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USD/JPY Grinds Higher with US Dollar Rebound and Escalating Tariff Tensions with Japan

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  • July 2, 2025
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USD/JPY currency pair traded slightly higher on Wednesday, aided by a modest US Dollar rebound even as a softer-than-expected ADP jobs report presented surprise June job losses. The Greenback stabilized as markets became wary of the imminent Nonfarm Payrolls release and absorbed Fed Chair Powell’s cautious words. Simultaneously, rising trade tensions between Japan and the US put additional pressure on the Japanese Yen, with threatened tariffs from former President Trump and staunch opposition from Tokyo increasing uncertainty. Bank of Japan Governor Ueda played it safe, emphasizing the requirement of inflation alignment prior to any policy changes. KEY LOOKOUTS • The markets are waiting for clearer indications regarding US labor market strength and possible Fed rate cuts. • Increasing tensions and hawkish postures before the July 9 deadline could influence JPY volatility. • Governor Ueda’s cautious tone supports expectations of slow and modest tightening. • In spite of soft ADP numbers, the rebound in the USD Index indicates that investors have not yet priced in aggressive dovish pivots. The USD/JPY pair made small gains as the US Dollar recovered from its sharp losses at the start of the week after a disappointing ADP employment report indicated surprise job losses in June. Though the data fueled speculation of Federal Reserve rate cuts, investor sentiment was subdued, and focus is now shifting to the coming Nonfarm Payrolls for firmer direction. Simultaneously, rising trade tensions between Japan and the US put more pressure on the Yen as both countries take harder stances before a high-stakes tariff negotiation deadline. Meanwhile, the Bank of Japan stood pat on its wait-and-see stance, solidifying expectations of incremental policy normalization. USD/JPY is trading slightly higher after the US Dollar steadies against weak ADP data. Surching US-Japan trade tensions and dovish BoJ policy tone are keeping the Japanese Yen under pressure. Markets now look towards the critical US Nonfarm Payrolls report for further cues. • USD/JPY is trading around 143.75, having recovered slightly after touching a three-week low. • US Dollar bounces back marginally despite ADP reporting a surprise loss of 33,000 private-sector jobs in June. • Wage growth holds steady, maintaining the Fed’s policy framework in mind prior to the NFP release. • US Dollar Index (DXY) increases 0.25%, rebounding from its lowest level since February 2022. • Trade tensions intensify as the US and Japan dig in ahead of the July 9 tariff negotiation deadline. • Former President Trump threatens up to 35% tariffs on Japanese imports, boosting market uncertainty. • BoJ Governor Ueda remains guarded, indicating no near-term rate moves while watching inflation developments. The USD/JPY exchange rate also captured wider market sentiment as investors absorbed important economic news and geopolitical events. The surprising drop in US private-sector hiring, as marked by the ADP report, added new worries about the extent of labor market deceleration. While wage increases continued to hold steady, the job losses have stoked expectations for possible monetary policy reduction by the Federal Reserve. Nonetheless, traders are still wary of the more conclusive Nonfarm Payrolls data, which will best illuminate the economic picture and the Fed’s next step. USD/JPY DAILY PRICE CHART SOURCE: TradingView Internationally, heightened tensions between the United States and Japan in recent times due to trade negotiations have created an extra layer of uncertainty. As the July 9 deadline draws near, neither side seems keen on making concessions, particularly in areas such as tariffs on Japanese exports and safeguarding domestic industries. Former President Trump’s assertive language has put pressure on Japan, while Prime Minister Ishiba has stuck to his guns in protecting national interests. These events have attracted the attention of international investors, who are monitoring closely for signs of further escalation that would influence economic relations and currency movements. TECHNICAL ANALYSIS USD/JPY is trying to make a minor rebound after finding support at around the 143.00 area, a level which concides with recent lows. The pair touched an intraday high around 144.25 briefly but was unable to sustain the momentum, indicating possible resistance at that area. A prolonged break above 144.25 would then pave the way towards the 145.00 psychological level, while a loss of holding above 143.00 would result in fresh bearish pressure. Momentum oscillators such as RSI and MACD are still in a neutral to slightly positive stance, mirroring the pair’s measured recovery amidst a larger-scale consolidation phase. FORECAST If future US economic releases, specifically the Nonfarm Payrolls report, indicate job growth resilience and stable wages, the US Dollar may strengthen further. Such a move should propel USD/JPY upwards, especially if sentiment turns away from near-term Fed rate cuts. Breaking the 144.25 resistance level may push the pair to test the 145.00 level, with further upside possibly seen in the 146.50 zone if buying pressure gathers momentum. On the negative side, though, if the NFP report does validate labor market softness or sets off heightened expectations of near-term Fed easing, the US Dollar could again face selling pressure. In such a case, USD/JPY would likely decline back towards the 143.00 support level, and a penetration through this could expose the pair to further losses down to 141.80 or even the psychologically significant 140.00 level. Furthermore, rising US-Japan trade tensions could also serve to drive up demand for safe-haven Yen, putting downward pressure on the pair.

