USD rally pauses ahead of ECB Policy Meeting

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Today’s focus turns to the CAD

ECB Policy Meeting

USD rally pauses ahead of ECB Policy Meeting. The USD and Euro were largely unchanged on Tuesday after the 10-year Treasury yield broke above the psychologically significant barrier of 3%.

The USD index hit a three-month high of 91.07, though the big gains on rising U.S. government bond yields mostly occurred on Monday. USD dribbled lower to close the NYK session around 90.75.

Today’s move in the 10-year bonds up to 3% had no big effect as far as currencies are concerned. So traders are now preparing for the ECB rate meeting and that probably means taking a bit of profit off the table.

The next 24 hours are pretty scarce as far as economic data goes. Australia & NZ are on holidays (ANZAC Day – Lest we forget) and the only potential event is the Bank of Canada Governor Poloz speech. He is due to testify along with Senior Deputy Governor Carolyn Wilkins before the Standing Senate Committee on Banking, Trade, and Commerce, in Ottawa.

The BOC has been erring on the side of caution with regards future rate hikes so the market will be eyeing this speech for further updates. More Dovish news and USDCAD will continue higher.

Outside of that the majors are just doing their thing….trading sideways awaiting the next injection of ‘momentum’. We may see a little long squeeze on the USD & that could be a good chance to reload at better levels.

Of course, the ECB meeting on Thursday is the main event of the week so if you don’t see a lot on your charts, just kick back and relax.

Sterling, Euro, and AUD all still look like good opportunities to me.

Check our Next Best Trades Watchlist for full details as to which specific pairs we are focusing on.

Asian Session

We could have a real snoozer on our hands as Australia & NZ celebrate ANZAC day.

USDJPY is just drifting now & the JPY crosses are all over the shop, so I’m going to be giving it a miss today.

European Session

There’s not a lot to get excited about in Europe with potential ECB announcements. If anything we may start to get some market rumors about possible ECB announcements following their meeting otherwise, traders will be happy to wait for Thursday meeting before jumping back into positions.

I’d say it’s going to be pretty quiet barring some random outside event.

North American Session

No US economic data of note so the main event will be BOC Gov Poloz’s speech.

I expect the USD to consolidate around current levels and if anything starts to track higher again.

With nothing on it would be a good day for Trump to stir up some trouble!

Technical Set Up – What’s Happening with the Majors

ECB

Today’s Fundamental Drivers

ECB

Plan the Trade, Trade the Plan!

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Brad

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