EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – Canadian Dollar Gains Ground After Inflation Data

Vladimir Zernov
Published: Sep 19, 2023, 17:13 GMT+00:00

The bank of Canada may be forced to be more hawkish, which is bullish for the Canadian currency.


In this article:

Key Insights

  • U.S. dollar is mostly flat as traders prepare for tomorrow’s Fed decision. 
  • USD/CAD tested new lows as Canada’s Inflation Rate jumped to 4%. 
  • USD/JPY settled below the 148.00 level despite rising Treasury yields. 

U.S. Dollar

DXY 190923 4h Chart

U.S. Dollar Index is mostly flat as traders wait for tomorrow’s Fed Interest Rate Decision. Today, traders focused on the housing data. Housing Starts declined by 11.3% month-over-month in August, while Building Permits increased by 6.9%.

U.S. Dollar Index stays above the 50 MA, so the market remains somewhat bullish. However, technical factors will take a back seat soon due to the Fed decision and the subsequent comments from Fed Chair Powell.


EUR/USD 190923 4h Chart

EUR/USD made an attempt to settle above the 1.0700 level but lost momentum and pulled back. The final reading of the Euro Area Inflation Rate report showed that Inflation Rate declined from 5.3% in July to 5.2% in August, compared to analyst consensus of 5.3%.

If EUR/USD settles above 1.0700, it will head towards the recent highs near 1.0760.


GBP/USD 190923 4h Chart

GBP/USD remains stuck below 1.2400 as traders stay focused on the Fed policy outlook.

In case GBP/USD stays below the 1.2400 level, it will move towards the nearest support, which is located in the 1.2300 – 1.2330 range.


USD/CAD 190923 4h Chart

USD/CAD tested new lows as traders reacted to Canada’s inflation reports. Inflation Rate increased from 3.3% in July to 4% in August, while Core Inflation Rate grew from 3.2% to 3.3%. The Bank of Canada may be forced to be more hawkish due to rising inflation, which is bullish for the Canadian dollar.

A successful test of the support at 1.3370 – 1.3400 will open the way to the test of the next support level at 1.3240 – 1.3260.


USD/JPY 190923 4h Chart

USD/JPY settled near the important 148.00 level. Treasury yields are moving higher, which is bullish for USD/JPY. However, traders are not ready for big moves ahead of the Fed decision.

The potential interventions from the BoJ prevent USD/JPY from moving above 148.00. However, it remains to be seen whether USD/JPY will stay below 148.00 if Powell is more hawkish than expected.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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