Global markets are kicking off the week with a cautious tone amid mixed economic signals. Last week saw surprising inflation data and shifting central bank expectations that stirred currency markets. The U.S. dollar has drawn some safe-haven demand recently on global trade and growth anxieties, regaining strength after a period of weakness. Meanwhile, key economies like the UK and Eurozone are seeing inflation cool off, altering the outlook for their central banks. Beginner traders should note that these fundamental shifts are creating new trading opportunities. In this report, we break down what’s happening with three major currency pairs (GBP/USD, EUR/USD, and USD/CAD), explaining price movements, chart levels, and the impact of recent economic events in simple terms.
GBP/USD
The GBP/USD pair fell sharply late last week, with the pound dropping from around the mid-$1.35s to roughly $1.348 by the week’s end. In fact, the exchange rate touched $1.3488 on July 11, testing its lowest levels in over a month. The provided chart confirms this downtrend, showing a series of lower highs and lower lows through Thursday and Friday. Notably, support around $1.348 held firm – the pair dipped to this area on Friday and again on Monday morning, but buyers stepped in each time to prevent a deeper slide. This double-bottom style price action near $1.348 suggests a potential short-term floor, at least for now. On the upside, the pound’s bounce has been limited; minor resistance is visible around $1.355–1.358, where last week’s brief rallies stalled. A break above $1.358 would indicate momentum shifting upward, but so far the bears remain in control.
Support & Resistance Levels
- Support: $1.3480 (major support tested twice – a level where pound buyers have consistently emerged). Below that, the next significant support might be around $1.3400 (an area of prior consolidation).
- Resistance: $1.3550 (near-term resistance from recent intraday highs) and $1.3600 (psychological level and approximate high from early July). A move above $1.3600 would be needed to signal a bullish reversal.
Technical Patterns & Price Action
The chart illustrates how GBP/USD broke below an upward trendline from early July and slipped into a short-term downtrend. Each attempt to rally was met with selling near the mentioned resistance. The pair’s ability to form a base at $1.348 is encouraging for bulls – it shows demand kicking in at a known support. If this level continues to hold, we could see a range-bound correction between $1.34–$1.36 as traders await fresh catalysts. However, a clear drop under $1.348 would be a bearish signal, potentially opening the door to further downside.
Impact of Macroeconomic Events
Fundamental factors played a big role in the pound’s pullback. Early in the week, the UK reported that wage growth slowed more than expected – average earnings rose about 5.0% (3m/y) versus 5.3% previously. Cooling wage pressures ease inflation fears but also undercut some support for the pound, since a slower rise in pay means less urgency for the Bank of England to hike rates. Additionally, Bank of England Governor Andrew Bailey’s speech on Monday did not signal any hawkish surprises, keeping sterling steady. By mid-week, UK inflation data for June came in at 3.4% year-over-year, exactly matching forecasts. While still well above the BoE’s 2% target, the fact that inflation didn’t surprise to the upside gave markets a sense that UK price pressures are stabilizing. This “as expected” CPI release limited the pound’s gains – traders seemed to have priced it in.
Across the Atlantic, the U.S. dollar was strengthening on the back of robust data. U.S. CPI (inflation) for June hit 2.6% (YoY), higher than the 2.4% expected. In plain terms, prices in the U.S. rose a bit faster than anticipated, a development that tends to support the dollar. A hotter CPI number can make traders think the Federal Reserve might hold off on cutting interest rates (or even consider another hike), which boosts the dollar’s appeal. The dollar’s broad rebound was a key driver pushing GBP/USD down to that $1.348 support. On Thursday, U.S. retail sales data came out weaker than hoped (headline sales only +0.2% vs consensus around +0.5%), but weekly jobless claims stayed low. The mixed U.S. news caused only a brief pause in the dollar’s rise. By Friday, overall sentiment favored the greenback, especially as global traders sought safety amid some new trade and geopolitical worries (which often benefits the safe-haven USD).
