• USD/CAD -0.3%
• EUR/CAD -0.4%
• AUD/CAD -0.5%

USD/CAD

Canadian Bulls March Past Tepid Inflation: The underlying USDCAD currency pair tested the 14-year low once again in light of worse than expected inflationary suggestions.  Declining in the month, both raw materials and industrial product price dipped below expectations, leading to indications that inflationary pressures remain tepid.  With the recent data in line with previous suggestions, Canadian dollar positions may be slightly under pressure as central bankers may exit their preemptive stance for a more staid one.  However, lending to strength in the underlying looks to be continued bidding on commodities.  With gold higher on the day, crude oil remains lofty on foreign political risks despite OPECââ,¬â"¢s promise to remain at current output levels.  Subsequently, this has led copper higher to test record levels above $2.20 on rising global demand.  Ultimately, further downside bias may arrive in the form of gross domestic product figures set for tomorrow.  Should expansion continue to the positive side, bullish expectations will continue for the underlying.

Technically Speaking: Slowly but surely, bears continued pressuring the USDCAD major currency lower, declining in the narrow channel begun on January 22nd.   Now consolidating ahead of the Asian open, bulls look to reattempt the upper trendline at 1.1490 / 1.1500 area with a fresh assault on the 1.1470 ceiling (20-hour moving average) and 1.1479 intraday resistance (50-hour moving average and consolidation support).  Although confirmed by a rising Stochastic, bullish momentum would be capped at 1.1493 (confluence of the 100-hour moving average and upper trendline).  Should current support fail, bears look to pounce to the monthly spike low set in 1992 at 1.1398.

Rumorville: Underpinning current bidding, plenty of buying interest looks to be residing at 1.1425/30 with stops slightly below at 1.1420.  The current areas of interest coincide with an option barrier at 1.1425 and 1.1400 even.  Offers to sell comparatively higher at 1.1500/10 are keeping the underlying tamed at the moment.

EUR/CAD

Watch The Trap: Following through on the textbook head and shoulder formation and break of the 1.3965 neckline, Canadian dollar strength has prompted the overnight test of the 1.3795 spike low.  Currently consolidating, the underlying price action looks to be setting a trap given the overall negative bias in the longer term.  As a result, before probable downside occurs, a retest of the 20-hour moving average at 1.3867 looks imminent with an easy break of the 10-hour MA at 1.3839.   Should upside momentum take the cross through the 1.3900 figure, confirmed by a continuation in the stochastic, upside runup potential would peter out at 1.3922 (50-hour moving average).      Comparatively, a downside floor is held at 1.3789 (region of previous consolidation) with definitive capping at 1.3733.

Rumorville: Concerning the synthetic, euro bids are rumored at 1.2065 by central banks that may prop up the cross in the near term with stops eyed just below at 1.2050/60.  With a barrier option rumored at 1.2045 and an even larger 1.2000 for the NY roll off next week, the underlying seems to be contained in a tight range.  Upside looks limited with stops at 1.2105.

AUD/CAD

Bulls Look For Upward Opportunity: Continuing lower in the bearish channel sparked on January 26th, bears have pounded the AUDCAD cross lower, finding consolidation floors at 0.8560.  Currently trading at 0.8576, the move lower looks to be exhausted with a probable upside attempt to the upper trendline before any further downside can be achieved.  Bulls will find nominal barriers at 0.8579 (10-hour moving average) as well as 0.8597 (20-hour moving average) before capping occurs at the 0.8616 figure (confluence of the 50-hour moving average and upper trendline).  Should the upper ceiling be penetrated, next formidable barrier will be at 0.8641 (100-hour moving average).  Downside potential looks to attempt the 0.8510 figure, area of previous consolidation should the current support not hold.   

Rumorville: Aussie interest looks to be reestablished with bids at 0.7480 and 0.7440.  With tight stops below containing downside at 0.7470/30, comparative selling resides above at 0.7500 and 0.7520, keeping the underlying major contained.  The tight ranges should spill into the cross as reflective of the major.

Richard Lee is a Currency Strategist at FXCM.