USD Whacked Vs The Majors
Shain Vernier • 2 min read
The Greenback is taking it on the chin vs the majors in today’s forex action. Losses against the Canadian dollar and Euro have highlighted the action, driven by Brexit and BoC developments. In addition, a sub-par IBD/TIPP Economic Optimism (MoM, Sept) has fueled the intraday exodus from the USD.
Typically, the mid-U.S. session brings no scheduled news items. However, today is unique in that regard. A collection of FED member speeches, as well as the U.K. Parliamentary Vote, are on the economic calendar. If you are trading the forex majors, be on the watch for enhanced volatility throughout the remainder of the U.S. trading day.
USD Lags Vs The Majors
As we alluded to last Friday, early September has brought stiff action to the markets. Participation is heavy in commodities, currencies, and equities, driving prices directionally in many assets. For now, it is time to buckle up and deal with the volatility.
Several of the forex majors have turned in large intraday ranges, with none being bigger than the USD/CAD. A somewhat hawkish BoC Statement and bull-run in WTI crude have driven a 100+ pip plunge in rates.
Here are a few support levels to watch in the Loonie for the remainder of the session:
- Support(1): Lower Bollinger Band, 1.3213
- Support(2): Psyche Level, 1.3200
- Support(3): 50% Macro Wave Retracement, 1.3198
Bottom Line: As of this writing (about 12:30 PM EST), the USD/CAD is posting an intermediate-term correction beneath the macro 38% Fibonacci retracement (1.3242). If the bearish price action continues, an area of strong support may come into play.
Converging indicators are a good thing and that is what the USD/CAD has near 1.3200. Until elected, I will have buy orders in queue from 1.3215. With an initial stop at 1.3174, this trade produces 30 pips on a sub-1:1 risk vs reward ratio.
The coming hours are likely to bring heavy volatility to the majors. If you are holding open positions, stop losses and moderate leverage are recommended.