It's been a crazy day on the forex markets as the USD has been crushed across the board, as the market has looked to unwind positions and a result risk has been on the cards today as traders and investors look elsewhere. For me this is purely a technical play and no representation of todays economic results which some may interrupt them as. ADP non-farm employment change jumped up to 205k, and ISM Non-manufacturing PMI slipped to 53.5, and yet all of this had little to no effect when it came to market movements in the end. For me the USD has been the king of currencies as of late and at some point the market will look to make headways and move out of USD positions into other currencies, and in this case we got exactly that.
The dollar index slipped sharply down the charts to 97.203 and it's likely to remain under pressure in the short term, until the market finds its feet again. The current break out has come as a late surprise to many new years traders as previously we had a strong bullish channel looking to resume up the charts, but with the current weightings in the dollar index and the movements we have seen in global currencies it's of no surprise to see it breakout today. For the market to go any lower it would find support at 96.499, and it's likely that if it finds itself under more pressure that could very much be the case after a 5 month hiatus.
For the Canadian dollar the good times have somewhat managed to keep rolling in, despite the efforts of the Canadian government trying to undermine this, as it looked to report results. However, the USDCAD slipped further today as the CAD continued to rally on the back of US weakness in the currency markets, and also because oil markets have seen a minor improvement. At the same time as having this rally, it is hard to gather an idea of the market as it continues to show signs of a bullish market when it comes to USD strength.
When it comes to technical's the USDCAD has been stuck in a bearish run for some part, and despite the upbeat nature of the economy from the government, many are inclined to believe that it is still struggling on their street. So far the 50 moving average has hindered past movements, but in reality the 20 day moving average has so far been much worse than expected as it acts as dynamic support and resistance on the charts, but at present it will get more choppy as international markets continue to add a stress on major currency pairs.
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