USDCAD Open (6:00 am EDT) 1.3300-03 Overnight Range 1.3288-1.3317

President Trump is on the warpath again.  He announced that the US is labeling Iran’s Revolutionary Guards as a “Foreign Terrorist Organization.” He also took a shot at the European Union.  He is reportedly planning to slap tariffs on €11 billion of EU products including aircraft as a result of the World Trade Organization (WTO) saying EU subsidies to support Airbus were illegal.  FX markets have become accustomed to Trump’s antics and didn’t react to the news.

The US dollar opened in New York with small losses across the major G-10 currency spectrum, led by a 0.32% rise in AUDUSD from yesterday’s close. Australia Homes data was higher than expected which supported the currency pair.

USDJPY consolidated yesterday’s losses in a 111.26-111.56 range, and it opened in New York at the low.  Prices were undermined by yesterday’s soft US Factory orders data.

EURUSD is marking time ahead of tomorrow’s ECB meeting, although it is expected to be rather tame.  ECB President Mario Draghi doubled down on his dovish bias last month and is not expected to offer any new insight into monetary policy.  EURUSD traded quietly in a 1.1256-80 range.

GBPUSD rallied from 1.3058 to 1.3120 on Brexit headlines saying UK politicians voted to delay article 50, which is meaningless as the decision to delay is the EU’s not the UK’s.  Another headline said EU Chief Negotiator Michel Barnier warned that the EU might not grant a long article 50 extension unless May backed a customs union.

Oil prices continued to climb, with WTI touching $64.76/b on fears that the ongoing internal conflict in Libya will disrupt their 1.1 million barrel per day crude exports.  An oil broker told Reuters that Libya’s exports haven’t been impacted, yet.  Russia’s Oil Minister said there wasn’t any need to extend production cuts in H2 if the market was forecast to be balanced.

USDCAD slid on the back of the mildly softer USD dollar and the surge in oil prices.  USDCAD dropped from 1.3377 yesterday to 1.3296 overnight, and prices are hovering just above the low in early New York trading.  There isn’t any Canadian data of note due this week leaving USDCAD direction at the mercy of broad US dollar sentiment and oil prices.

Today’s US data is second tier and includes JOLTS which will not have an impact on FX trading.  Instead, traders will bide their time until Wednesday afternoon’s release of the FOMC meeting minutes.

USDCAD Technical Outlook

The intraday USDCAD technicals are bearish following the break below support at 1.3360 which has put 1.3220, the uptrend line from February 2018 into play.  The move below 1.3329 (38.2% Fibonacci retracement of October/January range, suggests further weakness to 1.3224, the 50% retracement level. USDCAD moved below the 100-day moving average at 1.3327 which opens the door to a drop to the 200-day moving average at 1.3197. For today, USDCAD support is at 1.3290 and 1.3250.  Resistance is at 1.3320 and 1.3360.   

Today’s Range 1.3270-1.3320

USDCAD daily chart with moving averages and Fibonacci retracement levels