The US Dollar (USD) is expected to trade between 7.1190 and 7.1300 against the Chinese Yuan (CNH). Analysts suggest that if the USD drops below 7.1130, it might aim for 7.1000 next. Recently, the USD had a stable trading range, finishing nearly the same at 7.1242. The outlook stays the same as long as it remains below the resistance level of 7.1400.

FXStreet Insights Team

The FXStreet Insights Team gathers analysis from different financial experts. This includes general market insights and specific notes from commercial analysts. USD changes are just some of the many market topics discussed in newsletters and articles designed for informed decision-making. Other content covers recent trends in gold, Canadian CPI data, and global oil imports. FXStreet emphasizes that the information provided is not investment advice. Investors should do thorough research and consider any risks before making financial decisions. Since the USD/CNH is likely to trade within the range of 7.1190 to 7.1300, we see option selling strategies as suitable for now. Writing short strangles with strike prices outside this range could help traders earn premiums while the pair stabilizes. The low volatility makes this a good way to generate income.

Bearish Case and Positioning

We believe there’s a stronger chance for a dip toward 7.1130, and traders should consider preparing for this possible decline. Buying put options or creating bear put spreads targeting around this level provides a risk-defined approach to profit if support weakens. This strategy is more appealing as long as the pair stays under the key resistance level of 7.1400. This bearish outlook is supported by recent economic data from October 2025. China’s Q3 GDP growth was 4.9%, surpassing market expectations and indicating a stable economy. Additionally, the People’s Bank of China has been setting a stronger daily reference rate, helping the yuan strengthen. On the other side, the latest US inflation data for September 2025 showed a rate of 2.8%. This reinforces the idea that the Federal Reserve will likely keep rates steady through the year. The absence of upward pressure on US interest rates weakens dollar strength, contrasting with the 2023 policy differences that boosted the dollar. The 7.1400 resistance level is crucial for managing risk. A clear break above this mark would contradict the bearish outlook. Traders could use this level to set stop-losses on short positions or to rethink bearish options. The current tight range has reduced implied volatility, making options cheaper. For those expecting a big price movement but unsure of the direction, a long straddle could be a good strategy. This would profit from significant moves above 7.1300 or below 7.1190, taking advantage of a return to higher volatility. Create your live VT Markets account and start trading now.

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The USD/CAD is currently trading near the upper end of a multi-day range, between 1.4000 and 1.4080. Canada’s September Consumer Price Index (CPI) is expected to rise to 2.2% year-on-year, up from 1.9% in August. Core CPI is projected to stay steady at 3% year-on-year. An increase in CPI could lead to expectations that the Bank of Canada (BOC) might consider cutting rates, which could push USD/CAD rates up to 1.4160. With a weak growth outlook for Canada, the BOC has room to lower its policy rate within the neutral range of 2.25% to 3.25%. Right now, there’s an 80% chance of a rate cut to 2.25% at the BOC’s meeting on October 29.

Business Outlook Survey

The Bank of Canada’s third-quarter Business Outlook Survey shows a drop in the sales growth index to -2, the lowest since Q2 2023. Weak demand is affecting price expectations and profit margins, leading to a dim business outlook. Investment plans remain low, below long-term averages, and most businesses are not looking to hire new employees. As USD/CAD tests the high end of its recent range near 1.4080, we are closely monitoring today’s September inflation report. The market already expects a high chance of a BOC rate cut on October 29, with swaps data indicating over an 80% likelihood of a 25 basis point decrease. A lower-than-expected inflation reading would likely reinforce these expectations and drive the pair higher. The outlook for a rate cut is supported by worsening economic data beyond just inflation. Statistics Canada’s latest report revealed a surprising loss of 15,000 jobs in September, raising the unemployment rate to 6.4%. This trend matches the BOC’s Q3 Business Outlook Survey, which recorded the lowest projected sales growth since the second quarter of 2023.

