Canadian Dollar, USD / CAD call points:
- USD / CAD put a big break last week on the back of Canadian inflation data, and FOMC minutes of the meeting on the July interest rate decision.
- The interruption lasted until 1.2950, after which a reversal of the short-term trend began to appear. Now, three trading days and almost 400 points later, USD/CAD is in an uncertain place on the graph.
- The analysis contained in the article is based on pricing and chart formations. For more information on pricing or chart patterns, visit us DailyFX education section.
USD / CAD has been fast for the past week.
Last Tuesday, I had warned of a possible break in the USD / CAD pair had moved to a key point of resistance on the horizon with two really big drivers by Wednesday. Inflation in Canada was due to take place this morning and the minutes of the FOMC meeting were scheduled to be published later that day. One or two blows of these publications not only resulted in a break outside zone 1.2621-1.2652, of which I had spoken; but also an outbreak that exceeded the six-month high of 1,2800 bulls
USD / CAD prices rose to 1.2950, from a mere 1.3000 psychological level to pair the fresh nine-month high. But that’s when the proverbial music stopped, because a reversal began on Friday, which has continued to evaporate these breakthroughs in this week’s open.
This background is highlighted by interesting observations in the chart. This Friday candle, where vendors rushed to the market, ended as a tombstone dojo, and on Monday there was a bear’s sequel through the formation of the evening stars, often followed by a bear’s continuation. So far, the issue has continued during Tuesday’s trading, with prices falling back to a bullish trend line that has been a couple of lower since early June.
USD / CAD daily price chart
USD / CAD macrofactors
There are currently a few key macro factors at stake in USD / CAD, the most obvious of which are US dollar. The USD rose higher last week after those FOMC minutes showed the Fed may be approaching austerity than initially thought, helping both the USD and the USD / CAD rise to their recent short-term records.
However, this issue has recently disappeared as the USD has sunk in support and USD / CAD is following, but there is another important factor in USD / CAD and it oil prices. Oil was in strong sales last week, helping the Canadian dollar weaken further. However, as oil prices rebound this week, the strength of the CAD has risen and, together with the weak USD, this is a strong short-term trend for the USD / CAD.
Currently, the USD / CAD chart is approaching a large support position, taking a trend forecast, which has so far led to a couple of declines since June. There is also a bit of support that plays with past short-term resistance, taken from a swing of about 1.2588. This could keep the door open for a couple of rising scenarios, focusing on the upcoming Jackson Hole Economic Symposium. Below the projection of the trend line, there is a secondary support potential in the zone 1.2500-1.2521.
USD / CAD four hour price chart
The chart was compiled by James Stanley; In USDCAD Tradingview
– Written James Stanley, Older Strategist For DailyFX.com
Get in touch and follow James Twitter: @JStanleyFX