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Currencies

USD/CAD Extends Losses with Crude Oil Strength and Dovish Fed Outlook

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  • May 22, 2025
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USD/CAD currency pair continues to trade with a bearish trend, extending losses for the fourth day in a row in response to bolstering crude oil prices and reduced prospects for a Bank of Canada rate reduction. The Canadian Dollar is supported by warmer-than-anticipated domestic inflation numbers, whereas the US Dollar continues to suffer due to dovish Federal Reserve hopes, fresh US-China trade tensions, and increasing fiscal worries after a US credit rating downgrade. Technically, a break below the critical 1.3900 support and rejection from the 200-day SMA further increase the bearish outlook, making the pair susceptible to greater losses in the near term. KEY LOOKOUTS • More robust than expected Canadian core inflation has taken some sting out of the chances of a near-future rate cut by the Bank of Canada, offering underlying support to the Loonie. • Being a commodity-linked currency, the Canadian Dollar is inextricably linked with oil prices. Any persistent rise in crude oil—under geopolitical tensions or supply issues—can further buoy the CAD. • Traders are waiting for forthcoming US macro data, such as flash PMIs, for signals on the Federal Reserve’s interest rate trajectory, with dovish sentiments keeping the USD under pressure. • The inability of the pair to remain above the 1.3900 level and rejection against the 200-day SMA indicate sustained bear pressure, with more falls to come should support at 1.3810 be broken. Traders should closely monitor key drivers influencing the USD/CAD pair, including the impact of elevated Canadian inflation on the Bank of Canada’s rate path, which currently tilts against a near-term rate cut and supports the Loonie. Crude oil prices remain a crucial factor, with recent gains driven by geopolitical uncertainty continuing to bolster the commodity-linked Canadian Dollar. In the meantime, the US Dollar remains under pressure from dovish expectations about the Federal Reserve and the issue of US fiscal stability, particularly after being downgraded by Moody’s credit rating. From a technical perspective, the pair’s inability to retake the 1.3900 level and its rejection of the 200-day SMA support a bearish direction, with traders on high alert for a possible break below the 1.3810 support area. USD/CAD is under pressure as increasing oil prices and higher Canadian inflation support the Loonie. Dovish Fed expectations and US fiscal worries weigh on the US Dollar, while a decline below 1.3810 could indicate further declines for the pair. •  USD/CAD is trading with a bearish bias, extending its losses for the fourth day running. •  Reversal in crude oil prices supports the Canadian Dollar owing to its commodity-linked nature. •  Higher-than-anticipated Canadian inflation lowers the prospect of a June cut by the Bank of Canada. •  US Dollar declines in line with dovish Federal Reserve hopes and increasing fiscal worries. •  US sovereign credit rating downgrade by Moody’s adds to pressure on the USD. •  Technical breakdown