Policy Divergence

This weakness in Canada sharply contrasts with the relative stability of the U.S. economy, creating a clear policy divergence. While we expect a BOC rate cut, the CME FedWatch Tool indicates that futures markets see almost no chance of a Federal Reserve rate cut before next year. This widening gap between the two central banks’ paths is a strong reason for continued strength in USD/CAD. Given this context, we believe it makes sense to position for a break above the current resistance at 1.4080. Traders might consider buying short-dated call options on USD/CAD with a strike price of around 1.4100 to take advantage of a potential move toward the 1.4160 target. This options strategy offers a way to capture upside volatility surrounding today’s data and the upcoming BOC meeting while limiting risk. Alternatively, a bullish call spread could reduce the upfront cost of the trade while still profiting from an upward move. For example, one could buy a 1.4100 call option and simultaneously sell a 1.4200 call that expires in the coming weeks. This mirrors the situation we saw in late 2023 when concerns about a recession in Canada led to significant CAD underperformance against the dollar. Create your live VT Markets account and start trading now.

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The outlook for the New Zealand Dollar (NZD) against the US Dollar (USD) is currently neutral, according to FX analysts at UOB Group. The NZD is expected to trade between 0.5685 and 0.5770. In the last 24 hours, the NZD reached a high of 0.5751 and closed at 0.5745, marking a 0.34% increase. Although there was a rise, the momentum was limited. For today, we anticipate a trading range of 0.5725 to 0.5755.

Trading Range Forecast

Over the next 1-3 weeks, we maintain our previous outlook with reduced downward pressure. The NZD is expected to continue trading between 0.5685 and 0.5770 for now. The FXStreet Insights Team gathers market observations from various experts. This content provides a balanced view from both commercial and independent analysts, highlighting market dynamics. Given the NZD is likely to trade sideways within the 0.5685 to 0.5770 range, there is an opportunity to sell volatility. Strategies like iron condors may work well here, aiming to profit from the currency pair remaining within this defined channel over the coming weeks. This perspective is supported by the recent inactivity of central banks. In its October meeting, the Reserve Bank of New Zealand kept its Official Cash Rate at 5.50%, aligning with the cautious approach of the Federal Reserve. Last week’s data showed New Zealand’s quarterly inflation at 0.8%, meeting expectations and offering no reason for a breakout. This economic stalemate is keeping the currency pair stable.

Market Influences and Historical Context

A slight rebound in dairy prices, with the Global Dairy Trade index rising by 1.2% in the first auction of October, provides some support for the kiwi dollar, though it doesn’t create breakout potential. Implied volatility for NZD/USD options has also decreased, recently hitting multi-month lows around 8.7%. This low-volatility environment makes selling premiums appealing. We have seen similar conditions before, especially in the second half of 2023, when both central banks paused after aggressive rate hikes. During that time, the NZD/USD established a multi-month range, rewarding traders who positioned for sideways movement. This historical context strengthens our confidence in a range-trading strategy today. Create your live VT Markets account and start trading now.

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Pound Sterling (GBP) is expected to trade between 1.3385 and 1.3435. If it goes above 1.3475, it might advance to 1.3505 and could even reach 1.3530. In the past 24 hours, GBP moved between 1.3400 and 1.3442, closing at 1.3404, which is a drop of 0.26%. Current signals suggest it will stay within the 1.3385 to 1.3435 range.

Longer Term Observations

Long-term trends show that even with a slowdown, GBP might break above 1.3475 if it holds above the strong support at 1.3360. The outlook remains positive for potential growth. This analysis is put together by the FXStreet Insights Team, featuring insights from various market experts and researchers. The Pound is currently trading sideways, likely remaining between 1.3385 and 1.3435. This scenario suggests that short-term strategies betting on low volatility could be worthwhile. However, the general sentiment remains strong, pointing to a possible rise in the upcoming weeks.

If We See A Sustained Break Above

If GBP breaks above 1.3475 and holds, we expect a rally towards 1.3505. Recent UK inflation data last week, at 3.1%, supports the Bank of England’s strong position and reinforces this expectation. Hence, buying call options with a strike price around 1.3500 could be beneficial if that level is exceeded. Conversely, keep an eye on the strong support at 1.3360. If it falls below this, our positive outlook will be invalidated, which might indicate further weakness. Traders could consider buying puts below this level as protection, especially since the recent US jobs report from early October 2025 showed a slight slowdown in hiring, which may bring dollar volatility. The current tight range has kept short-term volatility low, but the chance of a breakout suggests this may soon change. The one-month implied volatility for GBP/USD is already up to 8.2% this week, indicating the market anticipates a significant move. A long straddle strategy, which involves buying both call and put options, could effectively capture any sharp movement. This price action reminds us of the consolidation phase we experienced in the summer of 2024, which led to a major trend. Back then, the pair traded in a narrow range for several weeks before breaking out. Once again, patience is required, but we should be ready for the range to result in a significant move. Create your live VT Markets account and start trading now.

