EURUSD rallied in Asia following Fed Chair Janet Yellen’s congressional testimony.  FX markets believed she was back to her doveish self and appeared to be content to leave rates where they are for the time being. Traders in Europe didn’t quite see it that way and EURUSD declined.  New York traders pushed EURUSD down to 1.1371, below the overnight low but the move didn’t last.  The Wall Street Journal wrote today the ECB will announce tapering plans in September and EURUSD popped above 1.1400.

USDJPY was under pressure throughout the Asia and European sessions but found a bit of a bid in New York.  USDJPY has risen from 112.88 to 113.30 where it is, at the time of writing.

Sterling was bounced around by competing interest rate views.  Yesterday, the Bank of England Deputy Governor Broadbent did not talk interest rates in a speech and traders concluded that he wouldn’t support a rate hike.  Sterling was sold.  Today, Monetary Policy committee member Ian McCafferty said he favoured a “faster unwind” of quantitative easing. Sterling rallied and is now trading at the overnight high of 1.2850.

Better than expected china Trade data gave Aussie and Kiwi a lift in Asia.  Prices have come off slightly since New York opened.

The Canadian dollar is basking in the glow of the hawkish outlook presented by the Bank of Canada yesterday. The BoC’s expectation that the output gap would close earlier than expected (December rather than sometime in 2018) fueled US dollar selling yesterday.  Overnight, USDCAD consolidated the gains inside a 1.2727-1.2769 range. Sliding oil prices provided the greenback with some support

USDCAD Technical outlook:

The USDCAD technicals are bearish.  Yesterday’s break of 1.2772, the 76.4% Fibonacci retracement level of the 2016-2017 range has hung a target on the 10-0% level, 1.2458.  However, it won’t be a one-way street. 1.2650-60 support proved unbreakable in June/July of 2016 and yesterday’s plunge stalled at 1.2680, just above that level. The short-term downtrend from 1.3340 is intact while prices are below 1.2970, a level being guarded by resistance at 1.2860 and 1.2770.   For today, USDCAD support is at 1.2710 and 1.2660.  Resistance is at 1.2770 and 1.2820.

Today’s Range 1.2710-70

Chart: USDCAD 4 hour