USD/CAD continues to tread dynamic trendline support, bulls eye 1.33 area


  • USD/CAD holds in consolidation as the US dollar attempts the upside, but fails to breakout.
  • Fed's forward guidance leaves the US dollar hanging on the balance of improved risk sentiment.  
  • 1.33 on the cards if there is a bullish breakout of consolidation from dynamic trendline support. 

USD/CAD is currently trading at 1.3176 between a range of 1.3127 and a high of 1.3200 in a choppy consolidation of the correction of the daily impulse. 

The Federal Reserve event was unable to shake out any spot market dollar bulls that are eager for an upside correction.

We will have to wait to look at data collected since the Fed meeting as for how CTFC positing might have been affected by the event.

However, there was little to encourage a bullish bias for the greenback, given that the Fed consensus suggests that there will be no changes before 2024.

Meanwhile, there was some acknowledgement of improved economic conditions which seemed to have supported the dollar during Fed Chair Jerome Powell's presser – rather counterintuitively though. 

CAD hangs in the balance of the US dollar and oil 

To date, the view that a reflationary Fed policy has been a dollar negative.

Such a policy should help to support stocks and commodities (CAD is correlated to commodities).

If there is a persistent sense of a recovery, then that should be a weight on the greenback. 

Oil breaks $40bbls

As for commodities, the price of oil has been on the march and broke the $40 handle in mid-North American markets on Wednesday as risk appetite improved.

In addition, the latest API data showed a heavy decline in oil inventories, while headlines have also suggested OPEC+ compliance was above 100% for August.

However, if oil now struggles to gain much further ground and if the US dollar dies indeed breakout to the upside, USD/CAD could be sent on its way to the 1.33 handle as per the technical analysis below:

USD/CAD levels

While al of the above points to a stronger Canadian dollar, the technical landscape on the charts remain negative, bullish USD/CAD.

As illustrated here, it has been a difficult environment to stay long of USD/CAD while the price has consolidated in sideways price action in anticipation of a breakout to the upside:

Original setup showed that the price was likely due an upside extension:

On the 4-hour time frame, however, the price has just moved sideways in the creating of dynamic trendline support:

At this juncture, bulls may well be trapped, but a break of the current resistance structure will likely lead to the breakout that has been expected. 

However, failures at resistance and a break of the trendline support and support structure will invalidate such bullish prospects. 

USD/CAD

Overview
Today last price 1.3178
Today Daily Change -0.0008
Today Daily Change % -0.06
Today daily open 1.3186
 
Trends
Daily SMA20 1.3145
Daily SMA50 1.3301
Daily SMA100 1.3523
Daily SMA200 1.352
 
Levels
Previous Daily High 1.3202
Previous Daily Low 1.3135
Previous Weekly High 1.326
Previous Weekly Low 1.3053
Previous Monthly High 1.3451
Previous Monthly Low 1.302
Daily Fibonacci 38.2% 1.3177
Daily Fibonacci 61.8% 1.3161
Daily Pivot Point S1 1.3147
Daily Pivot Point S2 1.3107
Daily Pivot Point S3 1.3079
Daily Pivot Point R1 1.3214
Daily Pivot Point R2 1.3242
Daily Pivot Point R3 1.3282

 

 

 

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