Super Thursday is here, so fasten your seatbelts, everyone! Traders will be watching the highly-anticipated CPI inflation data from the US due at 2:30 pm CET today (8:30 am ET). Moreover, there is the ECB press conference starting at the time of the CPI release, the two events together almost guaranteeing to make today's EURUSD session a highly volatile one.

But the ECB presser should remain in the backseat and receive less attention than the CPI because the ECB hasn't announced any big decisions today. That means that all USD pairs, rather than only EURUSD, will trade on higher volatility than usual. So, everyone should be careful today, especially those planning to trade breakouts, as the chances for fakeouts are relatively high.

As we said in our weekly analysis on Monday, breakouts of the ranges on major Fx pairs are unlikely to come today. Or even if some breakout does occur, price continuation in that direction is unlikely to come immediately. That's because traders will want to wait for next week's Fed meeting, which is the central event for the whole month of June and will likely set the directional themes in the Fx market for the next several weeks.

If you haven't already, refer to our weekly analysis here of the top three major Fx pairs to be prepared for today's trading.

With the warning been issued now, the bonus for today's newsletter is this beautiful reversal chart setup on USDCAD that could potentially materialize in the coming days, in which case USDCAD can shoot higher as far as 1.24. In the other scenario, the reversal setup fails, and USDCAD simply continues the trend lower.

First, let's look at USDCAD in context, the long-term picture. Here's the monthly chart.
 

As you can see, 1.20 is already an important support area (blue parallel lines), so the reaction here is completely expected. However, there is another possible scenario (black parallel lines), where USDCAD moves below 1.20 and finds support lower. In this scenario, the monthly support would be located near the 200-month moving average (red line).

For the potential reversal setup to be triggered, the support area at 1.20 will need to hold.

Switching to the shorter-term picture, we can see that USDCAD has been forming a rounding bottom formation since mid-May. A distinct resistance has formed at the 1.2120 - 1.2130 zone, a breakout of which would suggest further upside. 

Under such a bullish scenario, traders will be looking for the reversal to take USDCAD up toward the 1.24 area as the key resistance and potential upside target. Several technical factors concur around the 1.24 level, therefore, making this area the first most significant resistance higher.

• June 07, 2021 – Long Gold (XAU/USD) from 1887; moved stop to breakeven and allowed to be stopped out at breakeven ahead of today’s CPI inflation report = 0 pips (trade idea sent June 4, 2021)
• AUDUSD idea not triggered as the sideways price action didn’t give rise to either the bullish or bearish scenario
• EURGBP setup wasn’t triggered and as such is now canceled too
• EURCHF is getting nearer to the potential buy area; this setup may be triggered soon.