After yesterday’s FOMC presser, market participants are looking to short the Dollar. As a result, US Oil is pushing higher into profit and USDCAD shorts are expected.
Powell stated that although the economy is on track to meet its inflation goals, the threat of the new Delta variant is something the Fed is taking seriously. Since then, the Dollar has pushed below 92.00 and is en route to 91.500. US Oil longs taken last week are now up +150 pips as a result, with more profit to be expected.
With US Oil going higher and a bearish Dollar, price action traders are expecting USDCAD to head lower. Price spent the last five days in consolidation after a strong push lower by bears. Yesterday, the price broke below this consolidation zone hinting at a next leg down. Price is may revisit the low of July by the end of the short.
The month of July is almost over and the monthly candle will close as the second most bearish candle. This may be a sign of further Dollar weakness in the month of August. This should lead to higher prices for the majors as well as for precious metals such as Gold and Silver.
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