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**Potential Peace Talks** The FXStreet Insights Team shares market insights from expert analysts. This includes various aspects of Forex trading and tips for selecting brokers for 2025. There is a reminder that market movements come with risks and uncertainties, highlighting that readers are responsible for their own investment decisions. FXStreet and the authors do not provide personalized investment advice. **US Market Sentiment Dependence** The EUR/USD is currently at 1.1520, largely influenced by US market sentiment. Last week, the S&P 500 rose by 2%, and the VIX fell below 15. If this stability persists, a rise to 1.160 is possible. However, the release of the US CPI this Friday is crucial. If it exceeds the anticipated 2.8%, it could quickly halt any upward trend. Given the unpredictable nature of the CPI data, taking direct long positions carries risk. A safer strategy would be to buy short-term EUR/USD call options with a strike price at or slightly above 1.160. This way, you can benefit from a low inflation number while clearly limiting your maximum loss if the data is worse than expected. Another important yet currently overlooked factor is speculation about a potential truce between Ukraine and Russia. Reports suggest a possible three-way summit in Budapest in early November. If a ceasefire is announced, it could lead to a sharp, positive reaction in the euro, which the market is not currently factoring in. This potential truce creates a binary outcome, making it perfect for volatility trades. We are thinking about buying low-cost, out-of-the-money call and put options (known as a strangle) that expire in late November. This position would allow us to profit from a significant move in either direction, whether that’s a euro rally driven by peace or a dollar surge if talks fail. We are also monitoring the 10-year OAT-Bund spread, which has stabilized at 78 basis points after the S&P downgraded French debt. While this is high, it is far below the crisis levels of over 190 basis points seen in 2012, suggesting that political stability is currently easing fiscal concerns. However, if it rises above 85 basis points, it could indicate renewed stress and pose a challenge for the euro. Recent comments from ECB officials about boosting the euro’s global role are mainly background noise for now. This long-term goal is unlikely to impact spot prices in the near future. For the moment, the ECB seems to allow US data and geopolitical events to dictate the currency’s direction. Create your live VT Markets account and start trading now.

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The AUD/JPY currency pair rose as the Japanese Yen weakened after Japan announced new cabinet ministers. Sanae Takaichi was elected Japan’s Prime Minister with 237 votes in the Lower House, exceeding the required majority. During European trading hours, the AUD/JPY was around 98.30, recovering its earlier losses and achieving its third straight session of gains. Japan’s Chief Cabinet Secretary, Seiji Kihara, introduced the new cabinet, naming Satsuki Katayama as Finance Minister, Ryosei Akazawa as Trade and Industry Minister, Minoru Kiuchi as Economic Revitalization Minister, Kimi Onoda as Economic Security Minister, and Toshimitsu Motegi as Foreign Minister. Meanwhile, the AUD may rise due to optimism about a potential breakthrough in the US-Australia trade agreement.

Trade Agreements and Economic Impact

An $8.5 billion agreement was signed between US President Donald Trump and Australian Prime Minister Anthony Albanese. Both nations committed at least $1 billion each for mining and processing projects. Additionally, eased US-China trade tensions could benefit the AUD, as President Trump expects to reach a “fair deal” with China’s President during their upcoming meeting. The AUD/JPY is moving towards 98.50, signaling a clear weakness in the Japanese Yen following the establishment of a new government. The appointment of Prime Minister Sanae Takaichi has raised expectations that the Bank of Japan will continue its ultra-loose monetary policy. Historical data shows that the yen sharply depreciated during the early days of Abenomics in 2013, and this new political environment could lead to a similar, though smaller, trend. The growing policy difference between Australia and Japan is clear, which is likely to continue boosting the AUD. Japan’s core inflation for September 2025 was reported at just 1.9%, only slightly meeting the central bank’s target. This gives the new Finance Minister, Satsuki Katayama, little reason to support tighter policies. On the other hand, the Reserve Bank of Australia is keeping rates steady to tackle its own inflation, making the Australian dollar more appealing. For the AUD, the recent $8.5 billion critical minerals agreement with the United States offers significant long-term support. Australia provides more than half of the world’s lithium, and this deal secures a major customer outside of China, enhancing the AUD’s value. We see this as a structural change that will support the currency in the coming months.

