USDCAD consolidating losses. Broad USD moves+crude oil leading. Busy calender today with US CPI, DOEs, FOMC Minutes, mounting Syria tension.

Summary

• USDCAD: Sellers continued to hammer USDCAD yesterday.  The technical weakness on the charts and the China-led ease of trade tensions wasn’t a great set up to begin with, but then we saw the EURUSD break higher again (on hawkish comments from the ECB’s Nowotny) and AUDUSD break above 0.7740.   Combine this broad USD selling with a monstrous rally in crude oil prices and USDCAD made quick work of the support levels at 1.2660 and 1.2625-40.  The NY close was anything but pretty, and it opens the door for a move lower into the 1.25s (next support 1.2550-60, then 1.2480s), but markets are consolidating price action for the time being ahead of US CPI at 8:30amET.  Mario Draghi just finished speaking in Frankfurt, but he didn’t say anything notable for markets and didn’t touch on Nowotny’s comments from yesterday.  After US CPI, traders will be watching crude oil’s response to the DOE weekly inventory report (10:30amET), and then the broad USD’s reaction to the FOMC Minutes from the Mar 21 Fed meeting (2pmET) and rising geopolitical tensions regarding Syria.  Chart resistance today for USDCAD is 1.2625-40, then 1.2660 (yesterday’s support levels).  While we think USDCAD could take a stab at testing these resistance levels today given the event risk with all the scheduled headlines, we also have to be mindful of the fact that EURUSD, AUDUSD and crude oil prices are still not showing signs of technical weakness (ie. if these markets rally further, it will naturally pressure USDCAD).  Canadian dollar futures traders added 1230 contracts in new positions yesterday.

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About the Author

Erik Bregar - Director, FX Trading

Erik works with corporations and institutions to help them better navigate the currency markets. His desk provides fast, transparent, and low cost trade execution; up to the minute fundamental and technical market analysis; custom strategy development; and post-trade services -- all in an effort to add value to your firm’s bottom line. Erik has been trading currencies professionally and independently for more than 12 years. Prior to leading the trading desk at EBC, Erik was in charge of managing the foreign exchange risk for one of Canada’s largest independent broker-dealers.

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