USDCAD is showing signs of a pullback on its 1-hour time frame, as the pair bounced off the 1.2200 major psychological support area. Price is now testing resistance at the 38.2% Fibonacci retracement level, which lines up with the short-term 100 SMA.
No changed in our view, USDCAD remains in uptrend from 1.0810 (Aug 29 low), the fall from 1.1385 would possibly be consolidation of the uptrend.
With many of the major trading centres closed yesterday for public holidays, and with little in the way of meaningful fundamental news to drive price action, trading volumes in currency futures remained thin, with the Aussie dollar, the British Pound, the Canadian dollar and the Euro, all consolidating further following the volatile price action of last week.
Like many of the major currency pairs at present, it’s US dollar strength which has been the primary driver over the last few weeks, and for the USDCAD, which moved firmly lower once again, the decline in the price of oil has also added further momentum to the move.
The Canadian dollar has continued to come under heavy selling pressure once again today, driven by a resurgent US dollar, which has now broken through the key 81.30 level on the daily chart of the dollar index, to move firmly higher from this platform of support which is now in place.
Following on from my recent posts about the bearish nature of the USDCAD and the medium term prospects for the Loonie, today’s advance GDP release has helped to drive the Canadian lower once again, accelerating its downwards progress and adding to yesterday’s wide spread down candle.
The USDCAD pair initially fell during the session on Thursday, but found enough support at the 1.07 region to turn things back around and form a hammer. Will we find particularly interesting about this market is that it seems so well supported, even as oil prices went so much higher during the day.
In my post of 28th May I suggested that the Canadian Dollar was approaching a key turning point as it was heavily overbought as displayed on our daily currency strength indicator on the left. Since then, the currency has indeed been selling off and for evidence of this we need to look no further than the CAD/USD June futures where this price action is clearly reflected.
The USD/CAD moved lower today on mixed Canadian economic data and imminent Spanish bailout sent traders fleeing the U.S. dollar into the Lonnie.
