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Commodity Bloc FX Rebound Pauses - Markets Wait for FOMC

Commodity Bloc FX Rebound Pauses - Markets Wait for FOMC

Talking Points

- AUD/USD, USD/CAD see reversals stunted as oil dips again.

- EUR/USD weighed by ECB, but it might be an empty threat.

- Follow trader sentiment in USD/CAD with live DailyFX SSI updates.

On Friday, Currency Analyst James Stanley and I opened up a discussion on the psychology of energy markets, and we inevitably turned to the forex fallout. In discussing this, we came to the conclusion that, given the recent tweak in tone used by the Bank of Canada, that the Canadian Dollar's dog days may be coming to an end.

If our understanding is correct, then the BOC's desire to keep rates on hold in context of impending fiscal stimulus should be supportive of the Canadian Dollar over the long-term. In the short-term, if this view is true, we'd look for Crude Oil and USD/CAD to decouple. Already, there is some evidence of this view rounding out today.

See the above video for technical considerations in EUR/USD, USD/CAD, EUR/CAD, GBP/CAD, AUD/USD, and the USDOLLAR Index.

Be sure to join me and Currency Analyst James Stanley on Friday, January 29, at 09:00 EST/14:00 GMT for a special webinar discussing the ongoing slide in energy prices and their impact on FX markets.

Read more: Euro Burdened By Prospect of ECB Action in March - Is it a Real Threat?

--- Written by Christopher Vecchio, Currency Strategist

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Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.