USD/CAD bears in control to 2017 support structure, eyes on a correction
|- USD/CAD is tracking the lower greenback and broadly stronger commodity prices in the month of April and May.
- Bears take on bullish commitments at the early Sep 2017 lows.
At the time of writing, USD/CAD is trading at 1.2084 and is down some 0.3% after travelling from a high of 1.2103 to a low of 1.2080.
The greenback has been on the backfoot since the 5th May and was beaten up further on Friday due to the disappointment in the Nonfarm Payrolls report.
The US created a little more than a quarter of the jobs that economists had forecast last month.
On top of that, the unemployment rate unexpectedly ticked higher which leaves the market speculating that the Fed will not be looking to taper or raise rates sooner than what they had already communicated.
The report encouraged investors to unwind their growing long positions in the US dollar and bet on riskier asset classes, such as stocks.
The dollar index DXY, which measures the greenback against six rivals, stands at 90.13 at the time of writing, broadly flat on the day, after dipping as low as 90.128 for the first time since Feb. 26 earlier in the session.
The greenback is training at odds with the wider spectrum of markets with global equity prices bid and with even the benchmark US Treasury yields well above Friday's lows with the ten-year up some 0.6% at the time of writing.
Meanwhile, the loonie has been benefitting from the Bank of Canada's recent change to policy settings, higher commodity prices ad general risk-on markets.
The CAD can remain solid, in the main, as a function of the diverging monetary policy outlooks within the dollar bloc.
The BoC has already started to taper its asset purchases and has even signalled it may hike as soon as 2022, or at least as of when the output gap is significantly smaller.
USD/CAD technical analysis
USD/CAD has fallen some 4.6% since March.
The loonie is now taking on the USD/CAD bulls at multi-year lows as follows:
While there are prospects of a deeper extension into the demand territory, a correction may not be too far away.
From a daily perspective, the 61.8% Fibonacci retracement of the latest bearish impulse aligns with the prior lows as follows:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.