USDCAD TECHS: Walking the Bands

• RES 4: 1.3899 High Apr 8 
• RES 3: 1.3869 76.4% retracement of the Mar 31  - May 1 bear leg
• RES 2: 1.3808 61.8% retracement of the Mar 31  - May 1 bear leg
• RES 1: 1.3779 High May 20
• PRICE: 1.3750 @ 16:56 BST May 20
• SUP 1: 1.3701/3643 Low May 19 / 8 
• SUP 2: 1.3550 Low May 1 
• SUP 3: 1.3526 Low Mar 9
• SUP 4: 1.3482 Low Jan 30 and key support

A bullish corrective cycle in USDCAD remains in play and the pair is trading at its recent highs. Price has breached 1.3715, the 50-day EMA. This highlights a stronger short-term reversal and opens 1.3808 next, a Fibonacci retracement point. For bears, a reversal would mark the end of the correction and pave the way for a move towards 1.3550, the Mar 9 low and a key support. Clearance of this level would open 1.3482, the Jan 30 low.

• US Treasuries look to finish near session highs Wednesday, gapping off early lows after Al Arabiya had reported earlier today that the US had intensified its demands regarding the nuclear issue and navigation security in the Strait of Hormuz, points that have derailed talks with Iran previously. Gulf wires reported that US/Iran will start a new round of talks after Hajj season (dates vary: May 25-27, May 24-29)
• Broad based risk sentiment improved with crude prices falling (WTI to $96.94/bbl low) with Treasury yields (10Y yield to 4.5617% low), US$ retreated while equities gapped higher - recovering from week lows - to near flat for the week. Currently, the DJIA is +1.23%, SPX emini +0.87%, Nasdaq +1.3%.
• TYM6 currently +24 at 109-14.5 vs. 109-16 high, Moving average studies are unchanged, they remain in a bear-mode position highlighting a dominant downtrend. The bear trigger at 109-24, the Mar 27 low, and the 109-00 handle, have been cleared. Sights are on 108-18, a Fibonacci projection. Initial firm resistance to watch is the 20-day EMA, at 110-05+.
• Eagerly awaited Nvidia earnings after the close put wider focus on chip-makers buoying the IT sector. Nvidia is expected to report EPS of $1.774: a metric on which it has beaten expectations across all quarters since 2020 bar one (Q3'23). Guidance should prove key: markets were shaky earlier this year on concerns over the sustainability of AI-buildout demand in the coming years, and strong messaging from Jensen Huang today could bolster this view.
• Focus on prelim PMI data from Australia and Japan - which should provide a better look at the extent to which sharply higher energy prices are compressing profit margins for industry. Australian labour market data will be the next domestic driver for AUD, scheduled for Thursday. Consensus is for labour market tightness to persist, with an unchanged unemployment rate at 4.3% and solid employment growth of 15k in April.

• RES 4: 0.7358 Top of a bull channel drawn from the Apr 9 ‘25 low 
• RES 3: 0.7300 Round number resistance
• RES 2: 0.7223/78 High May 15 / 6 and the bull trigger
• RES 1: 0.7175 20-day EMA
• PRICE: 0.7154 @ 16:55 BST May 20
• SUP 1: 0.7080 Low May 19
• SUP 2: 0.7056 50.0% retracement of the Mar 30 - May 6 bull leg  
• SUP 3: 0.6986 Low Apr 13 
• SUP 4: 0.6899 Low Apr 7

The latest pullback in AUDUSD is considered corrective and the rally into the Wednesday close is illustrative. Moving average studies remain in a bull-mode position. This set-up continues to highlight a dominant uptrend. However, Tuesday’s sell-off resulted in a breach of the 50-day EMA, at 0.7112. A clear break of this EMA would signal scope for a deeper retracement and expose 0.7056, a Fibonacci retracement. Key resistance and the bull trigger is at 0.7278, the May 6 high.