USD/CAD retreats from seven-week tops down to 1.2630 but remains up in the week
- USD/CAD advances for the fifth consecutive week, up some 0.25%.
- The US dollar advances firmly, despite falling US bond yields.
- USD/CAD Technical outlook: A break above 1.2654 would expose the 1.2800 figure.
The USD/CAD climbs during the day, looking to close on the upside for the fifth week in a row, trading at 1.2632 at the time of writing. As the weekend approaches, the USD/CAD bulls keep pushing the pair towards higher prices, despite the Bank of Canada (BoC) hawkishness in the last two months. USD bulls benefitted from the Fed’s announcement of a bond tapering in the November 3 monetary policy meeting, which spurred a US 10-year Treasury yield spike above 1.60%.
However, US bond yields are plummeting in the day, with the 10-year at 1.528%, falling almost six basis points, at press time. Further, the greenback gains 0.30% with its US Dollar Index, sitting at 95.82, well below the weekly tops, around 96.00. Then how is it possible that the USD/CAD pair is edging higher? The answer lies in falling crude oil prices.
Developments in the last three days in the oil market that involved the White House and Asian allies accorded to “intervene” in the crude oil market, as high energy prices threaten to weaken the global economic growth. Authorities in China have already said that they plan to tap some of their oil reserves.
Goldman Sachs commodity strategists noted that the market has priced in the supply of 100M barrels. They added that it might limit the scope for further downside due to the reserve release news. At press time, Western Texas Intermediate (WTI) is trading at $75.31, down some 3.71%.
USD/CAD Price Forecast: Technical outlook
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As the weekend approaches, the USD/CAD bulls keep pushing the pair towards higher prices, though they found strong resistance at the October 3 high, at 1.2654. Worth noticing that swing high is also a weekly resistance that USD bulls fail to break. However, a breach of the latter would expose the confluence of a downslope resistance trendline and the September 29 high around the 1.2770-85 area. A sustained break above the former would expose September 20 high at 1.2895.
On the flip side, failure of a daily close above the October 3 high would add additional pressure on the pair. The first demand zone on the way south would be the 100-day moving average (DMA) at 1.2549, followed by the 50-DMA at 1.2528. A breach of the latter could send the USD/CAD tumbling towards the November 15 low at 1.2492.
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
