Daily Brief, Feb 27 – Top Forex Trade Setups While Canadian CPI Shares the Stage
Arslan Butt • 2 min read
Good morning, traders.
On Wednesday, the US dollar index weakened against a basket of six major currencies. The index fell to trade at 96.113 after dropping 0.4% overnight. I assume you already know by now that who’s behind this sell-off. It’s Jerome Powell, the Chairman of the US Federal Reserve. He stated on Tuesday that growing risks and recent light figures were unlikely to halt solid growth for the US economy this year, but that the Fed would remain “patient” on additional interest rate hikes. The remarks sounded dovish and investors shifted their funds from the dollar to stock markets.
The financial market focuses on Canadian inflation rate along with Fed Chair Powell Testimony which is due for the US session today.
Top Economic Events to Watch Today
EUR – German Buba President Weidmann Speaks
Weidmann is due to hold a press conference about the Bundesbank’s Annual Report, in Frankfurt at 10:00 (GMT). Mr. Weidmann is Deutsche Bundesbank President and voting member of the ECB Governing Council May 2011-Apr 2019. He’s believed to be one of the most influential members of the council.
The house will be open for audience questions, and there’s always a chance of volatility in response to unstructured questions.
CAD – CPI m/m
At 13:30 (GMT), Statistics Canada is due to release inflation figures for Canada. Reviewing previous figures, the Canadian economy has been struggling with inflation numbers, perhaps due to weaker crude oil prices.
In the month of January, the CPI figure came out at -0.1%, beating December’s drop of -0.4%.
Economists are expecting a 0.2% rise in the inflation rate this month, as crude oil prices are getting better progressively. Therefore, investors are expecting a reflection of better crude oil prices in Canadian economic events.
It will be nice to trade any figure above 0.2% as this can drive nearly 50 pips movement in USD/CAD just in a few seconds.
USD/CAD – Trading the Inflation Rate
The Loonie remains in the spotlight due to the upcoming inflation figures. The USD/CAD plunged to $1.3160 to trade below 50 periods moving average. The pair still isn’t in the oversold zone.
On the 4-hour chart, there’s a bearish trendline which is extending strong resistance to USD/CAD at $1,3240. In fact, the pair is trading in a bearish channel on the 4- hour chart with immediate support around $1.3120. On the violation of $1.3120, Loonie can go after $1.3070.
Daily Technical Levels
Key Trading Level: 1.3187
USD/CAD – Trade Plan
Consider staying bearish below $1.3180 with a stop loss above $1.3210 and take profit of $1.3120.
Stay tuned to FX Leaders for more updates!