under 1.3900 and rejection from the 200-day SMA indicate sustained downside risk. •  Focus turns to US macro data due later in the day and global flash PMIs for new trading signals. The USD/CAD currency pair is still saddled by wider macroeconomic considerations affecting the US Dollar as well as the Canadian Dollar. On the Canadian front, recent inflation numbers were higher than anticipated, lowering the potential for an instant interest rate reduction by the Bank of Canada. This has bolstered faith in the Loonie, particularly when coupled with the recovery of crude oil prices, which are the backbone of Canada’s economy. Stronger oil prices, underpinned by geopolitical tensions like uncertainty over US-Iran nuclear talks, still provide support to the Canadian Dollar. USD/CAD DAILY PRICE CHART CHART SOURCE: TradingView On the American side, the Dollar is under constant pressure because of escalating fiscal worries and weakening expectations regarding upcoming interest rate increases by the Federal Reserve. Moody’s sovereign downgrade of the US credit rating and anxieties regarding swelling deficits have triggered caution among investors. Furthermore, tensions between the US and China have reemerged, also placing the USD under increased risk aversion, adding to the pressure on the currency. Market participants are now intently following future economic indicators, including US macro data and world flash PMIs, for clues that may affect the policy direction and investor appetite in the future. TECHNICAL ANALYSIS USD/CAD is still under pressure after it was unable to stay above the key 1.3900 level and was rejected close to the 200-day Simple Moving Average (SMA), indicating bearish momentum. The recent breakdown of the pair below a short-term consolidation area indicates a change in sentiment in the direction of sellers. If the support area of 1.3810–1.3800 is broken convincingly, it may pave the way for a further decline towards the next significant support levels. Momentum indicators also have a negative bias, supporting the possibility of further downside in the short term. FORECAST USD/CAD is able to remain above the 1.3800 support area and experiences fresh buying interest, a bounce towards the 1.3900 level may be in the pipeline. A move above this area would invite new bullish interest, with the potential to see the pair return to the 1.3950–1.3980 zone. To experience an ongoing upside drive, the pair would have to regain and stay above the 200-day SMA, currently serving as a major resistance. Positive surprises in future US economic data or a recovery in US Treasury yields would also be able to sustain a USD recovery, causing the pair to strengthen in the near term. Conversely, a strong break below the 1.3810–1.3800 support will likely lead to a deeper correction, exposing the next downside targets at 1.3750 and maybe 1.3700. Ongoing rigidity in crude oil prices and sustained cooling of US economic data would most likely continue to keep the Canadian Dollar underpinned, exerting pressure on the pair. Moreover, if the Federal Reserve continues to stick to its dovish stance and US fiscal worries remain, the bearish scenario could deepen, keeping USD/CAD susceptible to more losses during upcoming sessions.

