Asia and Europe put the brakes on the US dollar slide in a subdued overnight session.Traders were concerned about today’s US CPI data, this afternoon’s release of the FOMC meeting minutes and rising geopolitical tension.  None of the G10 currencies opened in New York very far from where they closed.

EURUSD was adrift in Asia but ticked higher in European trading. The single currency was underpinned by yesterday’s hawkish comments from ECB Governing council member Ewald Nowotny, even though other ECB officials said that the remarks were “his views and not the views of the ECB.” Traders believe that they were proof that ECB policy normalization is an active discussion.  EURUSD rose from 1.2351-to 1.2386.

GBPUSD rose from 1.4174 to 1.4221, with most of the move occurring in London. Prices retreated from the peak after UK data missed forecasts.  However, the dip was shallow, and GBPUSD continues to be supported by positive Brexit sentiment and the prospect of higher UK rates.

USDJPY opened in Asia at the session high and then drifted lower until this morning’s New York open. The outlook for higher US rates took a back seat to rising geopolitical tensions over Syria’s suspected use of chemical weapons. Russia said that any US missiles fired at Syria would be shot down and their launch sites would be targeted.  The minor shift to safe-haven currencies drove USDJPY from 107.23 to 106.90.  USDCHF inched lower as well, falling from 0.9594 to 0.9557.  They opened in New York at 0.9577

AUDUSD failed to extend gains and traded within a 0.7741-0.7767 range.   The currency pair was flirting with major technical resistance, but soft Westpac Consumer Confidence data took the wind out of its sails.  Reserve Bank of Australia Governor Phillip Lowe gave a speech that hawks and doves would like.  He said the next move for the cash rate was higher but hedged himself when he added that he was committed to waiting and seeing how the economy develops.

NZDUSD traded in a similar fashion to AUDUSD

The USDCAD consolidated its recent losses in a narrow trading range.  Geopolitical concerns and the pending CPI data supported the greenback.

FX markets may see a flurry of activity after the 8:30 am release of inflation data.  March CPI is forecast to rise 2.4%, year over year (February 2.2%)  and Core CPI  at 2.1% (February 1.8%, y/y)  A higher than expected result would trigger a wave of US dollar buying.  At 2:00 pm, the FOMC minutes are released.  They will be scoured for hawkish clues.  In between, traders will be wary of White House or Syria headlines.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish while prices are below 1.2640 looking for a break of 1.2585 to extend losses to 1.2460.  A break above 1.2640 would lead to 1.2690.  For today, USDCAD support is at 1.2580, 1.2540 and 1.2510.  Resistance is at 1.2640 and 1.2680.

Today’s Range: 1.2540-1.2640