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?
- DailyFX Forecasts are published on a variety of markets such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.
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
Chart prepared by James Stanley; USDCAD on Tradingview
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
Chart prepared by James Stanley; USDCAD on Tradingview
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
Chart prepared by James Stanley; USDCAD on Tradingview
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.
Forex Trading Resources
DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.
If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
