$ The strength of the US dollar is accelerating CAD breakouts|
Updated
On Thursday's trading session, bulls of the US dollar made a significant rise. The dollar gained ground versus nearly all major FX counterparts, including the Euro, the pound, the Australian dollar, and the Canadian dollar, among others. Large-scale US Dollar advances enabled the DXY Index to overcome critical resistance and fly over the 93.50-price level to set a new all-time high for the year.
The USD/CAD and the AUD/USD have lately mirrored the strength of the US Dollar, which has been exacerbated by growing global growth worries, which have weighed on commodity currencies and fueled demand for safe-haven assets such as the dollar. The Canadian and Australian dollars are now trading at their lowest levels compared to the US dollar since February 2021 and November 2020, respectively, according to the most recent available data. Intensifying Fed taper chatter is likely to have contributed to the US Dollar's recent rally, but there is still ambiguity about the timing and extent of tapering. A weekly close of the DXY Index above technical resistance at the 93.35-price level may pave the way for additional rises in the coming weeks. Therefore, bullish traders on the US Dollar may have their eyes set on the 94.65-price level shown on the weekly chart above.
Besides the March 2020 swing low, the September 2020 swing high, and the 38.2 percent Fibonacci retirement of the DXY Index's current trading range, there is a region of convergence. If the US Dollar cannot sustain its current altitude over the weekend, bears may see their recent gains erode and seek support around the 92.00-handle of the US Dollar Index. Because of the recent break above the 1.2800-price barrier, the implied volatility of the USD/CAD has increased during the overnight period. Because of the event risk mentioned on the economic calendar, I expect more volatility in this pair on Friday. I expected Canadian retail sales and the index of house prices to be released at 12:30 GMT, and Dallas Federal Reserve President Robert Kaplan will deliver a speech at 15:00 GMT, respectively. Compared to the 20-day average of 6.3 percent, overnight implied volatility for the USD/CAD is 8.6 percent, which is in the top 91st percentile of measures collected over the last 12-months.
The USD/CAD and the AUD/USD have lately mirrored the strength of the US Dollar, which has been exacerbated by growing global growth worries, which have weighed on commodity currencies and fueled demand for safe-haven assets such as the dollar. The Canadian and Australian dollars are now trading at their lowest levels compared to the US dollar since February 2021 and November 2020, respectively, according to the most recent available data. Intensifying Fed taper chatter is likely to have contributed to the US Dollar's recent rally, but there is still ambiguity about the timing and extent of tapering. A weekly close of the DXY Index above technical resistance at the 93.35-price level may pave the way for additional rises in the coming weeks. Therefore, bullish traders on the US Dollar may have their eyes set on the 94.65-price level shown on the weekly chart above.
Besides the March 2020 swing low, the September 2020 swing high, and the 38.2 percent Fibonacci retirement of the DXY Index's current trading range, there is a region of convergence. If the US Dollar cannot sustain its current altitude over the weekend, bears may see their recent gains erode and seek support around the 92.00-handle of the US Dollar Index. Because of the recent break above the 1.2800-price barrier, the implied volatility of the USD/CAD has increased during the overnight period. Because of the event risk mentioned on the economic calendar, I expect more volatility in this pair on Friday. I expected Canadian retail sales and the index of house prices to be released at 12:30 GMT, and Dallas Federal Reserve President Robert Kaplan will deliver a speech at 15:00 GMT, respectively. Compared to the 20-day average of 6.3 percent, overnight implied volatility for the USD/CAD is 8.6 percent, which is in the top 91st percentile of measures collected over the last 12-months.
Note
The broader DXY Index is up more than 1% on the month largely thanks to US Dollar strength against key peers like the Euro and Yen. The monthly US CPI report is scheduled to cross wires Wednesday, 11 August at 12:30 GMT. Markets are expecting the latest year-over-year inflation data to come in at 5.3%.
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