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USD/CAD Eyes Resistance Ahead of FOMC, US & Canada Employment

USD/CAD Eyes Resistance Ahead of FOMC, US & Canada Employment

2017-10-31 16:47:00
Michael Boutros, Strategist
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USD/CAD Weekly Chart

USD/CAD Price Chart - Weekly Timeframe

Technical Outlook: A breach back above former trendline support extending off the 2012 low (and the October opening-range) shifted the focus higher earlier this month with the rally now approaching confluence resistance around ~1.2927- a region defined by the 50% retracement of the 2017 range and the 50-line of the descending pitchfork extending of the 2016 high (note the 52-week moving average just higher). Weekly support rests back at the trendline, currently ~1.2590s.

USD/CAD Daily Chart

USD/CAD Price Chart - Daily Timeframe

The daily chart further highlights this region of resistance. Note that the 200-day moving average / January low-day close rests just higher and converges on basic trendline resistance off the yearly highs at ~1.3000/26. A breach / close above this region would be needed to validate a more meaningful breakout with such a scenario targeting upper median-line parallel / 2017 open at 1.3400/35.

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USD/CAD 240min Chart

USD/CAD Price Chart - 240min Timeframe

Notes: A closer look at price actions has the weekly opening range taking shape just below resistance at 1.2927. Look for support along the parallel with a break below 1.2757/78 needed to validate a more significant reversal targeting 1.2663 & bullish invalidation at 1.2590/97– an area of interest for exhaustion / long-entries.

Bottom line: the pair is up more than 7% off the lows with the immediate rally at risk near-term while below confluence resistance. Keep in mind we still have the FOMC interest rate decision and more importantly, the announcement Thursday on President Trump’s pick for Fed Chairman. The fun doesn’t end there though, Friday is likely to be a key tell for Loonie price action with both the U.S. Non-Farm Payroll (NFP) report AND Canada employment figures on tap. The November open looks very promising.

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USD/CAD IG Client Sentiment
  • A summary of IG Client Sentimentshows traders are net-long USDCAD- the ratio stands at +1.02 (50.4% of traders are long) – Weak bearishreading
  • Long positions are 17.8% higher than yesterday and 20.6% lower from last week
  • Short positions are 3.2% higher than yesterday and 4.5% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDCAD prices may continue to fall. However retail is more net-long than yesterday but less net-long from last week andthe combination of current positioning and recent changes gives us a further mixed USDCAD trading bias from a sentiment standpoint.

See how shifts in USD/CAD retail positioning are impacting trend- Click here to learn more about sentiment!

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Relevant Data Releases

USD/CAD Economic Calendar

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Other Setups in Play

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com.

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

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