For new traders, the takeaway on GBP/USD is that the pound’s recent slide was driven by a combination of technical breaks and fundamentals: British data showed just okay economic conditions (inflation steady, wage growth cooling), while U.S. data gave the dollar a boost. In the week ahead, attention will turn to any fresh UK news – for example, if upcoming data (like retail sales or PMI surveys) show resilience, the pound could find support and bounce. Likewise, any hint that the Federal Reserve might soften its stance could weaken the dollar and lift GBP/USD off its lows. At the moment, the pair is trending lower in the short term, so caution is warranted if you’re bullish on GBP. However, the strong support around $1.348 is the line in the sand – if it continues to hold, it might offer a base for a rebound. Traders could see range trading between roughly $1.34 and $1.36 until a bigger catalyst (like a central bank announcement or major economic report) prompts a breakout. Keep an eye on Wednesday’s UK inflation report and any Fed speakers this week for potential sparks. In summary, GBP/USD is down but not out – the pound is stabilizing at key support, and any shift in the dollar’s fortunes or a surprise from the BoE could quickly change the pair’s direction.
EUR/USD
EUR/USD has been on a roller coaster in recent sessions. Early July saw the euro soar against the dollar – the pair even challenged highs near $1.18, reaching levels not seen in years (EUR/USD briefly hit about 1.18 on July 1-2 according to historical data). However, that rally lost steam last week. By Monday, 14 July, the euro had pulled back into the mid-$1.16s, marking a significant retracement from its highs. The provided chart shows this cooling-off: after a spike toward $1.173–1.175, the euro turned downward. A sharp drop on Friday brought EUR/USD down to roughly $1.166. There’s a visible support zone around $1.165–1.167 (the area where the pair found a floor over the weekend). Just above, the $1.170–1.172 region now acts as near-term resistance – this was a support level earlier that broke, and on Monday any rebounds struggled to clear $1.17 decisively. In short, the euro’s momentum against the dollar has stalled, and the pair is consolidating in the mid-1.16 to low-1.17 range as the week begins.
Support & Resistance Levels
- Support: $1.1650 (immediate support where buyers emerged on Friday/Monday). Below that, around $1.1600 is another support level (round number and former breakout zone from late June).
- Resistance: $1.1720 (near-term resistance from last week’s mid-week highs) and $1.1800 (major multi-year resistance – the July 1st peak and a level corresponding to the ECB’s inflation surprise rally). If EUR/USD climbs back above $1.18, it would signal strong euro resurgence.
Technical Patterns & Price Action
The euro’s chart shows a possible trend reversal pattern after the strong uptrend in late June. On the 5-minute chart, we see lower highs forming after July 10, hinting the bulls were losing grip. There was also a spike-and-fade price action – for example, a quick jump toward $1.173 that was immediately sold off, leaving a long wick (shadow) on the candle. This kind of price rejection often indicates a bullish exhaustion. Following that, EUR/USD drifted downward, breaking below its short-term moving averages (if you use those) and settling into a mild downtrend channel. The pair might be carving out a range now: roughly 1.165 bottom and 1.172 top, as noted. Traders will watch if that bottom holds; failure to defend $1.165 could see a deeper correction toward $1.160 or below. Conversely, a break above $1.172 would suggest the euro recovery is back on track, potentially re-testing the highs.
Impact of Macroeconomic Events
The euro’s reversal can be largely explained by the shifting fundamental winds. Eurozone inflation has essentially hit the European Central Bank’s 2% target – June’s CPI came in at exactly 2.0% year-over-year, as expected (up slightly from 1.9% in May). This confirmation that inflation is back to target gives the ECB less reason to keep raising rates aggressively. In fact, analysts noted the data “offered policy makers cause to pause” further tightening. For the euro, that meant some of the earlier enthusiasm cooled off; traders realized the ECB might be comfortable pausing or even considering eventual rate cuts if inflation is contained. Additionally, a bright spot in Eurozone news last week was the German ZEW economic sentiment index, which improved (indicating rising investor confidence in Germany). That helped the euro mid-week, but not enough to sustain a breakout.
On the U.S. side, the same force mentioned in the GBP/USD analysis was at work: a resurgent dollar. The higher-than-expected U.S. CPI (2.6% vs 2.4% forecast) gave the dollar a lift. Then, U.S. producer price inflation (PPI) also ticked up a bit more than anticipated on Wednesday, reinforcing the view that U.S. inflation isn’t falling as fast as some hoped. This combination of data boosted U.S. Treasury yields and made the greenback more attractive, putting downward pressure on EUR/USD. Moreover, towards the end of the week, Fed officials struck a cautious note – while no one signaled immediate rate hikes, they emphasized vigilance on inflation. The prospect that the Fed will keep interest rates “higher for longer” (relative to a potentially pausing ECB) created a divergence that favored the dollar over the euro.
