Canadian dollar hotspots
USD / CAD remains above 50-day SMA (1.2577) after knee reaction Canada Employment Reportand recent price measures increase the chances of an exchange rate move in the near term as it cleans up the September opening period.
USD / CAD forecast: the inverted pattern of the head and shoulders shapes
The Canadian dollar may continue to depreciate against the US dollar as recent data releases show a slowed recovery in Canada and USD/ CAD may continue to monitor the decline from the August peak (1.2949) if the Bank of Canada (BoC) ”considers that the Canadian economy is still significantly overcapitalised and that the recovery continues to require exceptional monetary support.“
It remains to be seen whether the update of the Canadian Consumer Price Index (CPI) will affect BoC, as the headline inflation is expected to rise from 3.7% to 3.9% in July, but there may be signs of stronger price rises in the Canadian dollar as it encourages central bank monetary reduce support. At the same time, a weaker-than-expected consumer price index could push the US president into USD / CAD Tiff Macklem and Co. emphasize that “The accelerators of inflation are expected to be temporary, ”And thigher than January (1.2881) may outpace the change in the broader trend as the 50-day SMA (1.2577) now reflects a positive slope.
In turn, USD / CAD may continue to appreciate before the next BoC meeting on October 27 Federal Reserve officials show a greater willingness to change gears, but further exchange rate developments may continue to dampen retail sentiment, as at the beginning of this year.
The IG customer feelings report shows 61.17% of traders are now net length USD / CAD, traders with a long and short relationship stand 1.58 to 1.
The number of traders in net length is 14.44% higher than yesterday and 21.81% lower than last week, while the number of short traders is 15.46% higher than yesterday and 44.41% higher than last week. The decline in the net short position comes as the USD / CAD empties the September opening range, while the rise in net short-term interest rates has helped ease crowding-out behavior, with the pair having a net length of 74.00% of traders at the end of August.
That being said, the highest interval in January (1.2881) may continue to reflect a change in the broader trend the opposite pattern of head and shoulders takes shape and falls August High (1.2949) may turn out to be a short-term correction, as the 50-day SMA (1.2577) now reflects a positive slope.
USD / CAD exchange rate daily schedule
Source: Trading View
- Break above the highest level in January (1.2881) shows change in a broader trend as the inversion of head and shoulders changes with a 50-day SMA (1.2577) now reflects a positive rise as USD / CAD trades to annual highs in August.
- In turn, withdrawal August high (1.2949) as USD / CAD may remain short-term trade back above 50-day SMA (1.2577), but you need a pause / close above 1.2770 (38.2% expansion) region To open Fibonacci overlap 1.2830 (38.2% retracement) to 1.2880 (61.8% expansion).
- Pause over August high (1.2949) brings to the radar 1.2980 (61.8% retracement) area, with the next area of interest being approx 1.3030 (50% expansion) to 1.3040 (50% expansion).
- However, failure to keep over 1.2620 (50% retracement) to 1.2650 (78.6% expansion) the region may reject the USD / CAD below a 50-day SMA (1.2577), with the next area of interest being around .12510 (78.6% retracement).
– Written by David Song, currency strategist
Follow me on Twitter at @DavidJSong