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Daily Pivots: (S1) 1.7716; (P) 1.7759; (R1) 1.7800; More...

Intraday bias in EUR/AUD stays neutral at this point, with focus on 55 D EMA (now at 1.7808). Rejection by the EMA will maintain near term bearishness. Further break of 1.7588 support will extend the corrective pattern from 1.8554 lower gain, and target 1.7245 and possibly below. However, decisive break of the 55 D EMA will bring stronger rally back to 1.8155 resistance instead.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Deeper fall could be seen as the pattern extends, but downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Uptrend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9317; (P) 0.9334; (R1) 0.9344; More...

Range trading continues above 0.9313 and intraday bias in EUR/CHF stays neutral at this point. Further decline is expected with 0.9394 resistance intact. On the downside, break of 0.9313 will resume the fall from 0.9452 to retest 0.9218 low. On the upside, break of 0.9394 will bring stronger rally towards 0.9452 resistance instead.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside potential should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

The US dollar fell sharply on Wednesday following the Federal Reserve’s decision to cut rates by 0.25%. However, by the end of the session it had regained part of its losses, reflecting ongoing uncertainty over the regulator’s next moves. The pound, meanwhile, after an initial rise on the back of the weaker dollar, turned lower ahead of today’s Bank of England meeting, which could bring fresh volatility to the GBP/USD pair. The Bank of Canada meeting also added to the overall market mood, with the regulator signalling a cautious stance on future policy.

During today’s trading, the market’s attention is focused on fresh US releases: labour market data, initial jobless claims, as well as the Philadelphia Fed’s business activity index and capital expenditure figures. These numbers could either support a corrective rebound in the dollar or renew pressure if they confirm an economic slowdown. For the pound, the key drivers will be the outcome of the Bank of England’s voting and accompanying statements, with uncertainty still surrounding how far the regulator is willing to go in easing policy.

USD/CAD

Yesterday, the price tested 1.3730 and bounced sharply from that level, forming a bullish piercing line pattern. Technical analysis of USD/CAD suggests a potential continuation of the rise towards 1.3800–1.3820, in line with confirmation of the mentioned pattern. Should negative US data emerge, the pair may fall back towards 1.3730–1.3760.

Events that could influence USD/CAD’s direction:

• Today, 15:30 (GMT+3): US Initial Jobless Claims
• Today, 15:30 (GMT+3): Philadelphia Fed Manufacturing Index
• Tomorrow, 15:30 (GMT+3): Canada Core Retail Sales Index

GBP/USD

A three-day rally in GBP/USD ended with a rejection at 1.3725 and the formation of a bearish shooting star pattern. Technical analysis of GBP/USD points to a possible decline towards 1.3540–1.3560. If the pair manages to consolidate above 1.3670, yesterday’s high may be retested.

Events that could influence GBP/USD’s direction:

• Today, 14:00 (GMT+3): Bank of England Votes on Rate Cut
• Today, 14:00 (GMT+3): Bank of England Interest Rate Decision
• Today, 14:00 (GMT+3): Bank of England Monetary Policy Committee Minutes

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Daily Pivots: (S1) 1.1774; (P) 1.1847; (R1) 1.1885; More...

Intraday bias in EUR?USD is turned neutral first with current retreat. Some consolidations would be seen below 1.1917 temporary top first. Further rise is expected as long as 1.1741 resistance turned support holds. Above 1.1917 will resume larger up trend to 1.2 psychological level. However, firm break of 1.1741 should confirm short term topping, and turn bias back to the downside for 1.1607 support.

In the bigger picture, rise from 0.9534 (2022 low) long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Sustained break of 1.2 psychological level will carry larger bullish implications. Next target is 138.2% projection at 1.2581. This will remain the favored case as long as 55 W EMA (now at 1.1215) holds.

Daily Pivots: (S1) 1.3588; (P) 1.3657; (R1) 1.3694; More...

Intraday bias in GBP/USD is turned neutral first with current retreat, and some consolidations would be seen below 1.3725 temporary top. Further rise is expected as long as 55 D EMA (now at 1.3488) holds. Above 1.3725 will bring retest of 1.3787 high first. Decisive break there will resume larger up trend to 1.4004 projection level. However, sustained break of 55 D EMA will indicate that corrective pattern from 1.3787 is extending with another falling leg, and bring deeper fall to 1.3332 support and below.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3151) holds, even in case of deep pullback.

Daily Pivots: (S1) 145.98; (P) 146.51; (R1) 147.54; More...