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Currencies

USD/CAD Remains Flat Below 1.4350 On Fed Speculation and Canadian Politics

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  • March 24, 2025
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The USD/CAD currency pair begins the week cautiously trading just below the mid-1.4300s as conflicting market signals keep traders and investors nervous. While hopes of an eventual Fed rate cut dampen the US Dollar, lower Crude Oil prices and political instability in Canada—after Prime Minister Mark Carney demanded a snap election—cap the Canadian Dollar’s appreciation. In spite of intraday declines, the pair is still within last week’s range, indicating a lack of direction. With US PMI data and FOMC member speeches coming up, along with volatile oil prices, traders are waiting for new signals to decide the next direction in USD/CAD. KEY LOOKOUTS • Flash PMI prints and comments from prominent Federal Reserve members may steer short-term market sentiment and USD direction. • Short bets on an impending Fed rate-cut cycle are still a dominant force for USD movements and will keep influencing the trend in USD/CAD. • The surprise call for a snap election by Canadian Prime Minister Mark Carney injects uncertainty and could cap any sharp rise in the Canadian Dollar. • As a commodity-based currency, the CAD is still vulnerable to price movements in crude oil, so oil market fundamentals are an essential factor to monitor. Several factors affecting the USD/CAD in the short term need to be monitored closely by traders. Market interest will continue to be on US economic releases, specifically the flash PMI prints and Fed official speeches, which might provide new insights into the central bank’s monetary policy direction. Speculation over a possible Fed rate cut continues to pressure the US Dollar, while political tension in Canada after Prime Minister Mark Carney’s surprise election call might cap Canadian Dollar gains. Also, crude oil price volatility—considering CAD’s high correlation with oil—will be instrumental in determining the pair’s direction. Major areas of focus are future US PMI releases and FOMC speeches, which may influence USD sentiment. Speculation in the market regarding Fed rate cuts and Canada’s surprise election announcement may also impact USD/CAD movement. Also, oil price volatility is still important for the Loonie’s direction. • USD/CAD trades flat below the mid-1.4300s on mixed market signals. • Expectations of a Fed rate cut continue to bear down on the US Dollar. • Dovish Crude Oil prices constrain the Canadian Dollar’s rise. • Political risk increases with Canada’s PM announcing a snap election on April 28. • The market mood remains risk-averse with no definite directional bias. • The market waits for US flash PMI numbers and FOMC member speeches for new indications. • Price volatility in oil will continue to be a primary driver of USD/CAD direction. The USD/CAD pair is stable to start the new week, guided by a combination of economic and political events. Market participants closely monitor the situation unfolding in the US and Canada. On one side, the US Dollar is under pressure as there are growing hopes that the Federal Reserve might have rate cuts in the near term in view of economic slowdown concerns. On the other side, Canada’s political scenario has been given a fresh twist with Prime Minister Mark Carney declaring an unexpected election, raising doubts over future policy and investor sentiment towards the Canadian Dollar. USD/CAD Daily Price Chart Chart Source: TradingView Simultaneously, sentiment across broader markets is subdued as traders consider global economic indicators and geopolitical tensions. The Canadian Dollar, commonly sensitive to commodity prices, is also responding to oil price movements, which significantly determine its relative strength. In the near term, traders are likely to monitor closely the release of US economic data and speeches by Federal Reserve officials, which may provide more insight into the policy direction and its implications for currency movements. TECHNICAL ANALYSIS USD/CAD pair is range-bound, with prices staying just below the mid-1.4300s, indicating a lack of strong directional momentum. The pair has been able to bounce back from initial Asian session lows around 1.4325 but still trades in the wider range set last Friday. In spite of multiple attempts, the pair has failed to break convincingly above the 1.4400 resistance level, which suggests that buyers are reluctant without a definite bullish catalyst. On the negative side, support at the moment is around the 1.4300 level, and a persistent dip below this may draw in new selling interest. Until a break on either side happens, the pair will remain in this tight range, waiting for new impetus from economic news or political events. FORECAST Should market sentiment turn bullish for the US Dollar, perhaps in response to better-than-anticipated US economic news or more aggressive Federal Reserve rhetoric, USD/CAD may try to challenge the 1.4400 resistance level once again. A clear breakout above it may allow for additional upside, particularly if political uncertainty continues to pressure the Canadian Dollar. Also, if the price of oil continues to slide, it will add pressure to the Loonie, thereby supporting the trend in the USD/CAD to the upside. Conversely, in the event of Fed rate cut hopes gaining traction or if disappointing US data come out in the future, the US Dollar is likely to face fresh selling interest, causing USD/CAD to move lower. A drop below the 1.4300 support area may initiate additional weakness towards the 1.4260 or even 1.4200 levels. In addition, any improvement in Canada’s political scenario or a good bounce in crude oil prices might provide support to the Canadian Dollar, raising the risk of decline for the USD/CAD currency pair.

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Currencies GBP/USD

GBP/USD Resists Below 1.3000 as US Dollar Weakness and Central Bank Prudence Take Hold

