Rising dollar pushes stock markets lower amid ECB mixed news, BoC meeting in focus

On Wednesday, the dollar climbed to a one-week peak at 92.70 against peers boosted by higher Treasury yields and a weaker euro ahead of ECB policy decisions.

Among expectations for an upcoming Fed taper announcement later this year, the yield on the benchmark 10-year US government hit 1.385% on Tuesday, its highest level since mid-July. As a result, the USD recovered strongly from one-month lows after the poor NFP figures were released. While stocks in Europe are on track for their most significant decline in three weeks on Wednesday, a day ahead of the ECB’s meeting to discuss whether to cut stimulus.

According to forecasts, ECB purchases may drop to as low as 60 billion euros from the current 80 billion euros under the Pandemic Emergency Purchase Programme (PEPP).

USDCAD bulls pause climbing

From a technical point, On the 4-hour chart, USDCAD, after breaking above the upper line of a descending flag pattern, is trading upward toward the first immediate resistance level at 1.27050 ahead of the BoC meeting.

The RSI is extremely overbought, signalling bulls are likely to take a breather and let the Loonie consolidate its weekly gains.

As long as the pair holds above 1.25826, the pair could bounce back to 1.28060, with the next hurdle being the recent peak of 1.29480. Overcoming this will be essential for an extended uptrend.

Conversely, For further decline to continue, the support level at 1.25826 must be broken.

Events of the day

In the early North American session, the market will focus on the latest monetary policy decision from the Bank of Canada due to release at 17:00 EEST. The bank will also report the Ivy PMI as well.

At the same time, investors will watch the monthly US JOLT report for July, which is expected to be around 10 million new open positions.