ASIA: Coming up in the Asian session on Monday

• RES 4: 1.3899 High Nov 1 and a key resistance    
• RES 3: 1.3866 1.0% 10-dma envelope
• RES 2: 1.3855 High Nov 10 2023
• RES 1: 1.3849 High Jul 25
• PRICE: 1.3814 @ 15:36 BST Jul 26
• SUP 1: 1.3778 Low Jul 24   
• SUP 2: 1.3715 20-day EMA 
• SUP 3: 1.3690 50-day EMA
• SUP 4: 1.33657 Low Jul 17 

The impulsive rally in USDCAD persists, with the pair showing above 1.3792 resistance this week, topping out at 1.3849. This has resulted in a print above key resistance at 1.3846, the Apr 16 high. Conditions are overbought, however, a clear break of 1.3846 would strengthen the bull theme and pave the way for a continuation higher, towards 1.3899, the Nov 1 high ‘23 and a key resistance. Firm support lies at 1.3690, the 50-day EMA.

We've just published our preview of the July 30-31 FOMC meeting - PDF here (and emailed to clients):

• The Fed will hold rates for an 8th consecutive meeting at its July meeting, putting immediate attention on any signals about rate cuts beginning in September.
• While inflation and the labor market cooled in the second quarter, providing a clear path to rate cuts by year-end, underlying demand has remained resilient in defiance of what FOMC officials see as “sufficiently restrictive” policy.
• With the lingering memory of various data "head fakes" in mind on both the upside and downside of the inflation and rate cycles, yet a “soft landing” still seen in reach, the FOMC is likely to express only cautious optimism.
• The policy statement is due for key adjustments to the characterization of recent inflation and employment, and perhaps to the shifting balance of risks – but it’s not clear the Committee will adjust the forward rate guidance, in contrast to previous cycles where it explicitly signaled that it could move rates at an upcoming meeting.
• That would put the focus on Chair Powell to deliver the message at the press conference that the FOMC is cautiously open to cuts at upcoming meetings.
• The absence of a clear signal about an upcoming rate cut would disappoint current market pricing for 2 to 3 rate cuts by year-end, which is more aggressive than the 1 to 2 cuts the FOMC eyed just 6 weeks ago.

• RES 4: 0.6702 High Jul 22     
• RES 3: 0.6657 50-day EMA                
• RES 2: 0.6620 Low Jun 28 
• RES 1: 0.6583 High Jul 25  
• PRICE: 0.6552 @ 15:35 BST Jul 26
• SUP 1: 0.6515 Low Jul 25
• SUP 2: 0.6466 76.4% retracement of the Apr 19 - Jul 11 bull phase   
• SUP 3: 0.6441 Low Apr 23  
• SUP 4: 0.6407 Low Apr 22 

A sharp sell-off in AUDUSD this week reinforces a bearish theme. The move down has resulted in a break of support at 0.6576, the Jun 10 low. A resumption of the bear leg would pave the way for a move towards 0.6466, a Fibonacci retracement point. From a near-term perspective, the pair is oversold. A recovery would allow this condition to unwind. Key short-term resistance is seen at 0.6657, the 50-day EMA.