In simpler terms, EUR/USD enjoyed a strong climb but hit a ceiling and is now catching its breath. The euro’s big run-up paused because the reasons to keep buying euros became less convincing: Eurozone inflation seems under control and the ECB might not hike much further. At the same time, the U.S. dollar got a jolt of energy from higher U.S. inflation and safe-haven flows. For new traders, this highlights how currencies see-saw based on expectations: earlier, markets expected the Fed to possibly cut rates soon (weakening USD) while the ECB was still hawkish (strengthening EUR), but now that narrative is shifting. Going into this week, watch for ECB signals and more U.S. data. If European Central Bank speakers hint that they’re done raising rates, the euro could stay on the back foot. On the other hand, any cooling in U.S. data – for example, if retail sales or consumer sentiment figures disappoint or if Fed officials soften their tone – could weaken the dollar and let EUR/USD bounce. Technically, the pair is in a range-bound mode right now, so range-trading strategies might work (buying near support, selling near resistance, with tight risk management). Until we get a clear breakout, expecting sideways chop between mid-1.16 and low-1.17 is reasonable. But don’t get complacent: a breakout could be brewing if there’s a big surprise (like a policy change or geopolitical shock). For now, euro traders should stay nimble and keep an eye on both Frankfurt and Washington for cues.
USD/CAD
The USD/CAD pair has been relatively range-bound but certainly not lacking volatility. Last week, the U.S. dollar strengthened against the Canadian dollar, albeit in a choppy fashion. The provided 5-minute chart shows USD/CAD oscillating roughly between C$1.365 and C$1.373 over the past few trading days. On Thursday/Friday, the pair spiked to the top of that range – USD/CAD climbed as high as ~1.3731, marking the Canadian dollar’s weakest level since June. This spike was short-lived; after touching 1.373, the pair pulled back as some sellers took profit, and it ended last week closer to the mid-1.36s. By Monday morning (14 July), USD/CAD was hovering around C$1.3700, showing a mild upward bias from the previous week’s close. In simple terms, the U.S. dollar has been gaining ground on the loonie, but each surge higher has met resistance around the mid-1.37s, while strong support has appeared on dips to the mid-1.36s. This creates a clear short-term trading range that both new and experienced traders can observe.
Support & Resistance Levels
- Support: C$1.3650 (near the recent lows on the chart – a level where USD/CAD found buyers late last week). Below that, C$1.3600 is another psychological support level (and roughly where the pair bottomed earlier in July).
- Resistance: C$1.3730 (the peak from Friday’s spike, which is capping the upside in the near term). If the dollar breaks above 1.3730 convincingly, the next resistance might be around C$1.3800 (an important round number and potential June high).
Technical Patterns & Price Action
USD/CAD’s chart displays a classic range-bound pattern, with price bouncing between support and resistance multiple times. Traders might notice a slight upward tilt – the lows have inched a bit higher (for instance, Friday’s low was higher than Tuesday’s low), suggesting a gentle uptrend within the range. One technical feature on the intraday chart is the presence of a possible ascending triangle: flat resistance around 1.373 and rising troughs. Such a pattern hints that bullish pressure is slowly building up. If that’s true, we could see an upside breakout. However, until the breakout happens, the safer assumption is continued ping-pong action between the boundaries. It’s worth noting that USD/CAD often correlates with movements in commodity prices (especially oil) and broader risk sentiment – sudden news in those areas can cause abrupt moves (like the quick spike to 1.373). Indeed, that spike likely corresponded to a momentary drop in oil prices or a bout of USD buying across the board. After the spike, a quick reversal (long wick) indicates that above ~1.373, sellers (or profit-takers) jumped in, reinforcing that level as stiff resistance. For now, technical traders may look to trade the range: long near support, short near resistance, with an eye on any breakout cues.
Impact of Macroeconomic Events
Several macro factors are influencing USD/CAD’s equilibrium. On the Canadian side, the data has been lukewarm. Canada’s economy showed some soft spots last week – for example, housing starts in June came in lower than forecast (around 254k vs ~279k expected), hinting at a cooling housing sector. More importantly, Canada’s inflation appears to be slowing. The market was expecting June’s CPI (reported on Tuesday, July 15) to moderate, with forecasts for only +0.2% monthly inflation, down from 0.6% in May. Indeed, the actual Canadian CPI data released on Tuesday confirmed the cooldown in price growth, which eases pressure on the Bank of Canada (BoC) to raise rates. A backdrop of easing inflation and recent BoC policy decisions (the BoC had paused rate hikes in June) tends to weigh on the Canadian dollar – if traders think the BoC will be less aggressive than the Fed, the loonie loses some appeal. We also saw evidence of a softening labor market in Canada: the title of one analysis last week noted Canada’s job market is “expected to flatline”, reflecting concerns that employment gains are stalling. While the actual Canadian jobs report for June (released a week prior) showed a minor uptick in unemployment, the overall narrative is that Canada’s economy is leveling off, which has kept the CAD on the defensive.
