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IronFX Essential Intraday Comment | 19/06/2015

•The dollar traded higher or unchanged against its G10 counterparts during the European morning Friday, regaining much of the ground that it lost after the FOMC decision on Wednesday. It was higher against EUR, SEK, NOK, NZD, GBP and CHF, in that order, while it was stable vs CAD, JPY and AUD.

•EUR remained under increased selling pressure ahead of the unscheduled ECB call to discuss Greek bank liquidity. If the Bank increases the ELA liquidity today, it will ease speculation on Greece introducing capital controls over the weekend. On the other hand, if the ECB does not increase the ELA and Greek savers continue to withdraw their savings, Athens could introduce capital controls and announce a bank holiday on Monday. Until the EU summit ends and the first negotiation results are known, the EUR is likely to remain sensitive to headlines regarding a Greek default.

•CAD has been trading virtually unchanged ahead of the country’s CPI for May. The forecast is for the headline CPI to remain unchanged in pace, while the core rate is forecast to decelerate somewhat. The market is likely to focus more on the core rate, which could weaken CAD a bit.

USD/CAD traded in a quiet mode during the European morning Friday, staying slightly above the support barrier of 1.2200 (S1). Although the pair is trading within a short-term downside channel, it has rebounded from near the longer-term uptrend line taken from back at the low of the 11th of July. Therefore it is possible to see the rate extending higher and even breaking above the upper bound of the near-term downside channel. A slowdown in Canada’s core CPI rate could be the trigger for such a move. I believe that a break above the upper line of the channel and the hurdle of 1.2280 (R1) could set the stage for extensions towards our next resistance of 1.2350 (R2). Our short-term momentum indicators support the notion. The RSI edged higher after rebounding from slightly below its 30 line, while the MACD has bottomed and looks ready to move above its trigger line any time soon. There is also positive divergence between both these indicators and the price action.

• Support: 1.2200 (S1), 1.2130 (S2), 1.2050 (S3)

• Resistance: 1.2280 (R1) 1.2350 (R2), 1.2440 (R3)

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