Potential Challenges and Strategy Recommendations

The easing of trade tensions between the US and China is also a significant positive for the AUD. China remains Australia’s largest trading partner, making up about 32% of our exports; any signs of stability are advantageous for demand. A successful meeting between President Trump and President Xi could boost commodity prices and, in turn, the Aussie dollar. In the upcoming weeks, consider buying AUD/JPY call options with strike prices around 99.00 and 100.00. This strategy allows investors to take advantage of expected upward movement while minimizing risk in case the political situation in Japan changes unexpectedly. Implied volatility is moderate, making option premiums reasonably priced. Traders should stay cautious, as any hawkish comments from Japan’s new cabinet could lead to a sudden reversal. Additionally, failure in US-China trade negotiations could harm the AUD. Therefore, it is wise to use defined-risk strategies, like options, instead of holding naked futures positions in this market climate. Create your live VT Markets account and start trading now.

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The British Pound is showing a slight upward trend against the Yen, with fluctuations between session highs of 202.80 and lows around 202.30. The currency pair remains within last week’s trading range and lacks a clear direction. The Japanese Yen is rebounding after Prime Minister Sanae Takaichi announced her cabinet. Satsuki Katayama’s appointment as finance minister has boosted the Yen, as her stance differs from expectations for a weak JPY and a loose monetary policy.

Yen’s Economic Fundamentals

Katayama has criticized the Yen’s weakness, suggesting that Japan’s economic fundamentals indicate a real value between 120 and 130 USD. Currently, the Yen is trading above 151.00. The British Pound is struggling for upward movement, with eyes on the upcoming UK Consumer Price Index (CPI) figures for clues about the Bank of England’s (BoE) policies. A projected CPI rise to 4% could lead the BoE to adopt a more cautious approach to monetary easing. The Yen’s value is influenced by Japan’s economic conditions, BoJ policy, bond yield differences, and market risks. The BoJ’s currency control measures play a key role, often choosing not to intervene due to political considerations. The move away from an ultra-loose policy in 2024 and interest-rate reductions elsewhere are narrowing the US-Japanese bond yield gap. As a safe-haven asset, the Yen often gains strength in times of market stress, attracting investments due to its stability.

Market Strategies and Predictions

As of October 21, 2025, the British Pound against the Yen is trading without clear direction, confirmed by its one-month implied volatility dropping to a three-month low of 8.5%. This shows that the options market is not expecting any major moves soon. Key for traders this week is the anticipated UK Consumer Price Index (CPI) report arriving tomorrow. We are preparing for Wednesday’s UK inflation data, as a higher-than-expected figure could greatly influence the Bank of England’s outlook. The current market consensus estimates a yearly rate of 3.9%, and any figure above 4% could prompt the BoE to take a more cautious stance on monetary easing, which would support the Pound. Traders might consider short-term call options on the Pound to hedge against or speculate on this potential surprise. On the Japanese side, Satsuki Katayama’s new role as finance minister is a significant factor for the Yen. Her previous comments criticizing a weak Yen could create risks for those betting against the currency, as she may adopt a firmer stance towards its depreciation. Recent CFTC data from the week ending October 14th shows that large speculators have slightly reduced their net short positions on the Yen. This political change aligns with the gradual normalization of policy from the Bank of Japan, moving away from its ultra-loose policy that started in 2024. Recent government data indicates that Japanese nominal cash earnings rose by 2.5% in September year-over-year—the fastest growth in over a year. This economic improvement could support further policy tightening, establishing a base for the Yen’s value in the medium term. Given the opposing pressures—a potentially stronger Pound due to UK inflation versus a resilient Yen from Japanese political changes—the GBP/JPY pair may stay within its recent range. We believe that selling volatility could be an effective strategy in the coming weeks. Derivative traders might look at selling strangles, with strike prices set outside the recent 201.50 to 203.50 range, to obtain premiums from the expected stability. Create your live VT Markets account and start trading now.

