USD/CAD
The U.S. dollar is seeing a little bit of a shift in balance after the Bank of Canada raised its overnight target rate by 25 basis points to 2.5% in the previous session. The Federal Reserve held its interest rate at 3.75% to 4%, a range of 25 basis points. Using the Fed midpoint, the rate advantage has narrowed to 1.375 percentage points in favor of the Americans.
So, while the Canadian dollar is strengthening, it still shows that there is a carry trade to be had to the upside. The 200-day EMA is offering a little bit of support here, with the 50-day EMA above offering resistance. For me, I’m looking for the return to the upside, which we haven’t seen quite yet, but it is telling that we are avoiding the 200-day EMA. If we go positive for the session, that’s probably when I get interested in going long.
EUR/USD
The euro has drifted a little bit lower. The ECB decision today could make this very noisy. What I’m looking for is to see whether or not we can sustain a move above 1.12. If we cannot, then I see that as a potential shorting opportunity. Now, I may not take that position until very late in the day. We’ll just have to wait and see.
Interest rates in America continue to outperform. The ECB isn’t necessarily going to be overly hawkish; at least that’s not the estimate, but we’ll have to wait and see how that plays out. Again, I need to see a daily move above 1.12 on the close to shift my view, and even then, I don’t think I would be a buyer for some time. I need a couple of days of strength. If we rally and pull back a bit, or show a long wick above there, that’s my setup for the day.
GBP/USD
The British pound initially fell during the trading session, but there is a bit of inflation to worry about in the United Kingdom. So, I think with its CPI being at 3.5%, and the central bank decision not until November 5, this is a market that may continue to try to go higher against the U.S. dollar. We’ll have to wait and see.
The rates in the United Kingdom are just a hair below the United States as far as the midpoints of the ranges are concerned, but I do think there are growing thoughts that perhaps the Bank of England may have to do something, and that adds a little support. If we can break above the high of the previous session, I’m probably buying the British pound.
USD/CAD Price Forecast
Every new USD/CAD analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all USD/CAD forecasts
AUD/USD
Finally, the Australian dollar is an interesting market right now. We had broken above a resistance barrier and been repudiated twice. CPI in Australia increased to a reading of 4.3%, over the 4% in August, while the annual trimmed mean number was actually 3.6% instead of the anticipated 3.5%.
So, with that, it seems like with the RBA raising rates as of late, there should be some support, but the price action is a little bit hesitant. What I would like to see is a move back above the 0.7050 level on a sustained move, maybe a couple of hours. Then I would go long, looking to perhaps try to get to the 0.7120 level. That’s the plan at the moment. Whether or not that holds, we’ll have to wait and see.
If we break down from here, there are a lot of currencies that I’m comfortable shorting against the U.S. dollar. The Australian dollar is not one of them.