In a week dominated by trade-tariff battles and Middle East flare-ups, the FX market has been nothing short of dramatic. Traders shook off hints of de-escalation even as oil surged to five-month highs and U.S. officials warned that new tariffs will stoke “meaningful” inflation. Against this backdrop, the dollar has largely held firm amid safe-haven demand while equity markets tread water. Federal Reserve officials are cautioning that higher import levies are likely to prolong inflation pressures, adding to the nerves. The result: a volatile canvas for EUR/USD, GBP/USD, and USD/CAD, each reacting to both economic crosswinds and geopolitical uncertainty.
EUR/USD
Technicals in Focus
The EUR/USD has ripped sharply higher over the past two sessions. The chart shows a strong breakout rally from roughly 1.1470 on June 23 up to a session peak around 1.1630. The move blasted through short-term resistance near 1.1550, fueled by broad USD weakness and euro buying. After hitting the 1.1630 level, the pair retraced modestly and is now hovering near 1.1610. Technical indicators are not at extreme levels – for example, RSI and stochastic readings are neutral and MACD has flattened – suggesting momentum has simply cooled rather than reversed. Key support lies in the 1.1550–1.1580 area (recent pullback lows), while resistance remains just above at the late-week high around 1.1625–1.1630.
Trading Strategy
Bullish scenario: A clear break and close above 1.1630 would signal continuation of the uptrend. Aggressive traders could enter long around 1.1635 with a first target near 1.1700 and a stop-loss just below 1.1620. Alternatively, buying the dip near support (around 1.1580) with a tight stop below 1.1550 could capture the next leg up toward 1.1650–1.1680.
Bearish scenario: If EUR/USD fails at resistance or falls back below 1.1580, it could roll over into a correction. A break below 1.1550 would open 1.1500 as the next target (stop-loss ~1.1600). Traders looking for shorts might wait for a push toward 1.1620–1.1630 and then short, aiming for the 1.1500 zone and placing protective stops above 1.1630.
GBP/USD
Technicals in Focus
The pound has likewise been on a tear. GBP/USD climbed from about 1.3400 on June 23 to intraday peaks near 1.3640 by Tuesday afternoon. It has since stabilized around 1.3610 after a brief pullback from that high. The uptrend broke several resistance levels (notably 1.3500 and 1.3600) on strong momentum. After stalling near 1.3635, price action has formed a loose range. As with EUR/USD, momentum indicators like RSI and MACD are not overbought, implying the move could have room to run (or at least to consolidate). Key support is in the 1.3550–1.3580 zone, with resistance at the recent 1.3635–1.3640 highs.
Trading Strategy
Bullish scenario: A decisive move above 1.3640 would target further gains. A breakout trader might go long at 1.3645 with a target near 1.3700 (stop ~1.3610). If price retests 1.3580–1.3600 and holds, long entries there could target 1.3640 and beyond (stop below 1.3550).
Bearish scenario: On the flip side, a drop below support around 1.3580 could pull GBP/USD back toward 1.3500. A short entry on a breakdown (e.g. below 1.3575) could target 1.3500–1.3520, with a stop near 1.3610. If range-bound, one could also sell into strength near 1.3630–1.3640, risking stops above that level.
USD/CAD
Technicals in Focus
In contrast, USD/CAD has been in a corrective rebound after a steep decline. On Monday it slid from about 1.3790 down to 1.3680 by midday Tuesday – a roughly 110-pip drop reflecting oil’s rise and broad USD weakness. Late on June 24, the pair found support around 1.3680 and then reversed course, rallying back to ~1.3730 by early Wednesday. The chart now shows a tentative bottom-fishing move. Near-term resistance is around 1.3750–1.3780 (the swing low high), while support is firm near 1.3680. Indicators are mixed – the recent sell-off left RSI slightly oversold, now retracing upward. MACD has flattened, hinting at a range-bound or corrective phase.
Trading Strategy
Bullish scenario: A break above 1.3750 would signal a deeper retracement of the decline. Traders could buy on a close above that zone, targeting 1.3800–1.3820 with stops near 1.3720. Alternatively, a pullback to 1.3700–1.3710 that holds as support could be bought for a rebound toward 1.3780 (stop below 1.3680).
Bearish scenario: If USD/CAD fails to hold the 1.3700 level and rolls over, it may resume downward. A break below 1.3680 could target the prior low around 1.3640 and then 1.3600 (stop on shorts near 1.3725). Short entries on any bounce toward 1.3740–1.3750 with a stop above 1.3780 would also play for a deeper move down.
Market Outlook
With markets on edge, tomorrow’s U.S. data and central bank commentary will be crucial. Traders will watch May personal spending and Core PCE inflation (due Friday) for clues on Fed policy, after Powell warned that tariffs could deliver a “cost shock” to consumers. Any hint of faster inflation will embolden Fed tightening bets; conversely, sluggish U.S. data could reinforce the view that policy cuts are coming later this year. Internationally, China’s slowdown and Europe’s growth headwinds argue for dollar softness – until geopolitical shocks hit. In that sense, the overriding wildcard is the Middle East: analysts caution that another flare-up (for example, an Iranian counterstrike) could abruptly reverse risk sentiment and send funds into USD, JPY, and other safe-havens. U.S. fiscal politics (e.g. debt ceiling talks and trade deals) will also loom large in coming weeks. In short, traders must balance central-bank calendars and macro readings against global unrest. The next big move in EUR/USD, GBP/USD and USD/CAD will likely hinge on which force, monetary policy or geopolitical shock, dominates the narrative.