The dollar seems to have retreated from its rallies at the start of this week, as traders may have booked profits off key inflection points for the major pairs. USD/CAD, in particular, has found resistance at the 1.0300 major psychological level.
From there, the pair has pulled back to the rising trend line on the 1-hour time frame. Stochastic, however, is making its way out of the oversold region. This suggests that the pair’s rallies could resume soon if sentiment for the dollar remains bullish.
The pair could test its former highs around the 1.0300 area and even make a strong break to the upside later on this week, depending on the outcome of the FOMC meeting minutes release and Fed head Bernanke’s testimony. Indications that the Fed is really considering reducing its bond purchases as early as June could trigger another strong dollar rally.
By Kate Curtis from Trader’s Way