USDCAD Continues to Fall Back
The US dollar may extend its retreat against its neighbor after oil producers agreed to production cuts. OPEC+ announced plans to curb output by more than a fifth or 10 million barrels per day to support prices. The final agreement could further prop up the oil-sensitive Canadian dollar.
The loonie may also find support from the Bank of Canada if it decides to stay optimistic and keep interest rates unchanged this Wednesday. The pair has struggled to find bids around the 20-day moving average. 1.3800 is a key support to maintain the current uptrend.
USDJPY Goes into Sideways Consolidation
The rise of the US dollar has come to a halt after the Federal Reserve unleashed a massive liquidity injection. As the upcoming retail and unemployment data are expected to show a deterioration of the US economy, the aggressive $2.3 trillion package has the merit to highlight the central bank’s resolve in averting a recession.
However, the ample supply of the greenback could ease the liquidity strain and cap its advance. USDJPY is trading in a narrowing range between 105.00 and 111.70. A breakout on either side could decide the trend of the coming weeks.
EURNZD Stays Under Pressure as Supply Grows
The euro continued to slide after EU members agreed on a half-a-trillion euros plan to mitigate the impacts of the pandemic. This united front would put the EU’s total fiscal stimulus to 3.2 trillion euros. While this may fuel the rebound in the equity markets, the single currency could face headwinds as its supply grows.
In the meantime, improved risk appetite is likely to favor riskier currencies like the New Zealand dollar, thus keeping the euro under pressure. The pair is testing the 61.8% (1.8000) Fibonacci retracement level. Should it dip lower, 1.7600 would be the next target in sight.
AUDJPY Rises on Improved Sentiment
Risky assets bounced back across the board as governments’ massive rescue programs and signs of a slowdown in infections injected some optimism into the market. The Australian dollar is no exception and is well-positioned to make up lost ground against the Japanese safe haven.
Thursday’s unemployment rate will give insight on Australia’s resilience in this difficult year. A less pessimistic reading could further support the currency’s recovery. The breakout above the 30-day moving average has put the pair on a trajectory towards 72.00, while 65.00 became a major support for the rebound.