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Bearish Threat Remains For USDCAD

US 10YR FUTURE TECHS

‌‌(H3)‌‌ Pullback Extends Into 4th Session

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Risk Recovery Sees Greenback Pare Earlier Gains

FOREX
  • The greenback had started the week as the best performing G10 currency as risk sentiment soured from the open and equities extended below last week’s lows. However, Monday’s session turned out to be a tale of two halves, with a solid bounce in both equities and oil prices weighing on the greenback throughout the US session, culminating in the USD index trading close to unchanged from Friday’s close.
  • With no direct headlines driving the price action, markets may have overextended given the holidays in the UK and Japan, with potential profit taking dynamics coming into play ahead of the FOMC decision on Wednesday.
  • NZDUSD has underperformed, following momentum selling below the psychological 0.60 handle. The pair continues to print fresh cycle lows (0.5930), the worst levels since May 2020.
  • Additionally, USDCAD extended on last week’s strength which resulted in a break of key resistance and the bull trigger. This confirmed a resumption of the broader uptrend and saw the pair get as high as 1.3344 on Monday. Despite this bullish price action, the pair has had the most significant turnaround, closing the gap with the overnight lows at 1.3250 and narrowing in on the initial recent breakout level at 1.3224, the Jul 14 high.
  • Japan returns on Tuesday and National Core CPI data is on the docket. Following this markets will receive the latest RBA Monetary Policy Meeting Minutes. Canadian August CPI highlights Tuesday’s North American session with US building permits a minor data point. Potential comments from ECB’s Lagarde due to speak at an event hosted by the Frankfurt Society for Trade, Industry, and Science.
  • Focus then turns firmly to a slew of DM and EM central bank decisions/projections, headlined by the Federal Reserve on Wednesday.

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