Canadian Greenback, CAD, USD/CAD Speaking Factors:
- USD/CAD has been in a clear sell-off for over a 12 months now, however has lately encountered a serious psychological stage that’s proving troublesome to interrupt.
- I had seemed into this theme early final week however dynamics have begun to shift, with Oil prices breaking out to assist hold CAD comparatively robust. This may as soon as once more make USD/CAD as a lovely candidate for bearish-USD themes.
- Tomorrow brings headline threat for each USD and CAD on the economic calendar, with jobs studies out of each economies due at 8:30 AM ET.
Sellers have dominated in USD/CAD now for greater than a 12 months. And extra pertinent to the current tense, that bearish sell-off was very pronounced from late-April and thru the primary couple weeks of Might.
On the core of the transfer was a elementary driver, with the Financial institution of Canada beginning to speak about post-pandemic coverage whereas the Fed seemingly shied away from even acknowledging the subject. That doesn’t imply that market individuals have rested on their laurels, nevertheless, and this subject will once more be heart stage tomorrow morning when jobs numbers are launched from each the US and Canada at 8:30 AM ET.
I had seemed into the bearish development in USD/CAD final week, remarking that the pair was oversold and dealing with an enormous spot of help, and atmosphere that might be conducive for pullback situations. And whereas that’s been taking part in out fairly visibly within the US Dollar, USD/CAD has been a bit extra subdued.
The primary resistance stage identified in that article did come into play; after which sellers took one other swing at help. However, the 1.2000 stage remained unfettered, with sellers coming a mere 2 pips away from testing the psychological stage. However, when a psychological stage like 1.2000 makes an impression with out even coming into play, there could also be a deductive message that may be gleaned from that, and within the days since that failed check sellers have continued to tug again on the throttle.
USD/CAD Two-Hour Value Chart
USD/CAD Not Monitoring USD – Engaging for Bearish USD Themes
One vital observe – whereas sellers have backed off of USD/CAD, not less than for now, it’s not close to to the identical diploma as what’s exhibiting within the US Greenback. This highlights the continued play of CAD-strength, with not less than some assist from the Financial institution of Canada. However, additionally an element extra lately has been the bullish breakout in Oil, with WTI crude oil shifting as much as recent two-year-highs, as I’d looked at in the analyst pick last week ahead of the break.
This may hold USD/CAD as a lovely automobile for methods behind USD-weakness. And with NFP on the playing cards for tomorrow, there’s ample alternative for sellers to return on the prowl.
For resistance ranges in USD/CAD, the identical construction as final week applies. The 1.2143 stage may be very close by and has already equipped not less than one resistance response. However, above that, one other stage of observe sits at 1.2203 and a bit-higher, the psychological stage at 1.2250 is confluent with a previous swing that retains this stage lively as a possible ‘r3’ space of resistance.
USD/CAD 4-Hour Value Chart
Chart ready by James Stanley; USDCAD on Tradingview
— Written by James Stanley, Senior Strategist for DailyFX.com
Contact and comply with James on Twitter: @JStanleyFX