The greenback is near the bottom of the relative strength charts for the third day in a row as traders rush to (re)price in the potential for multiple interest rate cuts from the Federal Reserve this year. Meanwhile, the loonie has maintained its strength from the first half of the year, despite BOC Governor Poloz striking a slightly cautious tone on the Canadian economy earlier this week. One factor supporting Canada’s currency has been the recovery the country’s most important export, with WTI crude oil trading at a 7-week high above $60.00.
Technically speaking, USD/CAD continues to trend lower within a bearish channel, though there are some signs that the pair may see a short-term bounce. For one, rates are testing a key support zone near 1.3050, an area that USD/CAD hasn’t traded below since October. At the same time, the secondary indicators (RSI and MACD) are both showing possible bullish divergences, signaling that the selling pressure may be waning as rates test support.
Source: TradingView, FOREX.com
While the technical setup suggests an elevated risk of a short-term bounce next week, the fundamental factors (and longer-term technical downtrend) both continue to point lower for now. Therefore, bulls looking to play a potential bounce should be nimble as bearish traders may look at rallies toward the top of the channel as an opportunity to join the downtrend at a favorable price.
At this point, a break and close below the 1.3050 zone could open the door for a continuation toward 1.2900, if not lower, next.
This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold reaches to all-time highs near $2,230, US PCE eyed
Gold price appreciates to all-time highs near $2,230 per troy ounce, attempting to continue its winning streak for the fifth successive session on Friday. However, trading volumes are light as market participants are likely observing Good Friday.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.