US Dollar whipsaws and undecided Markets — North American Mid-Week Market Update

Log in to our mid-week North American Markets overview where we look at the NA Indices and currencies.

This week has been a typical end-August trading week, with mostly rangebound markets and volumes subdued – As pointed in our previous day Market Wrap, the most influential participants tend to take the final weeks of August to take their breaks off Markets.

Hence, the price action has been held in tight ranges for FX Markets.

Equity Markets have seen some profit-taking since Friday's post-Powell rallies, with the S&P holding close to its previous highs (is the most recent double top going to get cancelled by hungry-for-cut bulls?), the Dow Jones still holding around/above its previous all-time highs, and the Nasdaq held at the lows of its ascending channel.

You can observe all of the most recent technical updates for US Indices right here:

Markets tread carefully as US indices consolidate after Powell's speech

Markets have been holding around hopes of further US Dollar weakness around US Rate cuts and FED's Independence being constantly attacked by the Trump Administration – But one of the most important market developments is the failure for USD bears to push for further lows..

As it was marked in a July US Dollar analysis (a bit out-dated now but still valid), the longer-run selling trend for the Greenback may have just concluded, have we seen the bottom for the USD after a first-half of bloodshed for the Reserve currency?

In the waiting for more data, FX majors have been mostly rangebound as seen in USDJPY for example.

Read More: USDJPY rallies into its range amid a US Dollar rebound – Will the range break?

Let's dive right into a few charts to get an overview on North American Markets, from US and Canadian equity Markets performance, USD and CAD performance to USDCAD and DXY charts.

The TSX is back on top, with US Indices performing in a more rangebound fashion.

The US Dollar is running to test the highs of its range – go check out the levels on our latest USD Index (DXY) analysis.

Read More: What’s driving the US Dollar after Powell’s Friday remarks? Dollar Index (DXY) outlook

The price action for the US Dollar has been seesawing all around, but the trajectory is still higher overall.

There is ongoing selling happening right now as Markets are rejecting the higher bound of the range seen just above.

The Loonie has stopped weakening against other majors but has still yet to mark a concrete return – The CAD is consolidating at the lows against its peers.

Macklem did mention the 2% target not changing for the Bank of Canada in a Speech released yesterday.

Upward inflation risks have been pointed, in a relatively hawkish tone which could support the Canadian Dollar.

Participants are really waiting for better Canadian data to allow the Loonie to really make a comeback.

In the meantime, it will be moving along with the USD in the pursued geographic trend in FX.

USDCAD had retracted from its extremes and is now back into the higher part of its range.

Still, buyers are stubborn at the 1.38130 support that acts as a key barometer for future price action.

Selling might accelerate if the level is broken, but with the rangebound action in FX, it should be holding still – Tomorrow's GDP release for both the US and the Canada will have strong influence on future outcomes.

Levels to place on your USDCAD charts:

Resistance Levels:

• 1.3850 Main resistance (immediate resistance
• 1.3925 Aug 22 highs last Friday highs
• May Highs 1.40185

Support Levels:

• Immediate support at May 30 highs - 1.38 Handle
• Key longer-term pivot 1.3750
• Main Support Zone 1.3675 to 1.3686

The rest of the week should be a bit more exciting as it comes to US and Canadian data, with GDP expected to release for both countries tomorrow at 8:30 A.M. and the US Core PCE awaited for Friday.

The Core PCE is obtained with the calculation of many already released data like CPI, PPI and others but some surprises can still happen. The Core y/y data is expected at 3.1% and is still very high to prompt further cuts – Let's see how markets interpret this.

For lower-tier data, still consider the Jobless Claims (continuing claims have been trending higher, at November 2021 levels) and Friday's U-of-Mich Consumer sentiment data.

Safe Trades!