Intraday bias in USD/JPY is turned neutral with break of 147.25 minor resistance. Outlook is also mixed up by the current rebound. On the upside, break of 149.12 resistance will suggest that pullback from 150.90 has completed as a correction, and rise from 139.87 is still in progress. Further rise should then be seen back to retest 150.90 next. On the downside, below 145.47 will resume the fall to 142.66 support next.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Daily Pivots: (S1) 0.7847; (P) 0.7871; (R1) 0.7912; More….

Intraday bias in USD/CHF is turned neutral with current recovery. Some consolidations would be seen above 0.7828 temporary low. But upside should be limited below 0.8006 resistance to bring another fall. On the downside, break of 0.7828 will resume larger down trend to 61.8% projection of 0.8475 to 0.7871 from 0.8170 at 0.7797. Firm break there will pave the way to 100% projection at 0.7566.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds.

Daily Pivots: (S1) 1.3738; (P) 1.3763; (R1) 1.3798; More...

Intraday bias in USD/CAD stays neutral for the moment. With 1.3725 support intact, rise from 1.3538 could still extend higher. Break of 1.3889 should resume the corrective rise through 1.3923 to 1.4014 cluster resistance. On the downside, though, firm break of 1.3725 will indicate that the corrective rebound has completed, and bring deeper fall back to 1.3574 support.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 cluster resistance (38.2% retracement of 1.4791 to 1.3538 at 1.4017) holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.

Markets

Let’s start with the numbers. In its updated quarterly Summary of Economic Projections, the US central bank raised its growth path over the 2025-2027 policy horizon from 1.4%-1.6%-1.8% to 1.6%-1.8%-1.9%. Expectations around the unemployment rate shifted from 4.5%-4.5%-4.4% to 4.5%-4.4%-4.3%. Finally, both headline and core PCE deflators are now projected at 2.6% next year instead of 2.4%. Summarizing: stronger growth, lower unemployment and higher inflation. Without additional context, this calls for raising the Fed funds rate instead of lowering it. Yet the latter was the (as expected) outcome at yesterday’s FOMC meeting. The Fed lowered its policy rate by 25 bps to 4%-4.25% after keeping it stable at 4.25%-4.50% since the start of the year. Fed Chair Powell labelled the rate cut as a “risk management decision”. Compared with the July policy statement and in line with the pivot made by Powell at the Jackson Hole conference, the Fed now judges that downside risks to employment have risen. In light of that shift in balance from “attentive to the risks to both sides of its dual mandate”, the committee almost unanimously decided to lower the Fed funds rate. It’s a strong signal from within the Fed that governors back Powell and push back against any political attempts to manipulate the independent central bank. Only President Trump’s recently installed Fed governor Miran voted in favour of a 50 bps rate cut. The median estimate for the end-of-year Fed Funds rate now stands at 3.5%-3.75% from 3.75%-4% in June. Powell stressed that this median hides a split between 9 governors in favour of back-to-back action in October and December and 1 (Miran) even suggesting an additional 125 bps split over those two meetings and 9 governors preferring either a status quo from here on (6), only one rate cut (2) or even a rate hike (1). It’s also telling that the press release didn’t hint at a continuation of gradual rate cuts if things play out as expected, suggesting that data dependency and a meeting-by-meeting approach is more than ever name of the game. Given the new risk assessment, we think that disappointing labour market data carry a bigger weight than upward inflation surprises. We don’t draw any conclusions from median policy rate estimates for 2026 (3.25%-3.5%), 2027 (3%-3.25%) and 2028 (3%-3.25%) other than there is no willingness to get rates below a neutral 3% (only 5 out of 19 governors in 2026, 6 in 2027 and 8 in 2028). Markets initially reacted in dovish fashion after the median 2025 estimate confirmed a scenario of two more 25 bps rate cuts this year. EUR/USD set a new YTD top at 1.1919, but returned back to the 1.18 area after US Treasuries changes tack. US yield eventually added 4.2 bps (30-yr) to 6.9 bps (5-yr) with the 2-y and 10-y yields bouncing off technical support at respectively 3.5% and 4%. The main conclusion after yesterday is that we’re likely up for a very volatile year-end.