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USD/INR finished Monday a bit lower, close to 88.00, as the US Dollar remained strong due to easing trade tensions between the US and China. With Indian markets closed for Diwali and Balipratipada, traders are now looking forward to the US CPI data coming out this Friday, which will help them understand the Federal Reserve’s plans for monetary policy. President Trump expressed his concerns about India purchasing oil from Russia, suggesting that higher tariffs could follow if these purchases continue. The upcoming CPI data may influence expectations regarding US interest rates, as indicated by the CME FedWatch tool, which shows potential for rate cuts later this year.

Key Resistance and Support Levels

USD/INR is facing a crucial resistance level at the 50-day EMA around 88.13. The RSI is approaching a key mark of 40.00. Support levels are set at 87.07 and 86.55, while resistance can be found at the 20-day EMA around 88.50 and the all-time high near 89.10. India’s economy has grown by an average of 6.13% from 2006 to 2023, attracting foreign investments that boost demand for the Rupee. Oil imports impact the Rupee, as higher oil prices lead to increased demand for USD. Inflation also plays a role in altering the Rupee’s value, which affects the RBI’s decisions on interest rates. Trade deficits have resulted in a higher demand for USD, which can sometimes weaken the INR. Increased market volatility also raises the demand for USD, further impacting the Rupee.

Market Analysis and Inflation Discussion

With Indian markets observing Diwali festivities today and tomorrow, the USD/INR pair is holding steady around the 88.00 mark. This pause allows us to evaluate the key factors that will influence currency movements in the upcoming weeks. The calm domestic market contrasts with the anticipation for significant economic data from the United States. The most important event this week is the US Consumer Price Index (CPI) report set for Friday. US inflation has remained stubborn in 2025, with the year-over-year figure for September at 3.4%. This has kept the Federal Reserve from providing a clear direction for rate cuts. This upcoming data will be important for shaping expectations for the Fed’s final policy discussions this year. Domestically, the Rupee faces pressure from ongoing geopolitical challenges. The US government continues to criticize India’s substantial oil purchases from Russia, which have consistently made up over 35% of India’s crude imports in 2025. These unresolved trade issues create uncertainty and possible volatility for the Rupee. From a technical perspective, the pair faces resistance at the 50-day Exponential Moving Average around 88.13. The Relative Strength Index (RSI) is currently near 40.00. If it drops below this, it may signal new bearish momentum, prompting traders to monitor this closely. This indicates that options traders might consider strategies to take advantage of a range-bound market or a potential breakdown. Key support levels to watch include the August 21 low of 87.07 and the July low of 86.55. On the higher end, any upward movement would need to surpass the 20-day EMA near 88.50 before aiming for the all-time high around 89.10. The price of oil poses a direct threat to the Rupee’s strength since India is a major importer. Recently, Brent crude prices have risen back above $90 per barrel, leading to increased demand for US Dollars from Indian importers for these essential energy supplies. This situation naturally affects the INR. At the same time, we are monitoring the Reserve Bank of India’s approach to inflation. Although the RBI’s benchmark repo rate stands at 6.75%, which should theoretically support the Rupee, the central bank is mainly focused on managing domestic price pressures. Recall how the Rupee fell below 83 for the first time in late 2022 when the Fed began aggressive rate hikes, highlighting how sensitive our currency is to global interest rate differences. India’s ongoing trade deficit also ensures a constant demand for the US Dollar for import payments. When global markets become volatile, as they have in much of 2025, the flow of foreign investments can become less reliable, making the Rupee more vulnerable to being sold off to meet dollar demand from importers. Create your live VT Markets account and start trading now.

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The Euro is likely to experience small changes and may drift lower within the range of 1.1625 to 1.1660 in the short term. Analysts see this as part of a larger trading phase between 1.1580 and 1.1690. Recently, the Euro traded between 1.1637 and 1.1675, closing slightly down by 0.09% at 1.1640. Although a slight decline is expected, analysts do not foresee a significant drop below 1.1625.

Long Term Outlook

Looking ahead, if the Euro breaks above 1.1720 and stays there, it could gain some upward momentum toward 1.1760. However, this potential has diminished since it hasn’t dropped below the 1.1625 support. Current movements appear to be part of ongoing range trading. In general, these trends suggest that the Euro will likely remain within the current price ranges without any major sudden changes. The Euro’s upward momentum has slowed after it failed to rise last week. The EUR/USD pair is now expected to trade between 1.1580 and 1.1690 in the coming weeks. Any dips in value are likely to be mild, with support around the 1.1625 level. This change in outlook reflects the European Central Bank’s cautious stance on monetary policy. Eurozone inflation data for September, confirmed at 2.8%, has decreased from previous highs, leaving officials with little reason to pursue a more aggressive approach. This approach is likely to limit significant Euro strength for now.

