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The Fed’s main man sent the dollar surging across the board while risk-off flows dragged the Loonie down.

Will the BOC decision and the upcoming speech by Powell send USD/CAD on another leg higher?

Before moving on, ICYMI, yesterday’s watchlist looked at AUD/USD after the RBA’s dovish 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:

Fed head Powell: If economic data warrants faster tightening, they are prepared to increase the pace of interest rate hikes

Powell acknowledged that latest data has been stronger than expected but noted that decisions will still be on a per meeting basis

U.S. 2-year bond yield rose more than 10 basis points to move above 5% while 10-year yield remained under 4%, resulting in largest yield curve inversion in almost 40 years

SNB Chairperson Jordan says that inflation is still above their price stability target, so they cannot rule out the possibility of further tightening

RBA Governor Lowe reiterated that they are closing in on a point where they have to stop hiking, especially if data suggests a pause is warranted

Japanese current account surplus narrowed from 1.18 trillion JPY to 0.22 trillion JPY in February due to rising fuel prices and weaker exports to China during Lunar New Year

Japanese Economy Watchers Sentiment index improved from 48.5 to 52.0 vs. 49.1 forecast in February, reflecting shift to optimism

German industrial production rebounded by 3.5% m/m in January vs. projected 1.4% increase, following earlier 2.4% slide

German retail sales slipped 0.9% m/m in January vs. estimated 2.3% gain, previous 4.9% slide

Price Action News

Overlay of USD Pairs 15-min

Overlay of USD Pairs 15-min

Fed Chairperson Powell‘s testimony rocked the markets when his remarks turned out waaay more hawkish than many expected.

Not only did he acknowledge that the latest set of economic figures has been stronger than expected, but he also kept the door open for more aggressive tightening moves (a.k.a. much higher interest rates) if data keeps comin’ in hot.

As a result, the dollar surged across the board and left risk assets like stocks and commodities eating dust. The Australian dollar was the weakest of the bunch, as the currency extended its slide when RBA head Lowe reiterated his dovish remarks.

Upcoming Potential Catalysts on the Forex Economic Calendar:

ECB head Lagarde’s testimony at 10:00 am GMT
U.S. ADP non-farm employment change at 1:15 pm GMT
BOC interest rate statement at 3:00 pm GMT
Fed head Powell’s testimony at 3:00 pm GMT
JOLTS job openings at 3:00 pm GMT
Fed Beige Book at 7:00 pm GMT
Chinese CPI at 1:30 am GMT (Mar. 9)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

Technical Chart of the Day: USD/CAD

USD/CAD 15-min Forex Chart

USD/CAD 15-min Forex Chart by TradingView

It’s shaping up to be a busy session for both the Greenback and the Loonie since the BOC decision is happening alongside another speech by Fed head Powell!

Now the Canadian central bank already hinted that they’re planning on hitting the pause button with their rate hikes for now, so we might hear some cautious remarks explaining their decision to stand pat.

On the flip side, if Powell decides to repeat his hawkish views from his earlier speech AND leading U.S. jobs indicators come in strong, we might see another pop higher for USD/CAD.

The pair seems to be stuck inside a bullish flag consolidation pattern for now, as traders are biting their nails to see how the upcoming catalysts would turn out.

A break above today’s highs at 1.3773 could be enough to signal continuation, which might take the pair up by its average daily volatility of 89 pips and all the way up to the R2 of its Standard Pivot Points.