Geopolitical shocks are the initial drivers of the FX market today: news of US military attacks on Iranian enrichment facilities sparked a rush for the US dollar, as well as a sell-off in the Canadian dollar related to crude oil. USDCAD broke above the 50% retracement of the May trendline resistance and the May-June decline at 1.37782 and briefly renewed the three-week high. But the breakthrough failed to last. Treasury yields drifted lower as Wall Street recouped early losses, and the focus shifted to policy divergence. Fed Governor Bowman echoed Governor Waller's comments on Friday that a rate cut in July was "possible," highlighting the divergence with Chair Powell's more cautious stance. The USD reversed, pulling USDCAD back inside the yellow shaded swing band and recently falling back below it. USDCAD is now fluctuating around the previous support at 1.37498. A decisive close below will keep the narrative of defeat alive and portray this morning's spike as a bullish trap; In this case, the 38.2% retracement below 1.37221 is the first natural attraction, while the 100-hour moving average just below it adds weight. Conversely, a return to the swing zone and a move above 1.3771 and 1.3778 for 50% will reinvigorate buyers and open the door to 1.3814 as well as 1.3824 for 61.8% as targets. Key Technical Levels Resistance 1.3778 – 1.3781 (50% Retracement & Swing Zone Upper Limit)1.3814 (May Small Pivot Point)1.38342 (Early May High / 61.8% Fibonacci)Support 1.37221 (38.2% May Retracement)1.3701 (100 Hour Moving Average; Start with a broader support band) 1.3685 -1.3692 (swing area) As long as geopolitics and Fed rhetoric pull in opposite directions, expect a two-way flow, traders are inclined to go against the above levels. The probability of a rate cut in July is as high as 20%, while the probability of a rate cut in September is now 80%. Two Fed officials greater than 1. There were also political cues that were quick to refute the Fed chairman, who on Wednesday hinted that the Fed was determined to wait for an imminent tariff-induced spike in inflation.
View Original
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
11 Likes
Reward
11
5
Share
Comment
0/400
SmartContractPlumber
· 4h ago
This sideways range is the easiest time to break contracts.
Reply0
FlashLoanKing
· 9h ago
bearish traders are eating noodles again
Reply0
LiquidityNinja
· 10h ago
The USDCAD is starting again, just like I said yesterday.
Reply0
ContractSurrender
· 10h ago
Holding a long order and crying loudly
Reply0
ImpermanentLossFan
· 10h ago
The pro politicians are fighting among themselves again.
Geopolitical policies and the divergence with The Federal Reserve (FED) affect the USDCAD trend.
Geopolitical shocks are the initial drivers of the FX market today: news of US military attacks on Iranian enrichment facilities sparked a rush for the US dollar, as well as a sell-off in the Canadian dollar related to crude oil. USDCAD broke above the 50% retracement of the May trendline resistance and the May-June decline at 1.37782 and briefly renewed the three-week high. But the breakthrough failed to last. Treasury yields drifted lower as Wall Street recouped early losses, and the focus shifted to policy divergence. Fed Governor Bowman echoed Governor Waller's comments on Friday that a rate cut in July was "possible," highlighting the divergence with Chair Powell's more cautious stance. The USD reversed, pulling USDCAD back inside the yellow shaded swing band and recently falling back below it. USDCAD is now fluctuating around the previous support at 1.37498. A decisive close below will keep the narrative of defeat alive and portray this morning's spike as a bullish trap; In this case, the 38.2% retracement below 1.37221 is the first natural attraction, while the 100-hour moving average just below it adds weight. Conversely, a return to the swing zone and a move above 1.3771 and 1.3778 for 50% will reinvigorate buyers and open the door to 1.3814 as well as 1.3824 for 61.8% as targets. Key Technical Levels Resistance 1.3778 – 1.3781 (50% Retracement & Swing Zone Upper Limit)1.3814 (May Small Pivot Point)1.38342 (Early May High / 61.8% Fibonacci)Support 1.37221 (38.2% May Retracement)1.3701 (100 Hour Moving Average; Start with a broader support band) 1.3685 -1.3692 (swing area) As long as geopolitics and Fed rhetoric pull in opposite directions, expect a two-way flow, traders are inclined to go against the above levels. The probability of a rate cut in July is as high as 20%, while the probability of a rate cut in September is now 80%. Two Fed officials greater than 1. There were also political cues that were quick to refute the Fed chairman, who on Wednesday hinted that the Fed was determined to wait for an imminent tariff-induced spike in inflation.