USD/CAD is testing a key resistance zone ahead of the FOMC meeting minutes!
Will we see an upside breakout today?
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/JPY’s potential break-and-retest play after the RBA’s rate hike. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. factory orders up by 1.6% vs. 0.5% expected, 0.7% gain in April
BOE Gov. Bailey: UK banks ‘strong’ in face of weak outlook
British Cabinet ministers Sajid Javid (Health Secretary), Rishi Sunak (Chancellor of the Exchequer) resign amid Chris Pincher scandal
Russian court orders Caspian Pipeline Consortium to suspend operations
BOJ survey: ratio of Japan households expecting price rises hits 14-yr high
Shanghai announces two new rounds of mass COVID testing
Crypto lender Voyager files for bankruptcy
Germany’s factory orders up by 0.1% in May vs. -0.5% expected, -1.8% in April
Dollar reigns as investors fear recession pain
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone retail sales at 9:00 am GMT
U.S. JOLTS job openings at 2:00 pm GMT
U.S. ISM services PMI at 2:00 pm GMT
FOMC meeting minutes at 6:00 pm GMT
AU AIG services index at 10:30 pm GMT
AU trade balance at 1:30 am GMT (Jul 7)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: USD/CAD
USD/CAD is hanging around the 1.3025 – 1.3075 area that has held as resistance at least thrice since mid-May.
Will the pair break above its resistance zone today?
I’m seeing a bunch of potential movers including the FOMC meeting minutes at 6:00 pm GMT. Remember that Fed members recently raised interest rates by a bigger-than-expected 75 basis points in June to fight Uncle Sam’s high inflation.
If we see overwhelming support for the Fed’s aggressive tightening schedule, then USD can see increased demand against its major counterparts.
USD/CAD, which already jumped higher on a decline in crude oil prices, can bust above its 1.3075 highs and revisit levels not seen since November 2020.
If today’s FOMC minutes turns out to be a non-mover, though, or if crude oil prices recover from their weekly losses, then USD/CAD could get rejected from the resistance zone that we’re watching.
USD/CAD could fall back to 1.2900 or see selling pressure until it dips back to the 1.2950 July support.
