The US Dollar Index (DXY) finished the day modestly lower after recovering from a fresh 7-week low. Bullish intraday studies (4-hourly) managed to trigger a rebound, possibly marking a false-break of former platform support. While a 6-week double top was confirmed, the rebound back above the formation neckline at 78.820 negates weakness. The 4-hour RSI and 18-period moving average hold the key for a sustained recovery, especially since both metrics capped price-action recently. Also lending support for dollar bulls is the completion of a 5-wave structure off the January high. This suggests a potential re-test of Monday's low, which is located just below the 38.2% retracement of the January 10th/18th relapse. Meanwhile, if the greenback fails to clear the 18-period (4-hourly) moving average, then the next downside target lies between 77.853/78.535, the 61.8% & 50% retracement levels of the entire late-October to December advance.
The Canadian Dollar was the weakest performing major currency, following the Bank of Canada's decision to keep interest rates unchanged. The loonie fell 0.61% vs. a trade-weighted basket of currencies, as expectations for a rate hike were pushed back further. Since reaching a fresh 2 1/2-year high, the Canadian exchange-rate index has formed a head & shoulders pattern. While recent price-action has closed below the neckline, follow-through weakness is required to confirm this bearish formation. If confirmed, however, then the GBP/CAD should re-test the 1.60 region. Either way, tomorrow's price-action will probably dictate direction for the rest of the week.