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  • March 18, 2025
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The GBP/USD currency pair continues to resist below the 1.3000 level due to a weak US Dollar amidst growing economic risks and prudent central bank expectations. As the pair trades around 1.2970, bears seem to have limited room as the Greenback grapples with weak US retail sales reports and fresh trade tensions. Investors believe the Federal Reserve will leave policy unchanged at the meeting on Wednesday, and similarly, the Bank of England is expected to leave interest rates untouched on Thursday. These moves combined with the BoE’s recent reluctance to try and balance growth worries against inflation worries may support the Pound Sterling further in the short term. KEY LOOKOUTS • Markets broadly expect the Fed to stick with its current interest rate policy, but any hint on future rate direction may influence USD sentiment. • The BoE is expected to keep rates unchanged, with attention on dealing with inflation risks while facing low growth and revised expectations. • Subpar retail sales figures, Trump’s tariff warning, and escalating economic uncertainty are still dragging down the Greenback, constraining its recovery. • The pair is still supported around 1.2970, with minimal downside pressure. A breakout above 1.3000 may indicate additional bullish momentum if USD weakness continues. Traders are keenly observing major economic and policy events this week that may influence the direction of GBP/USD. The Federal Reserve interest rate decision on Wednesday is likely to keep the current stance, but any indication of future monetary policy may influence the US Dollar. In the same vein, the Bank of England’s Thursday meeting is expected to keep rates unchanged, marking a conservative stance against ongoing inflation and decelerating growth. In contrast, the US Dollar continues to struggle with softer-than-expected retail sales figures and escalating trade tensions, capping its potential for recovery. These combined factors collectively favor the Pound, with GBP/USD remaining firm around 1.2970 and targeting a possible breakout above the 1.3000 level. GBP/USD is stable around 1.2970 as the US Dollar falters with soft economic data and trade tensions. Investors look forward to major policy decisions by the Fed and Bank of England that might propel further action. A break above 1.3000 could be an indication of fresh bullish push for the pair. • GBP/USD hovers around 1.2970, backing off but staying strong below the pivotal 1.3000 level. • US Dollar is still susceptible to weakness with poor economic numbers and escalating trade tensions. • February US Retail Sales increased just 0.2%, falling short and sparking concerns over consumer spending. • Markets anticipate the Federal Reserve to leave interest rates steady in Wednesday’s policy meeting. • US Dollar Index (DXY) stands near 103.50 but remains exposed to losses. • Bank of England is also likely to keep rates unchanged on Thursday, underpinning GBP strength. • Pound Sterling can also be further supported by the BoE’s conservative approach in the face of inflation and growth worries. The GBP/USD currency pair is maintaining its ground as market attention turns to pivotal central bank announcements this week. Investors are monitoring closely the policy meeting of the Federal Reserve, where there is no rate change expected, but the focus is still on the tone of the Fed on future economic conditions. Recent US data, specifically weaker retail sales numbers, has worried investors on the strength of consumer spending and the overall economic prospect. In addition, trade policy and global economic stability uncertainties are weighing on the optimism of investors and putting pressure on the US Doller. GBP/USD Daily Price Chart Chart Source: TradingView Meanwhile, the Pound Sterling is being supported by hopes that the Bank of England will stick with its present interest rate policy when it meets later. The central bank is walking a tightrope between containing sticky inflation and responding to easing economic growth. While the UK economy also has its challenges, the prudent policy stance of the BoE is steadying sentiment towards the British Pound. As both central banks take a wait-and-watch stance, the overall market environment remains influenced by economic data and world events. TECHNICAL ANALYSIS GBP/USD is now consolidating just below the psychological 1.3000 level, with 1.2970 serving as the immediate support area. Any prolonged break above 1.3000 might make way for additional bullish follow-through, perhaps heading higher towards broader resistance levels. Conversely, any break beneath 1.2950 could see near-term selling pressure, but overall, the pair remains in a bullish inclination so long as it remains above key moving averages. Traders will be looking for price action at these levels to confirm the next direction. FORECAST If the GBP/USD currency pair is able to hold above the 1.3000 psychological level, it could open the way to more upside momentum. A clean break above this level could lead to buyers driving the pair to the next resistance areas around 1.3050 and 1.3100. Bulls around the Pound, backed by the Bank of England’s firm policy direction and the US Dollar’s weakness, may also continue to propel bullish strength. Any sign of dovishness from the Federal Reserve or further disappointing US economic data could also add more to upward pressure on the pair. To the downside, in the event that GBP/USD cannot resist below the 1.2950–1.2970 support zone, the pair might temporarily retreat. A fall below this level could trigger additional losses to 1.2900 or even 1.2850 in the near term. The US Dollar might regain momentum if the Fed turns more hawkish or if risk appetite declines in international markets. Moreover, any unexpected change in the Bank of England’s expectations or poor UK economic indicators may cap the rally potential and pull the Pound back.

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