May 20, 2026
USDCAD open: 1.3777, overnight range 1.3742-1.3779, close 1.3745
USDCAD gains continue to be fueled by CAD_US yield spreads move sharply against the Loonie. The 2-year and 10-year differentials are near multi-month extremes, which suggests the market is increasingly pricing a more dovish Bank of Canada alongside a higher-for-longer Fed. Yesterday’s April CPI numbers were below forecasts, due to the oil price surge, and support the BoC outlook.
WTI oil prices traded in a 100.88-104.45 and are just above the session low. The lack of upside despite Trump’s latest threats suggests markets increasingly see him as more steer than bull. Rocky Mountain Oysters, anyone?
The highlight today will be the release of the FOMC minutes and traders may bide their time until then.
USDCAD Technical Outlook
The intraday technicals are unchanged from yesterday. They are bullish while above the 1.3700-1.3720 area, with a break above 1.3790 needed to extend gains toward 1.3810. The momentum indicators are mixed.
The longer-term daily technicals are bullish above the 100 day moving average at 1.3720, but bumping into the resistance zone, which includes major Bollinger band resistance at 1.3800 and the 200 day moving average at 1.3814. The daily RSI at 83.54 is stretched and warning USDCAD is approaching extreme overbought levels. A sustained close above 1.3830 would shift the bias meaningfully higher toward 1.3900.
For today, USDCAD support is at 1.3730 and 1.3710. Resistance is at 1.3790 and 1.3820 Today’s range: 1.3720-1.3820.
FX Heat FX open high low 6:00 am
FX open high low 6:00 am
Business as Usual
Trump is threatening Iran again, this time with a “big hit” if Iran continues to refuse to bow to his demands. Iran replied “bring it on” and warned it would retaliate beyond the region, implying terrorist attacks in western countries.
Equity traders are largely ignoring the sell-off in global government bonds. The US 10-year Treasury yield was 4.41% on May 14, touched 4.681% yesterday and is 4.643% today. For now, equity traders believe the AI and Tech upside will more than offset higher interest rates because of inflation. However, FX traders have taken note and the higher US Treasury yields are underpinning the greenback.
Yesterday, Philadelphia Fed President Anna Paulson added her voice to the chorus that believe the current stance of monetary policy is appropriate but it is “healthy” to consider scenarios with higher rates.
Taking Stock
Asian equities retreated. Japan’s Topix lost 1.53%, Australia’s ASX 200 fell 1.26% and the Hong Kong Hang Seng closed down 0.57%.
As of 5:30 am PT the French CAC 40 has risen 0.66%, the German DAX is up 0.55% and the UK FTSE 100 is up 0.21%. S&P 500 futures have climbed 0.42%, the 10-year Treasury yield is 4.65%, DXY is 99.35 and gold (XAUUSD) is 4,502.23.
EURUSD | Range: 1.1584-1.1613
EURUSD trickled lower due to fears that the ongoing US/Iran stalemate will prolong the oil market disruption. Prices were further weighed down by firm to rising US treasury yields. Traders appear less than impressed after EU officials appeared to cave in to Trump’s demand to agree to his trade terms or face new tariffs on July 4. EU officials wanted a clause to allow them to terminate the deal unless renewed, knowing full well that any Trump deal, is only a “deal” in name. Eurozone inflation data was as expected at 3.0% y/y. EURUSD technicals suggest a move below 1.1570 will extend losses to 1.1505.
GBPUSD | Range: 1.3375-1.3407
GBPUSD trickled lower in the face of broad US dollar strength which was fueled by higher Treasury yields. UK inflation data injected more uncertainty around the outlook for BoE monetary policy. Headline CPI rose 2.8% y/y compared to estimates for a 3.0% increase while core-CPI rose 2.5% compared to the estimate of 2.6% y/y.
USDJPY | Range: 158.82-159.11
USDJPY traded sideways in a relatively narrow range with prices supported by US treasury yields and steady, but firm oil prices. BoJ Governor Kazuo Ueda said that Japan’s GDP data is in line with forecasts and that they are monitoring signs of upward price pressures. Finance Minister Katayama chirped about being ready to take action on FX.
AUDUSD | Range: 0.7087-0.7187
AUDUSD is being weighed down by rising inflation fears and higher Treasury yields which are giving the greenback a boost. However the downside is supported by firm commodity prices.
.USDMXN | Range: 17.3618-17.4309
USDMXN traded higher yesterday and continues to be supported by US inflation fears that are driving Treasury yields higher. The aggressive USMCA negotiating tactics are adding additional support to USDMXN.
CHINA
- USDCNY Fix: 6.8397 vs exp. 6.8072 (prev. 6.8375).
- Shanghai Shenzhen CSI 300 fell 0.04% to 4,850.70
PBoC leaves 1-year and 3-year Loan Prime Rate (LPR) unchanged at 3.0%, and 3.5%, respectively.
Russia President Vladmir Putin meeting with Jinping and reportedly Iran and Ukraine are on the agenda.
Chinese investments in Europe, including UK are at a 7-year peak.
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview
