- USD/CAD bulls looking to the Jackson Hole for a boost.
- Technically, the price is at a critical juncture within a bullish territory.
USD/CAD has started to confirm a bearish environment according to the previous two daily candles.
However, the following analysis illustrates the bias from both a bullish and bearish perspective.
Daily chart
As per the chart above, the price printed a shooting star reversal candlestick pattern on 20 Aug.
This has been followed by a strong technically engulfing bearish candle on 23 Aug.
However, it will require further confirmation that this is a valid reversal on a break of the 21-day EMA and the 1.2580/1.2600 support structure in the forthcoming sessions.
In doing so, it will then be on course for a break of the dynamic trendline supports 1&2.
1.2520 would be expected to be the last defence against an outright bearish breakout.
With all that being said, given the broader bullish trend, bulls will be highly active above the trendline supports that would potentially lead to bearish failures and a continuation to the upside next month.
Much will depend on the outcome of the Jackson Hole at the end of the week and the trajectory of US money markets and the US dollar.
Bulls will be looking for a monthly close above 93.50 to target 93.80 and beyond:
(DXY monthly chart)
For this to occur, it will be imperative that US 10 year yields extend beyond 1.3020% daily resistance and break ice above 1.3810% to confirm the bullish bottoming candle formations.
We have a bullish hammer printed on July 20, followed by a double bottom on Aug 4, although this was followed by a failure of a restest of old resistance structure near 1.2950/1.3030:
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.