With Powell going under the spotlight, dollar bulls will have another opportunity to price in the Fed tapering sooner than they initially signaled.
This is why I’m setting my sights on USD/CAD’s 4-hour chart today.
Before moving on, check out the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- Wall Street ends sharply higher, led by surging Dow
- New Zealand consumer confidence rises in Q2
- New Zealand credit card spending growth at 11-month high
- Mandatory mask rules extended in Sydney as COVID-19 cluster grows
- Bitcoin recoups some losses in Asia after plunging on Chinese crackdown
- Fed officials open debate on bond taper
- AUD, NZD dragged lower by iron ore weakness
Upcoming Potential Catalysts on the Economic Calendar:
- U.K.’s CBI industrial order expectations at 10:00 am GMT
- Eurozone consumer confidence at 2:00 pm GMT
- U.S. existing home sales at 2:00 pm GMT
- Australia’s CB leading index at 2:30 pm GMT
- Fed Chairman Powell to talk lending programs at 6:00 pm GMT
What to Watch: USD/CAD
There aren’t a lot of top-tier economic reports scheduled for release today, which means that traders’ attention will likely be on Fed Chairman Powell’s testimony.
Powell’s event will be centered around the Fed’s leading programs but traders likely won’t miss the chance to talk about the Fed possibly tapering its asset purchases in the foreseeable future. After all, central bank members had recently upgraded their inflation forecasts AND hinted at a rate hike as early as 2023.Unless we see other catalysts, USD/CAD will likely find support from the 38.2% Fib retracement and area of interest on the 4-hour time frame. I’ll be on the lookout for a trip back to the 1.2450 June highs, though new monthly highs for the U.S. dollar isn’t out of the question.
If Powell tempers his optimism, however, or if we see a risk-friendly trading environment in the next trading sessions, then USD/CAD could revisit the lower Fib retracement levels before finding support.
