USD/CAD rejected from above 1.2920 on a volatile session for the dollar

• Volatile session across financial markets after ECB meeting.
• US Dollar without a clear direction, US yields tumble.
• USD/CAD holds onto weekly losses as recovery fades above 1.2900.

The USD/CAD reversed and dropped back below 1.2900 in a volatile session for financial markets following the European Central Bank meeting and US data.

The pair peaked at 1.2935 and then pulled back. It is hovering around 1.2880, flat for the day and approaching the weekly low, near the strong support zone of 1.2850.

The rejection from above 1.2900/05 (horizontal levels, and 20 and 200 Simple Moving Average in four-hour chart) reinforced the bearish short-term bias. If USD/CAD consolidates above it would point to further gains.

USD/CAD 4-hour chart

Data, ECB and uncertainty

Equity markets are posting modest losses, but the dollar is not benefiting from this as US yields are falling sharply. The US 10-year stands at 2.92%, the lowest since Monday, and the 30-year at 3.06%. Crude oil prices are falling more than 3%.

US economic data weighed on the US dollar on Thursday. Initial Jobless Claims rose more than expected to the highest level in eight months while Continuing Claims also rose above expectations to the highest in eleven weeks. The Philly Fed tumbled unexpectedly. On Friday, Canada will report May retail sales and the US the flash July S&P Global PMI.

Technical levels