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May 28, 2021

US data, month end flows, boost US dollar

EURUSD testing pivotal support

USD opens mixed, but climbs steadily in NY trading

USDCAD open 1.2095-99, Overnight range 1.2068-1.2099,  Previous  close 1.2067

FX Month-to-Date at a Glance

FX Recap and outlook

Today’s US PCE report was better than expected. The PCE index rise 3.6% y/y compared to forecasts for a 2.2% y/y gain.  The results are further evidence of a US economic rebound.

Global equity markets are posting gains.  Asia equity markets closed on a firm footing led by a 2.1% gain in Japan’s Nikkei 225.index.  European bourses are higher, and Wall Street is poised to open with gains. 

President Biden plans to unveil a  $6.0 trillion budget proposal which will keep inflation concerns on the front burner.

EURUSD is probing pivotal support in the 1.2140 area, having dropped from 1.2200 in Europe.  The recent US economic data,  widening US/Eurozone interest rate differentials ,and more dovish comments from ECB officials are weighing on the currency.  Today, ECB Executive Board Member Isabel Schnabel said “monetary policy support would remain in place until March 2022.”   A decisive break of 1.2140 targets 1.1950.

GBPUSD dropped alongside EURUSD and is trading at 1.4140, down from 1.4207 in Europe.  GBPUSD is suffering from month-end selling pressures and position adjusting as UK traders leave for a long weekend. Monday is the spring Bank Holiday.

USDJPY consolidated yesterday’s gains in a 109.81-109.95 range overnight then popped to 110.19 after todays US data.  Prices got an added lift as US 10-year Treasury yields inched higher.

NZDUSD and AUDUSD are lower, weighed down by broad US dollar demand.  Higher commodity prices support both currency pairs.

USDCAD lost 1.73% month-to-date, but downside momentum has stalled, despite WTI oil prices climbing to $67.42/barrel, a level last seen in October 2018.  Traders are looking for fresh incentives to drive USDCAD below the 1.2015-1.2040 support zone.

The Canadian economic calendar is empty

USDCAD technical outlook

The intraday USDCAD technicals are neutral as the currency pair consolidates in a 1.2050-1.2150 range.  A topside break targets 1.2250 while a downside moves puts 1.1935 in play.  For today, USDCAD support is at 1.2070 and 1.2040.  Resistance is at 1.2120 and 1.2150.  Today’s range 1.2070-1.2140.

Chart USDCAD daily

Source: Saxo Bank

FX open, high, low, previous close

Source: Saxo Bank