USDCAD broke lower Thursday, breaking out of a tight trading range this week. The pair remains soft. A key support at 1.4261, the Jan 20 low, has been cleared and this signals scope for an extension of the current bear cycle - a correction. Scope is seen for a move towards 1.4107, a Fibonacci retracement. Initial firm resistance to watch is 1.4380, the Feb 10 high. A break would highlight an early bullish reversal signal.
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FX Exchange Weekly traded Option, expiry Friday, covers the US CPI, IJC, Retail Sales and IP, and the rest of the European Final CPIs.
Underlying is slightly higher than the spot at 1.0341.
Dovish repricing in EUR STIRs following the lower-than-expected UK CPI reading, with ECB-dated OIS now back to pricing 91bps of cuts through the course of this year (vs 87bps at yesterday’s close).
Meeting Date | ESTR ECB-Dated OIS (%) | Difference Vs. Current Effective ESTR Rate (bp) |
Jan-25 | 2.675 | -24.4 |
Mar-25 | 2.445 | -47.4 |
Apr-25 | 2.303 | -61.6 |
Jun-25 | 2.165 | -75.4 |
Jul-25 | 2.116 | -80.3 |
Sep-25 | 2.050 | -86.9 |
Oct-25 | 2.035 | -88.4 |
Dec-25 | 2.013 | -90.6 |
Source: MNI/Bloomberg. |