Yesterday’s FOMC did not bring much to the global trading activity. That should not surprise us as FED didn’t change anything and met the traders’ expectations. With the FOMC being uneventful, traders focused again on the Coronavirus and the rising number of cases. Yesterday’s gains on Stocks, were largely wiped out during the Asian session. On the side note, in the shadow of the global health crisis, President Donald Trump signed a Trade Agreement between US, Canada and Mexico (USMCA) and on this, we will focus on today’s analysis.
Information was positive for both: Mexican Peso and the Canadian Dollar but both currencies have their own problems. USDMXN seems relatively strong though. Most of the EM currencies are currently under pressure due to the risk off mode coming from the Coronavirus outbreak but the USDMXN is relatively low. Actually, we are currently on a major long-term dynamic support and a breakout here can trigger a major sell signal, positive for the Peso. For now, this seems less likely but once the world will switch again towards the risk, this instrument will be the one to look at.
USDCAD looks a bit different. Here, CAD is suffering from the false breakout that happened at the end of the year. Breakout below major dynamic and horizontal supports was fake and the price reversed sharply. False breakouts are usually very strong trading signals and this is precisely, what we can see here. USDCAD is now much closer to the breakout of the down trendline than to the bearish movement. Sentiment here is definitely positive.
Small update of the EURUSD, which we mentioned few days ago and we were bearish. The price indeed declined and met a crucial mid-term support from November– 1.099. This is were the buyers try to initiate a correction and are drawing a triple bottom formation, with a nice divergence on the MACD. All is needed here for a short-term buy signal is the breakout of the neckline of this formation.
This article was originally posted on FX Empire
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