Splat-US Dollar Takes it on the Chin

Posted by Andrew McGuire - Agility Forex

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CAD-10-JUNE-1024x357

USDCAD Overnight Range 1.2207-1.2350        

The US dollar went “Splat” overnight. The greenback dropped against the majors as Bunds and  central banker’s combined to deliver a “one-two” punch to dollar bulls in a move that may have been exaggerated by poor liquidity.

The RBA governor started the Asian session telling traders that the RBA would ease further.  The AUDUSD dropped, but not for long buoyed by general US dollar weakness.  The Bank of Japan Governor, Kuroda, in an address to the Diet, warned against additional JPY weakness which was followed up by further headlines stating that QE won’t last forever. USDJPY traders got spooked and USDJPY plunged from 124.60 to 122.49.

The US dollar remained wobbly in Europe and then toppled when German Bund yields topped 1%. EURUSD has since returned back to yesterday’s New York closing level.

USDCAD bounced in early New York trading, but that move didn’t last and it is now flirting with the next level of minor support at 1.2210. The Loonie is continuing to benefit from the positive domestic data in addition to the bounce in WTI to $61.66/bbl

The US dollar and USDCAD will likely consolidate within the bottom area of the overnight ranges ahead of tomorrow’s US Retail Sales Data.

USDCAD technical outlook

The intraday USDCAD technicals are bearish. The break of support at 1.2360 points to further losses to 1.2165, supported by the overnight move below the intraday 50% Fibonacci retracement level of the May-June range (1.2240).  In addition USDCAD is in a steep downtrend channel, between 1.2210 and 1.2340.  For today, USDCAD support is at 1.2210 and 1.2180.  Resistance is at 1.2260 and 1.2290.

Today’s Range 1.2180-1.2260

Chart: USDCAD hourly with downtrend channel  Larger Chart

CAD-10-JUNE-1024x357