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USD strength takes a pause ahead of onslaught of Fed speak

Posted on: March 03, 2017

If you were looking for an overused cliché to describe the events of yesterday but can’t quite put your finger on a good one, may I suggest “The trend is your friend”? USD buying against most crosses remained in vogue, with participants encouraged by recent Fed speak that is pointing to a potential March interest rate hike. USDJPY has returned to a 114-handle while GBP weakness is compounding the slide lower in GBPUSD. USDCAD grinded higher all day, poking its head above 1.3400 before coming off a bit.

Today, the data is limited, and all eyes will be on four speeches by five Federal Reserve members throughout the day. Capped off with Janet Yellen at 11am Alberta time, this will likely be the last communication ahead of the March rate decision. With the probability of a March rate hike sitting at 90%, participants are looking for one final bit of reassurance or warning.

For those watching USDCAD, the grind higher has continued although we have stalled a bit after running some stops above 1.3400. If the Fed speakers are anything but hawkish, we could see some profit taking going into the weekend with USDCAD coming back a bit. However, it is tough to “buy the dip” when they are as shallow as they have been. The next levels of resistance to watch are the 1.3450/60 level, and closing above 1.3400 could point to another run at the double top around 1.3600. If you need to buy USD, it may be prudent to put some orders in down below while protecting yourself with stop losses up above.

  • Yesterday’s NA Range 1.3352 – 1.3402
  • Asia Overnight Range 1.3378 – 1.3399
  • London Overnight Range 1.3385 – 1.3422

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