USD/CAD bears have been on a recent run lower, breaking below a minor swing low. Will the momentum pick up or will the bulls hold their ground?
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on GBP/USD OF U.S. data and the BOE event, so be sure to check that out to see if there is still a potential play!
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 9860.07 -0.14%
FTSE: 5698.61 +0.18%
S&P 500: 2553.94 +3.17%
DJIA: 21959.55 +3.58%
|US 10-yr 0.798% -0.058
Bund 10-YR -0.361% -0.069
UK 10-YR: 0.384% -0.058
JPN 10-YR: -0.004% -0.032
|Oil: 23.90 -2.41%
Gold: 1657.10 +1.45%
Bitcoin: 6609.21 -0.99%
Etherium: 134.56 -0.92%
Fresh Market Headlines & Economic Data:
- U.S. Jobless claims soar past 3 million to record as coronavirus sends Americans to the unemployment line
- Powell on whether the Fed has enough firepower: ‘We’re not going to run out of ammunition’
- ECB shakes off limits on new €750bn bond buying plan
- French economic activity at 65% of normal levels: INSEE
- Coronavirus darkens outlook for German exporters, Ifo reports
- Bank of England promises more bond-buying if needed to fight coronavirus crisis / Bank of England Monetary Policy Summary
- Oil falls as sinking demand outweighs stimulus hopes
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Japan Tokyo CPI at 11:30 pm GMT
- China Industrial profits at 1:30 am GMT (Mar. 26)
What to Watch: USD/CAD
Today, we’ve thrown USD/CAD to the top of the watchlist as the bears have been in firm control over the past couple of sessions. It’s likely the recent historic stimulative moves from the Fed have put a lot pressure to reverse recent dollar strength, while the Loonie has benefited from the recent shift in global risk sentiment towards positive.
Without major fresh catalysts to likely break those themes throughout the rest of the session, odds are pretty good that this momentum will continue, but the question now for USD/CAD traders is what will the pair down now that it has broken a minor swing low?
On the one hour chart above, we can see that the market is now trading below 1.4150, a level that showed buying support twice last week before the pair rallied higher. This could be a signal for the bears to jump on the momentum, and if you’re in the camp that thinks the current short-term themes (recent government moves to halt major economic damage) will hold for the session, then it makes sense to nibble at current levels up to the broken support level for a short-term short position. With a daily ATR of around 200 pips, keeping a stop tight to just above the broken support area and targeting one daily ATR move makes for a very strong short-term return-on-risk to consider.
For the bulls on the pair, look out for bearish oil data/news updates, and/or negative coronavirus updates (e.g., an accelerating number of cases/deaths) or surprising weak economic updates (remember that traders have already priced in expectations of negative first and second quarter GDP numbers). Or possibly a hang up in further stimulus measures like the House not passing the $2T stimulus bill today (very low probability). If these scenarios occur, then a break back above the 1.4150 handle could draw in USD/CAD bulls trying for quick profits off of news plays.