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If there is agreement with the Fed Chair speech earlier on in the week regarding weakness for the US dollar and the US economy, then we might see a significant sell off of the US dollar. If there’s some disagreement with what the Fed had to say earlier on this week, then we may see some pullbacks for the US dollar and some gains back of those moves against the dollar earlier on in the week. So, we’ll watch for that coming up at 8:30AM Eastern US time today.
So, we’ll look at each of the US currency pairs, but first just a recap of yesterday’s trade suggestion here on the USDCAD. On the USDCAD, we were looking for the breakout underneath a support level for the continuation lower of the downtrend. You could see clearly here it’s been a downtrend. We see yesterday and the day before, and even so far today, bottoming out here around the pink-shaded area, into the 1.2920-level. The red line at the very bottom of that pink zone – 1.2920 – represented the breaking point. If it would’ve gotten underneath there, we would’ve expected it to go lower, down into the 1.2700s.
We looked at this significantly during yesterday’s live Trade Room. So, we did not see the breakout obviously here on the daily. It looks like a false breakout. It was just a challenge and test of that level and couldn’t break it, and now moving back higher again into the 1.3000s. Take it down to the four-hour timeframe and you could see what happened here even on the four-hour. It tried, it attempted, no breakout, and we discussed this in the Trade Room yesterday, how I didn’t consider this a breakout because there wasn’t an open and close underneath the pink zone.