The US dollar fell from resistance on the assumption that the recent positive labor market data will cause the Federal Reserve to exit their nearly six years of quantitative easing early, as well as leading into the first Fed funds rate increase since 2008.
Andrew Wilkinson, chief market analyst at Interactive Brokers, said “the market is getting a bit ahead of itself in looking for a faster timetable for a pickup in the Fed funds rate.” The FOMC minutes from the June 17-18 meeting will be released on Wednesday, and traders will be digesting the statement to pick out clues on when the Fed may change their current stance on interest rates.
USDCAD is higher on the session, but price action has been consolidating in the sideways trending channel on the 4H chart. Traders are undecided as price action has been held in a tight range of 1.0665 and 1.0619. The 4H 50 EMA is supporting resistance levels at the top of the channel, but the +/- DMI is suggesting a bullish move in price action.
A breakout above 1.0665 would allow the pair to trade higher to 1.0690/95, while seeing resistance near 1.0700. Is channel and the 50 EMA resistance holds, USDCAD will likely trade within the channel with intra-channel support at 1.0650 before attempting to challenge the low.
The yen is seeing demand as risk assets sell-off during afternoon US trading session. USDJPY is testing Fibonnaci support on the 4H chart. Price action is pressuring the 61.8 percent Fib. level from the monthly high-to-low. There is a 4H 20/200 EMA bearish convergence in the works that will help push price action lower. A close below this Fib. level, USDJPY could test support at 101.65/70, while a move lower to 101.55 is probable.
Dollar-yen will have upside resistance just under 102.00, while additional resistance will be found at 102.10/15.