USD/CAD slightly bearish below 200-DMA; bears targeting 1.3010

Currently, USD/CAD is trading at 1.3190, down -0.06% or (7)-pips on the day, having posted a daily high at 1.3122 and low at 1.3087.

Over the last 3-trading sessions, the Canadian dollar vs. American dollar traded below its 200-DMA which translates in a relative bearish tone for the pair as bears and bulls seem to continue a 4-week battle to define the next leg for this currency.

On the data front, Durable Goods Orders clocked 1.8% a figure above the 1.7% consensus and a previous 'revised' -0.8%. The week ahead delivers robust high-impact releases worth the attention from market participants as in the next 2-days the BoC Rate Statement could trigger market volatility if the word selection leads to believe economic conditions in Canada have improved or deteriorate. Finally, besides significant data-driven news, the US docket has a stellar participation when Fed's Yellen take the spotlight with another key speech.

USD/CAD neutral to bullish short term – Scotiabank

Historical data available for traders and investors indicates during the last 9-weeks that USD/CAD pair, a commodity-linked currency, had the best trading day at +1.71% (Jan.18) or 227-pips, and the worst at -1.02% (Jan.17) or (133)-pips. Furthermore, the US 10yr treasury yields have traded from 2.34% to 2.31%, up +1.07% on the day at 2.33% or +0.0248.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.3210 (50-DMA), then at 1.3270 (100-DMA) which seems to build a 'Walls of Troy' multi-year resistance region since July 2015 and finally above that at 1.3380 (high Jan.20). While supports are aligned at 1.3008 (low Feb.16), later at 1.2910 (low Sep.9) and below that at 1.2760 (low Aug.18).

On the other hand, Stochastic Oscillator (5,3,3) seems to head south. Therefore, there is evidence to expect further CAD gains in the near term.The pair requires a close and open above the 200-DMA near 1.3140 to dilute any bearish pressure that could drag it lower back to the 1.3010 level.

On the long term view, if the 'double Doji' candlestick formation from 1.3587 (high Nov.) and 1.3597 (high Dec.) is in fact, a relevant top, then any upside potential seems limited for this currency pair. Then, to the downside, supports are aligned at 1.2986 (short-term 23.60% Fib), later at 1.2626 (long-term 50.0% Fib) and finally below that at 1.2460 (low May.2016).

As of writing, USD/CAD trades around 1.3190, therefore upside barriers are aligned at 1.3311 (short-term 38.2% Fib), then at 1.3468 (long-term 61.8% Fib) and finally above that at 1.3574 (short-term 50.0% Fib).

Canada: BoC and GDP figures in the limelight this week – BBH