Canadian Dollar Forecast: USD/CAD Scales Above 1.3200 on CAD Jobs
Canadian Dollar Talking Points:
- This morning’s Canadian jobs report helped to bring some weakness into the CAD, with USD/CAD pushing up to a fresh four-week-high.
- Ahead of the release, USD/CAD had lagged behind the bounce in the US Dollar, keeping the door open for CAD-strength in short-side USD/CAD setups. Is that scenario still workable, or is the trend on the verge of turning in the pair?
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USD/CAD Breaks Out, Plays Catch Up to DXY
It’s so far been a big week for the US Dollar. While the US currency limped into last week’s close, holding support around two-month-lows, this week has seen a continuation of strength as that bearish trend has pulled back. In the USD, this has amounted to a fresh three-week-high, with the Greenback moving to and breaking-out from two different resistance zones looked at yesterday. In USD/CAD, however, that pullback had been muted as the same resistance that came into play after last week’s Bank of Canada and FOMC rate decisions held the highs through a couple of tests earlier this week.
This morning’s Canadian jobs report helped to bring some CAD-weakness into the mix, and USD/CAD is now pushing up to a fresh three-week-high.
USD/CAD Two-Hour Price Chart
USD/CAD Heading to Range Resistance?
Given this push up to fresh three-week-highs, the next objective becomes trying to find that next area of resistance, and to do so taking a tops-down approach can be helpful. Drawing back to the Daily chart and noticing a similar support bounce as what played-in during July trade and the potential for a range begins to show.
When prices formed support just above the 1.3000 level in mid-July, buyers pushed all the way into a resistance zone lurking from 1.3361-1.3385. A recurrent test in early-October saw sellers come-in ahead of a test of that zone, but resistance forming a series of lower-highs around the 1.3348 area keeps this area of interest as potential range resistance in the longer-term theme.
USD/CAD Daily Price Chart
USD/CAD Shorter-Term Levels to Know
Given this morning’s short-term breakout as driven by Canadian data, and there are a few points of nearby interest for strategy. The 1.3240 area is now very nearby and previously gave a dose of resistance in mid-October just before sellers posed a plunge. This could be looked at as that next area of resistance on the chart that could allow for pullbacks; and for traders looking to work with a short-term theme of strength, higher-low support potential exists around prior resistance of 1.3200.
Around the 1.3300 level is another point of potential resistance as this price helped to carve-out highs in the month of September, and this could be a topside profit target for short-term bullish plays.
USD/CAD Four-Hour Price Chart
To read more:
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--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.