USD/CAD declined somewhat during the European morning Wednesday

USD/CAD

In a quiet European morning session for currencies Wednesday, the dollar was unchanged or lower against most of its major peers. It was slightly lower against CHF, EUR and GBP, in that order, while it was higher only against NOK. The dollar could reverse its early losses later in the day when US initial jobless claims come out later today. The market consensus is for the number to remain more or less unchanged, which would be consistent with a firming labor market. The 4 week moving average, considered a better measure of underlying labor market conditions, is expected to decline a bit, supporting the idea of broader strength of the US economy.

USD/CAD declined somewhat during the European morning Wednesday after finding resistance near the 1.1635 (R1) line. Bearing in mind our short-term momentum indicators, I would expect for the decline to continue at least until the 50-period moving average that provided a good support to the price action recently. A break below that moving average could extend the decline until our 1.1575 (S1) support level. The RSI stands just below its 50 line pointing down, while the MACD lies below its trigger line and seems willing to enter its negative territory. This signals accelerating bearish momentum, thus amplifying the case for a decline, at least temporarily. However, on the daily chart, the pair is still trading above both the 50- and the 200-day moving averages, and above the light blue uptrend line drawn from back at the low of the 11th of July. Hence, I still see a longer-term uptrend and I would expect any possible future setbacks to provide renewed buying opportunities.

• Support: 1.1575 (S1), 1.1550 (S2), 1.1510 (S3)

• Resistance: 1.1635 (R1), 1.1670 (R2), 1.1715 (R3)