The US has agreed to drop its proposed Auto Content from NAFTA, opening the way for progress to be made on the trade agreement. USDCAD dropped on the news, breaking through trend line support down to 1.30097 but has moved back to the current levels around 1.30395. Resistance is found near the broken trend line at 1.30704, with the previous high at 1.31241. US FOMC is expected to hike interest rates to 1.75% later today and signal up to four rates hikes for 2018.
Support can be found at 1.30000, close to the rising 50-period MA, if the market resumes its moves lower. However, the trend is for higher prices and only a move under trend line support at 1.28850 would upset proceedings. Until then, support can be seen at 1.29608 and 1.29200, close to the rising 100-period MA. The 200-period MA is on track to reach 1.28000 later, with a test to this level wiping out long positions and creating a lower low.
The USDMXN pair has also taken a dip on the NAFTA news and is approaching trend line support at 18.5364. A break under this area would hit support at 18.4377 initially but could push lower to test the recent lows at 18.3000. A loss of this area would create a lower low and target 18.0495, followed by the red trend line support at 17.6950.
The resistance comes in at yesterday’s highs and the moving average cluster at 18.7148, followed by the trend line at 18.8334. The 18.9028 level, located above the trend line, and recent highs at 18.9697 block a move to 19.0000 and 19.3633. The December high comes in at 19.9000.