Technical Analysis

USD/CAD: Key assist ranges in focus forward of Financial institution of Canada determination, Poloz

USD/CAD trades decrease on the day, loonie buoyed by higher threat sentiment


The low as we speak touched 1.3224 earlier within the session and bumped into assist from the September excessive @ 1.3226 earlier than value rebounded just a little to commerce at 1.3240 ranges now. The main target for the loonie as we speak will probably be on the Financial institution of Canada assembly determination and Poloz’s press convention to comply with thereafter.

The Canadian central financial institution is anticipated to maintain charges regular a lot of the main focus will flip in direction of Poloz’s stance and whether or not or not he’ll shock markets by being extra hawkish once more. Because it stands, the improved threat sentiment and recovering oil costs are good causes for USD/CAD to fall and once you couple that with a technical break seen on Monday the commerce to the draw back may be very a lot writing itself.

Any hawkish shift by Poloz & co. may be very a lot an added bonus for the loonie at this level. The one concern is that he turns extra dovish and highlights worries surrounding the worldwide economic system and the Fed that might doubtlessly trigger the Financial institution of Canada to pause indefinitely on mountain climbing charges down the street too.

As for ranges to look out for, as talked about above value is working into assist from the 1.3226 stage in the meanwhile. However additional assist is then seen from the 100-day MA (crimson line) @ 1.3179. That will probably be a key stage to be careful for in a draw back extension in a while. A break beneath that stage will put an finish to the bullish bias within the pair.

Thereafter, additional assist is then seen @ 1.3160 after which @ 1.3132 earlier than the 200-day MA (blue line) @ 1.3081 comes into play.

As for a possible reversal again to the upside, value must climb again above the July excessive @ 1.3290 for an opportunity of an additional extension for my part. Finally, resistance @ 1.3384 will probably be key as that additionally coincides with the highs seen in June and it might additionally imply a transfer in direction of testing the damaged trendline assist from October. If value can get again above the latter, solely then I might be satisfied of a restoration again in direction of the highs on the finish of December/begin of January.

Barring any main sentiment change by the Financial institution of Canada later, I would nonetheless be inclined to quick the pair if it heads in direction of the resistance ranges above.

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