For traders looking at USD/CAD, the scenario is one of cautious range trading with a slight bullish lean. The U.S. dollar has the fundamental upper hand right now – the Fed isn’t expected to cut rates imminently (especially with U.S. inflation running a touch hot), whereas the Bank of Canada seems comfortable with its policy pause given Canada’s inflation is cooling. This policy divergence tends to support USD/CAD (i.e. favor the USD). If nothing changes dramatically, one might expect the pair to eventually test that upper resistance again. However, range-bound conditions often persist longer than one anticipates – so it wouldn’t be surprising to see more sideways chops between ~1.36 and 1.37. New traders should remember that in a range, it can be tempting to assume a breakout, but false breakouts happen. It’s wise to wait for confirmation (like a decisive move above 1.3730 with strong volume or a clear fundamental catalyst) before betting on a continued climb. Conversely, if oil prices rally strongly or if there’s very positive Canadian news (say, an unexpected surge in economic activity or a hawkish remark from the BoC), the Canadian dollar could strengthen, pushing USD/CAD down through support. At the moment though, those scenarios seem less likely. The path of least resistance appears mildly upward for USD/CAD, meaning the U.S. dollar could continue to grind higher against the loonie. Keep an eye on Thursday’s Canadian wholesale trade data and any BoC member speeches – anything that changes the outlook for Canada’s economy or BoC policy could jolt the CAD. Likewise, watch out for global oil market headlines. In summary, USD/CAD is offering a relatively well-defined playing field: a range-bound market where patience and attention to news (like inflation data or oil prices) will be key. Traders can prepare for eventual breakouts but may find short-term opportunities trading the range until a clearer trend emerges.
Summary of Trends & Opportunities
USD Strength Resurgent: The U.S. dollar is starting the week on a firm footing, buoyed by higher-than-expected inflation data and safe-haven flows. This is pressuring pairs like GBP/USD and EUR/USD lower. Opportunity: Traders may look for chances to “buy the dollar dips” against weaker currencies, as long as U.S. economic signals remain robust.
Key Support Levels Holding: Despite dollar strength, major support levels for GBP/USD ($1.348) and EUR/USD ($1.165) have held up so far. These inflection points could offer short-term trading opportunities – for instance, range traders might go long on a bounce off support, aiming for modest recoveries. Always use stop-loss orders, since a break below support could lead to sharp selloffs.
Diverging Central Bank Outlooks: The Bank of England and European Central Bank are seeing inflation moderate, which could mean a pause in tightening, whereas the Fed may stay cautious about easing. This divergence is creating new trends – e.g., a slower uptrend for the euro, and range-bound pound trading as BoE policy uncertainty grows. Opportunity: Keep an ear on central banker remarks this week (BoE’s Bailey, ECB speakers, Fed’s Waller and others) for clues. A hawkish surprise from the BoE or ECB could spark a rebound in GBP or EUR, while any hint of Fed dovishness might cap the dollar’s gains.
Commodity and Risk Sentiment Impacts: Currencies like the CAD will dance to the tune of commodity prices and risk appetite. With oil inventory surprises and global growth concerns in play, expect volatility in USD/CAD. Opportunity: Traders can monitor oil price movements as a leading indicator for CAD strength/weakness. A stabilizing or rising oil market could strengthen the loonie (leading to potential sell opportunities on USD/CAD rallies), whereas falling oil or risk-off news could do the opposite.
Event Risks This Week: A slew of economic releases is on the docket – U.K. inflation figures, U.S. retail sales and consumer sentiment, and Canada’s inflation and retail data, among others. These events can quickly change the technical picture. Stay adaptable: if GBP/USD breaks below 1.348 or EUR/USD below 1.165 on a news shock, that could signal a deeper downtrend. Conversely, upbeat data from Europe or a soft U.S. report could trigger a bullish reversal in those pairs. Being prepared to react (rather than predict) is often the best strategy in such news-driven environments.