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Is the USD uptrend ending?

Posted on: March 22, 2017

Canadian retail sales surprised to the upside coming in at 2.2% for January vs expectation of 1.5%. The strong retail number gave momentum to the CAD bulls as it tested the last week low of 1.3277 before bids came in at 1.3265 to stop the slide. However, the slide in oil took the wind out of the CAD as it reverse the whole move and some more to close back above previous day’s close around the 1.3360 area.

Overnight, risk sentiment is on its back foot as the possibility of Trump’s new health care plan not getting enough vote to pass on Thursday is coming to light. The delay in the new health care plan will put a speedbump into Trump’s growth plan for the country. As per usual with risk sentiment souring, equities are on a slide with gold and Yen outperforming this morning.

The shine on USD has worn off since the Fed meeting last week, losing 2.1% according to the DYX index. Many USD longs have cut or reduced their position waiting for better levels to engage USD longs. USDJPY is especially worrying with the important support of 111.60/69 broken. USDCAD may continue to slide along with USDJPY. The support at 1.3265 should be the pivot this week and should it break, I would be targeting the 200 day moving average of 1.3188 for its next leg down.

  • Previous Day’s NA Range 1.3265 - 1.3360
  • Asia overnight range 1.3348 – 1.3387
  • London overnight range 1.3358 - 1.3409

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