Market Dynamics

Meanwhile, the US dollar is gaining support from ongoing inflation concerns. The latest US Consumer Price Index slightly exceeded expectations, keeping open the possibility of further tightening by the Federal Reserve. This situation adds pressure to the EUR/USD pair and supports the idea of a confined trading range. For derivative traders, this market environment suggests that selling volatility might be a good strategy. With the pair expected to remain in a set range, strategies like short strangles or iron condors with strikes outside the 1.1580 to 1.1690 range could be appealing. The aim is to profit as time passes while the currency pair remains within these limits. Market indicators are reflecting this as well, with the Cboe EuroCurrency Volatility Index hitting its lowest level in several months. This suggests low expectations for major price movements. The current low-volatility environment resembles much of the sideways trading seen in the latter half of 2024. Thus, collecting premiums now seems more favorable than betting on a significant price change. Given the recent failed rally, selling out-of-the-money call options with strikes above 1.1700 could be a smart way to leverage the fading upward momentum. However, it’s crucial to manage risks properly, and traders should define their exit points if the 1.1580 support or 1.1690 resistance levels are broken decisively. The latest Commitment of Traders report shows a slight decline in bullish Euro bets, reinforcing this perspective. Create your live VT Markets account and start trading now.

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Canada will soon release its inflation data for September, and it’s expected that the headline Consumer Price Index (CPI) will rise above 2.0%. However, the Bank of Canada (BoC) is more focused on core inflation measures, which are expected to stay around 3.0%. The BoC is prioritizing concerns about growth and job risks linked to tariffs rather than focusing solely on inflation. The USD/CAD exchange rate is forecasted to drop below 1.40, returning to levels seen in September by the end of the year. Despite recent strong job data, markets are anticipating a 19 basis point rate cut before the BoC meeting next week. The BoC’s third-quarter Business Outlook Survey indicates that US tariffs are causing uncertainty in investment and slow hiring.

The Bank of Canada Rate Cut Concerns

The BoC cut rates in September due to worries about the economy. There is ongoing debate about whether the risks around inflation are significant enough to keep rates unchanged on October 29. The Canadian dollar (CAD) is seen as weak compared to other G10 currencies, primarily because the risk of another rate cut and ongoing economic uncertainties limit its chance for gains. Still, if the US dollar weakens, USD/CAD may decline further by year’s end. Today’s inflation report for September isn’t likely to change the BoC’s approach. Even if headline inflation exceeds 2%, the BoC is expected to concentrate on core measures that remain stubbornly high near 3%. Their main concern is the economic growth and job risks caused by ongoing trade tariffs. Recent survey results confirm these concerns, showing businesses are postponing investments and hiring due to continuing uncertainty. This correlates with the Bank of Canada’s worries that prompted the rate cut in September. Ensuring economic support is clearly the bank’s priority. Markets are now heavily expecting another interest rate cut at the meeting on October 29. In fact, traders are almost certain that the BoC will ease next week. It would take an unexpected and strong piece of good news for the bank to hold rates steady.

Strategizing Currency Trades

For traders, this suggests positioning for a weaker Canadian dollar in the coming weeks. A simple strategy would be to buy put options on the CAD or call options on USD/CAD with expiry dates after the central bank meeting. This approach allows you to benefit from a rate cut while knowing your maximum risk is limited to the premium paid. We’ve seen this trend before, notably during the 2023-2024 period. During that time, core inflation often didn’t align with the central bank’s immediate moves, as the CPI-trim figures from Statistics Canada stayed near 3% for several months in early 2024. This indicates that the Bank of Canada may overlook stubborn core numbers when growth risks are considerable. While the US dollar is also expected to weaken, the Canadian dollar is perceived as the weaker currency. Therefore, promising trades may be found in currency crosses, such as going long on EUR/CAD or GBP/CAD. The loonie will likely struggle against other major currencies until the Bank of Canada signals the end of its easing cycle. Create your live VT Markets account and start trading now.

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