The USDCAD is moving higher today, reversing the declines from both yesterday and Wednesday.
Recall that yesterday’s weakness came as the U.S. dollar sold off broadly in sympathy with the sharp decline in USDJPY amid intervention speculation
That selling pressure came despite Treasury yields moving higher following the FOMC decision. Today, yields are climbing again, with the 2-year Treasury yield up 6.2 basis points and the 10-year yield higher by 6.7 basis points. This time, the U.S. dollar is responding to the rise in yields, and the USDCAD is participating in the move.
From a technical perspective, yesterday’s decline brought the pair within striking distance of the 38.2% retracement of the rally from the early May low. The price bottomed at 1.3990, just 9 pips above the retracement target at 1.39812. The inability to reach, let alone break, that key Fibonacci level was a disappointment for sellers looking to gain stronger control.