News & Views

After pausing since April, the Bank of Canada (BoC) cut its policy rate by 25 bps to 2.5% yesterday. The BoC sees further weakness in the economy after growth contracted by about 1% in Q2 as exports and investment heavily weighed on growth. Employment recently declined mainly due to job losses in trade-sensitive sectors, but job growth also slowed in the rest of the economy. The BoC expects slow population growth and weakness in the labour market to weigh on household consumption in the months ahead. CPI inflation was 1.9% in August and measures of core inflation were near 3%, but the BoC assess underlying inflation to be closer to 2.5%. The combination of weaker growth and less upside inflation risks justified yesterday’s rate cut. The MPC concludes that it will carefully proceed, with particular attention to risks and uncertainties, without giving concrete guidance on the next policy step. Markets still discount a final cycle cut by early next year.

The Brazilian central bank kept its policy rate unchanged at 15% and stuck with a rather hawkish bias by saying that in the current context of heightened uncertainty, the committee “will remain vigilant”. They will not hesitate to resume the hiking cycle if appropriate. The economy shows some moderation in growth, but the labor market is still strong. Headline inflation and measures of underlying inflation remain above the 3% inflation target and the central bank expects inflation at 3.4% in Q1 2027. Also inflation expectations remain too high, requiring a significantly contractionary monetary policy for a prolonged period. The Brazilian real yesterday finished the session near the strongest level against the dollar since June last year.

The Federal Reserve (Fed) started cutting rates yesterday, delivering a widely expected 25bp reduction. The new dot plot shows a median projection of two more 25bp cuts this year and one additional cut in 2026. But the details matter: six members expect no further change, two even pencilled in a rate hike, while nine members see more than just a quarter-point of easing next year, with two of them projecting cuts of up to a full percentage point. In short, the median suggests that Trump won’t get the deep cuts he’s called for — the Fed is not bowing to political pressure.

That’s reassuring. Reassuring because:

• The Fed remains independent and data-driven. It acknowledged slowing job gains (with a 900k downside revision to NFP figures) but also noted that unemployment remains low, while inflation “moved up and remains somewhat elevated.”
• The Fed doesn’t see a major economic downturn. On the contrary, it revised growth and inflation forecasts higher as it announced the first of a series of rate cuts.

Markets weren’t sure how to take the news. The S&P 500 swung before closing just 0.1% lower. The Russell 2000 surged but erased most of its gains, leaving behind a shooting star candlestick. The US 2-year yield rebounded and the dollar index bounced from a fresh yearly low. Today’s session will be key to gauge whether risk appetite holds. Early signs are positive: US and European futures point higher, suggesting that a reasonably dovish Fed, combined with stronger earnings prospects, looser financial conditions and a weaker dollar, keeps risk assets in a sweet spot.

But geopolitical risks are never far. Just as Nvidia looked set to move past China’s regulatory hurdles — having agreed to a 15% licensing fee to secure export approvals — Beijing went a step further: instructing Alibaba and ByteDance to terminate their orders for Nvidia’s chips. That could cost Nvidia between $300m–$1bn in annual revenue. No surprise, the stock dropped more than 2.5%, breaking below its 50-day moving average. A deeper correction could be in the cards unless the narrative shifts.

Asian markets cheered the Fed’s cut. The Nikkei 225 rose 1.3% to a fresh ATH despite political uncertainties in Tokyo. The CSI 300 hit its highest level since March 2022, while the Hang Seng index briefly touched a four-year high. The Kospi also advanced to a record.

Elsewhere, the Bank of Canada (BoC) followed the Fed with its own 25bp cut, helping the TSX hold near all-time highs. But today’s Bank of England (BoE) decision will be the opposite story: rates are expected to stay on hold, with the UK facing slowing growth, sticky inflation and political/budget worries. Sterling is already under pressure against both the dollar and the euro. The BoE’s hawkish divergence, however, doesn’t appeal to traders: the BoE’s cautious tone isn’t backed by growth momentum. With the US dollar poised for a rebound as crowded shorts likely to be unwound, yesterday’s peak in Cable could mark the start of a move toward 1.31–1.33 over the next six weeks. Against the euro, sterling is also set to weaken. As for the EURUSD, the 1.20 handle — if reached — may act as solid resistance. The Fed’s stance reassures dollar bulls that policy isn’t politically captured, opening space for a medium-term dollar recovery cycle, even if the longer-term outlook remains bearish amid trade tensions, geopolitics and US debt concerns.

As such, gold is offered near ATH and silver is down for a third straight session. Both risk further short-term correction if the dollar strengthens. Crude oil remains capped near $65/bbl, with dollar strength limiting upside. A sustained break out of the $62–65/bbl range doesn’t look likely this week.