The dollar keeps recovering ground against major currencies as traders await the ADP private payrolls print and the Bank of Canada's rate decision. USD/JPY has pushed above 160.00 while USD/CAD holds inside a tight range ahead of the central bank verdict. Iran-related tensions add volatility to both pairs, while oil-inventory data weighs additionally on USD/CAD.
The US dollar is extending its recovery after a recent stretch of weakness, gradually clawing back ground against the major currencies. Traders are now focused on preliminary ADP employment data, with forecasts pointing to 48K private-sector jobs added, following a 44K increase the prior month. A sizeable deviation from that forecast could increase dollar volatility and force a reassessment of Federal Reserve policy expectations.
Tensions around Iran remain another factor in play, supporting demand for safe-haven assets and adding volatility to the oil market. Stronger safe-haven demand could also lend support to the yen, partially limiting the upside potential of USD/JPY.
USD/JPY holds above 160.00
USD/JPY retested the 159.40–159.80 support area last week before recovering, and buyers pushed the pair above the psychological 160.00 level yesterday. Should US employment data beat expectations, the advance could continue toward 160.50–161.00; the bullish scenario would be invalidated by a firm move below 159.40.
USD/CAD awaits the Bank of Canada
USD/CAD has consolidated within a 1.3840–1.3910 range over recent sessions. For the pair, the Bank of Canada's meeting is the key event: the central bank is expected to hold its policy rate at 2.25%, so attention will center on the statement and press conference. A more dovish tone could pressure the Canadian dollar and support further gains in the pair, while a break above 1.3910 could open the way toward 1.3960–1.4000. A break below the range's lower boundary could instead trigger another test of the 1.3730–1.3780 lows.
EIA crude inventory data and the Iran-related tensions could further move oil prices and, in turn, the Canadian dollar. Stronger-than-expected US data combined with a dovish Bank of Canada tone could support further gains in both pairs, while weaker US figures or a more hawkish Canadian central bank could limit the dollar's recovery.
Source: ActionForex
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