USDCAD to reverse from above 1.3700
farhan fazal
USDCAD·
Mar 26 2023
Stop Loss -0.21%
Holding time 6hr
1.37231
Entry price
1.36938
Stop loss price
The USD/CAD pair catches aggressive bids following a brief consolidation on Friday and extends its strong rally heading into the North American session. The momentum lifts spot prices to over a one-week high, closer to the 1.3800 mark, and is sponsored by a combination of factors.
Furthermore, worries that a global recession will dent fuel demand triggers a fresh bout of selling around Crude Oil prices and weighs on the commodity-linked Loonie. Apart from this, the softer-than-expected Canadian consumer inflation released on Tuesday reaffirmed expectations that the Bank of Canada (BoC) will refrain from raising interest rates any further. This further seems to undermine the Canadian Dollar and contributes to the USD/CAD pair's strong intraday rally.
From a technical perspective, the two-way price moves within a familiar range witnessed since the beginning of the current week point to indecision among traders over the near-term trajectory. Furthermore, the aforementioned mixed fundamental backdrop warrants some caution before placing aggressive directional bets around the USD/CAD pair.
USD/CAD gained strongly from yesterday’s attempted push under 1.3650 support and today’s strength in the USD has taken funds above descending trend resistance off the early Mar high at 1.3725 (now support). A bullish break from what has been in effect an extended consolidation boosts upside risks for USD/CAD in the short run at the very least and puts a retest of 1.3850/60 on the radar.
Trend signals are bullishly aligned on the short-term oscillators, implying firm USD support on moderate dips.