European Central Bank President Mario Draghi dropped broad hints about a policy shift. He told an audience in Sintra, Portugal, “All the signs now point to a strengthening and broadening recovery in the euro area — deflationary forces have been replaced by reflationary ones.”

Just a hint that Mr. Draghi endorsed a policy change was enough to send EURUSD from 1.1184 to 1.1274 in New York trading.

Sterling followed EURUSD higher but its gains were muted due to the overhang from the UK election, Brexit negotiations and the rate debate at the Bank of England.

USDJPY dropped in Asia on geopolitical issues stemming around the US and Syria. The move was reversed in Asia on anticipation of hawkish comments from Fed Chair Janet Yellen, later today but the rally stalled in New York.

The Asia session was tame although Aussie and Kiwi both made gains. However, the gains were erased by the open in New York, in part due to EURUAUD and EURNZD demand.

USDCAD was ignored in Asia but slid steadily during the European and early New York session.  The hawkish shift by the Bank of Canada combined with stable oil prices and wrong-foot speculative Canadian dollar positioning is weighing on the currency.

The US Case Shilller Home Price data missed forecasts. (Actual 5.7% vs forecast 5.9%) which contributed to the soft dollar sentiment.

Fed Chair Janet Yellen is on deck just after lunch, and traders will be looking for her to reiterate her positive US economic outlook.

USDCAD Technical outlook:

USDCAD technicals are bearish.  The series of lower -highs from June 12 and the downtrend from early May continues to target support in the 1.3140-60 area.  A break of this level would extend losses to 1.2165.  Only a move above 1.3320 would negate the downside pressure.  For today, USDCAD support is at 1.3205, 1.3180 and 1.3140.  Resistance is at 1.3280, and 1.3305.

Today’s Range 1.3170-1.3250

Chart: USDCAD  1 hour