July 27, 2025
USDCAD open: 1.4106, overnight range 1.4071-1.4109, close 1.4095
USDCAD trickled higher despite improved global risk sentiment because of fears the Fed may raise rates to 4.0% on Wednesday. The odds still favour a pause but CAD/US 2 and 10 year interest rate spreads have widened in favour of the greenback.
USDCA Ddirection is a US dollar story. Domestic news, event and data are mostly irrelevant as it is the outlook for the Fed and America’s plans for Iran and by default oil prices that are moving markets.
WTI oil dropped 9.4% since Friday, falling from 92.86/b to 83.81 in NY today. The decline may not last that long. Iran claims to control the Strait of Hormuz and Yemen’s Houthi’s have dramatically slowed tanker traffic in the Red Sea.
There are no Canadian economic reports today.
USDCAD Technical Outlook
The intraday USDCAD technicals are neutral, consolidating in a tightening range between 1.4060 and 1.4150 after Friday’s pullback from the 1.4248 spike high. A decisive break below 1.4060 opens the door to the May-June, Fibonacci 38.2% retracement near 1.3990, while a break above 1.4150 targets a retest of the 1.4250 area high. The RSI is neutral.
Longer term, USDCAD remains in an uptrend from the spring low near 1.3573, holding well above the 100-day moving average at 1.3832. Momentum indicators support further gains.
For today: USDCAD support is at 1.4060 and 1.4000. Resistance is at 1.4150 and 1.4190.
Today’s expected range is 1.4060-1.4140
FX Heat Map
FX open high low 6:00 am
Another Pause that Refreshes
The greenback softened across the board to start the week as oil prices and Treasury yields after the US took a break from bombing US Iran. Risk sentiment is broadly positive, with US and European equity futures gapping higher, though the calm may be short-lived. Today, Iran announced that it still controlled the Strait of Hormuz.
Central Bank’s and Data
Traders are also positioning ahead of a heavy central bank week, with the FOMC, Bank of England, and Bank of Japan policy meetings sue Wednesday, Thursday and Friday. Markets are rather nervous and concerned that the Fed may hike rates to 4.0% on Wednesday. The CME Fed watch shows the odds of such a move at 66% today, compared to 84% a week ago.
Its another big week for tech stock earnings with reports from Meta, and Microsoft on Wednesday followed by Alphabet and Amazon on Thursday.
US Durable Goods-transportation rose 0.6% (forecast 0.9%) compared to 1.4% last month. US Q2 GDP and PCE Price index will be anti-climatic as they are released post-FOMC.
Taking Stock
Asia equity indexes turned risk negative after Wall Street closed with steep losses. Japan’s Topix lost 1.05%, the Hong Kong Hang Seng closed down 0.98% and Australia’s ASX 200 fell 0.75%.
As of 5:40 am PT, the German Dax leads the European bourses higher with a 1.57% gain. The French CAC-40 has risen 0.81% and the UK FTSE 100 index is up 0.40%. S&P 500 futures are up 0.60%, the 10-year Treasury yield is 4.643%, the DXY is 101.40 and gold is 4,085.21.
EURUSD | Range 1.1382-1.1418
EURUSD moved higher on Trump’ decision to stop bombing Iran and the 15.3% drop in Brent crude prices since Friday. Gains were limited due to last week’s ECB decision to leave rates unchanged and rising odds for a Fed rate hike this week. Germany’s ifo index rose to 86.6 from 85.6 in June.
GBPUSD | Range 1.3305-1.3364
Cable is little changed despite the better risk outlook. Prices are pressured by downgraded rate hike risks and ongoing concerns around Britains fiscal health with the latest Labour government.
USDJPY | Range 163.33-163.74
USDJPY retreated from the peak on improved risk sentiment although the dip was shallow. The currency pair continues to be underpinned by concerns that the Fed may raise rates on Wednesday while the BoJ leaves its benchmark rate unchanged.
AUDUSD | Range 0.6990-0.7011
The Aussie edged higher with the improved risk backdrop, though gains were limited due to the fragility of the US/Iran ceasefire. Prime Minister Albanese said he will appeal directly to President Trump over Washington’s latest round of tariffs, calling the levies unjustified,( good luck with that).
USDMXN | Range 17.4121-17.4897
USDMXN is consolidating its gains after Trump said he would halt attacks on Iran, which gave risk sentiment a much-needed boost. Inflation numbers, released Friday, ensures that Banxico will leave rates unchanged. However, the downside was limited on concerns for a hawkish Fed outcome on Wednesday.
CHINA
- PBoC Fix: 6.7911 (prev. 6.7939)
- Shanghai Shenzhen CSI 300 rose 1.15% to 4,702.43
Chinese equities got a jolt of positive sentiment when the IPO from chipmaker CXMT soared around 470% in its first day of trading, making it China’s most valuable listed company
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
