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The dollar continued to gain ground against its major counterparts earlier today.

Will the trend continue through U.S. session trading?

Before we talk setups, take a look at the top headlines during the Asian session:

Upcoming Potential Catalysts on the Economic Calendar:

  • Eurozone’s CPI flash estimates at 10:00 am GMT
  • Canada’s monthly GDP at 1:30 pm GMT
  • Fed’s Brainard will give a speech at 6:00 pm GMT
  • Fed’s Daly to talk at an online event at 7:00 pm GMT

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart
USD/CAD 1-hour Forex Chart

USD/CAD broke above a trend line resistance late last week and then retraced to the broken resistance before bouncing 50 pips higher to its current levels.

Canada’s December and Q4 2020 GDP numbers are due in a bit and, if the economic calendar is any indication, the report would reflect pullbacks in economic activity after a strong rebound in Q3.

It also doesn’t help the oil-related Loonie that crude oil prices are taking hits over concerns of lower Chinese demand and the OPEC possibly raising global supply this week. Lastly, better-than-expected mid-tier economic data and strong U.S. equities are making the Greenback popular these days.

If Canada’s GDP numbers print better than markets had expected, then we could see USD/CAD revisit the trend line support closer to the 100 and 200 SMAs on the 1-hour chart.

Worse-than-expected readings, on the other hand, or optimism from Fed members Brainard and Daly’s speeches could speed up USD demand against CAD and boost USD/CAD to the 1.2750 area of interest.

Keep in mind that USD/CAD tends to move by an average of around 80 pips on Tuesdays and the pair has only moved by a bit less than half of its average so far. Something to think about if you’re planning on day trading this pair!