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USD/CAD Reaches New Highs on GDP Data Beat

USD/CAD Reaches New Highs on GDP Data Beat

Walker England, Forex Trading Instructor

Talking Points:

The USD/CAD is trading to fresh monthly highs this morning, despite Canadian GDP data being released above expectations. Today’s CAD GDP (YoY) (Dec) was expected in at 1.7% but was released at an actual 2.0%. While the USD/CAD's rally temporarily stalled on this news, the pair's weekly trend now spans 311 pips from high to low since Monday.

Technically, the USD/CAD is now trading directly below a critical point of daily resistance. This point is the January 20th swing high, seen in the graph below at 1.3388. While the USD/CAD is trading well above its 10 day EMA (exponential moving average) and 200 day MVA (simple moving average), if prices fail to breakout higher it may suggest that the USD/CAD is prepared to retrace some of this week’s gains. Alternatively, a breakout above 1.3388 should be seen as a strong bullish continuation signal. A daily close to a higher high above this point would suggest that the current USD/CAD uptrend may have more room to run.

USD/CAD Daily Chart & Averages

(Created Using IG Charts)

Intraday analysis now has the USD/CAD trading beneath the first point of short term resistance, identified at the R1 pivot at 1.3380. If prices continue to rally from this level, this will expose other values of resistance including the R2 and R3 pivots found at 1.3405 and 1.3453. A move to either of these two points should be seen as significant as it would have the USD/CAD trading above the previous swing high identified on the daily chart at 1.3388.

Alternatively, in the event that resistance holds, traders may look for a move back towards today’s central pivot at 1.3115. A move to this point would suggest a shift in market conditions, allowing traders to then target an intraday reversal towards values of support. This includes support found at the S1 pivot at 1.3306.

USD/CAD 30 Minute Chart with Pivots

(Created Using IG Charts)

--- Written by Walker, Analyst for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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