidance. Markets see a hawkish tilt and price a roughly even chance of a July hike, but the authors doubt a full hiking cycle as inflation is expected to ease and long-term expectations remain contained.

Warsh’s hawkish tone versus easing inflation

"The dust has settled after the Fed’s first decision under Kevin Warsh, resolving some uncertainty. But plenty of questions remain, with policy ambiguity a deliberate feature of this new-look FOMC."

"That was clear last week when investors received an ultra-slim rate statement with no forward rate guidance. This new communication strategy marks a clear departure from the Powell Fed, which ensured markets knew what to expect by decision day."

"Case in point: the next Fed meeting is priced as a toss-up (~40% hike odds) and may remain as such right up to July 29th."

"The curve will also depend on whether this apparent hawkish shift is reinforced with hikes or is just rhetorical. If the central bank really wanted to prove it was laser-focused on price stability, a hike next month would make that clear (and Thursday’s PCE data won’t argue against such a move)."

"Instead, we expect many officials will balk at starting a new hiking cycle right when inflation begins easing (which it will start to do in June) and with inflation expectations that aren’t all that alarming."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Geoff Yu at BNY highlights that Eurozone PMIs remain weak despite a slightly better-than-expected composite reading. Core economies like Germany and France continue to underperform, with German services at a 43‑month low. Softer inflation pressures in the PMI data raise questions over the European Central Bank’s assessment of demand and the necessity of further rate hikes, weighing on the Euro.

Weak core data and easing price pressures

"The composite Eurozone PMI was better than expected at 49.5 (consensus: 49.2), and manufacturing also showed some expansion at 51.3 (consensus: 51.6)."

"However, the core names such as Germany and France continued to perform poorly."

"German manufacturing PMI was flat at 50.0, but services fell to a 43-month low of 46.8."

"The figures will certainly lead to questions over the ECB’s current assessment of Eurozone demand conditions to justify tightening."

"Reports of softer inflation pressures in the reports also lead us to question the necessity of further hikes."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)