Spring has finally sprung and US Dollar bulls are feeling feisty.  The greenback rallied in Europe after a dull Asia session, powered by higher US Treasury yields.

EURUSD is pressuring key support in the 1.2230 area which, if broken could set up a test of the 1.2000 area.  The single currency is being pressured by speculation of a dovish ECB policy statement on Thursday.  Eurozone Markit PMI data was mostly positive.

GBPUSD continued to be sold following Bank of England Governor Mark Carney’s comments last Thursday, downgrading the prospect of a May rate hike.  GBPUSD is sitting on support at 1.3960, which if broken targets 1.3800

USDJPY popped in Europe, in line with the general US dollar strength.  The break above resistance at 107.90 which had capped topside moves since February opened the door to a retest of the 108.90 area.  Rising US Treasury yields fuelled the move.

AUDUSD and NZDUSD dropped in Asia, due to higher Treasury yields and soft commodity prices but managed to recover somewhat in early New York trading.  AUDUSD traders are cautious ahead of a speech by Assistant Governor. Christopher Kent and Q1 CPI data tomorrow.

USDCAD continues to be supported by what many believe was a dovish Bank of Canada statement.  Traders are ignoring high oil prices and recent economic data. Retail Sales were a tad soft but CPI was firm and the March 2.3% year over year reading was the highest level in 4 years.

US March Existing Home Sales (Forecast 0.2%, m/m) and Markit PMI data are on tap today.  The Markit data does not carry the same weight as ISM with FX traders and should not be a factory.  USDCAD direction will be governed by broad US dollar sentiment.

USDCAD Technical Outlook

The intraday USDCAD technicals are bullish above 1.2770 looking for a break above 1.2820 to extend gains to 1.2860 and then 1.2940.  A break below 1.2775 would extend losses to 1.2680.  For today, USDCAD support is at 1.2770 and 1.2730.  Resistance is at 1.2820 and 1.2860.

Today’s Range 1.2770-1.2860