Dollar Retreats from Record Highs After Trade Tariff Delay
FXOpen
The start of the current trading week was marked by price gaps in many currency pairs. The announcement of trade tariffs on Canada, Mexico, and China, made by the Trump administration over the past weekend, led to a sharp surge in the USD against other currencies. The USD/CAD currency pair reached new highs for 2020, EUR/USD briefly traded around 1.0200, while sellers of GBP/USD attempted to push the price below 1.2300.
On Monday, it was announced that Canada, the US, and Mexico had agreed to postpone the introduction of tariffs, which consequently led to an immediate closure of the price gaps that had formed after the market opened.
USD/CAD
A sharp rise in USD/CAD to 1.4800, followed by an equally sharp pullback from the highs, contributed to the formation of a "bearish engulfing" pattern on the daily timeframe. At present, the price is trading above 1.4300. Technical analysis of USD/CAD suggests a potential downward correction if the price firmly establishes itself below 1.4280.
Key events that could influence USD/CAD price formation in the upcoming trading sessions:
- Today at 16:15 (GMT+2): Speech by FOMC (Federal Open Market Committee) member Thomas Barkin
- Today at 16:30 (GMT+2): US ADP Non-Farm Employment Change
- Today at 16:30 (GMT+2): Canada’s Trade Balance
- Today at 17:45 (GMT+2): US Services PMI (Purchasing Managers' Index)
GBP/USD
A rebound from 1.2250, followed by a daily rise to 1.2460, allowed buyers of GBP/USD to form a "bullish engulfing" pattern on the daily timeframe. In the near term, the pair may test a key resistance range at 1.2570–1.2530. If the price consolidates above this level, an upward correction towards 1.2700–1.2600 could begin. A rejection from 1.2530 may result in a retest of 1.2300–1.2250.
Key events for GBP/USD this week:
- Today at 12:30 (GMT+2): UK Services PMI
- Today at 14:00 (GMT+2): Bank of England Quarterly Bulletin
- Tomorrow at 16:00 (GMT+2): Bank of England Interest Rate Decision
- Tomorrow at 17:30 (GMT+2): Speech by Bank of England Governor Andrew Bailey
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