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USD/CAD at Risk for Breakout as Traders Dismiss BoC Rate Decision

USD/CAD at Risk for Breakout as Traders Dismiss BoC Rate Decision

David Song, Strategist

Talking Points:

- USD/CAD Wedge/Triangle Formation at Risk as BoC Retains Wait-and-See Approach.

- AUD/USD Support in Focus Ahead of RBA Interest Rate Decision.

- USDOLLAR Continues to Clear Near-Term Targets & Carves Bullish Formation.

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USD/CAD

USD/CAD Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • USD/CAD may ultimately break out of the wedge/triangle formation from March & resume the long-term upward trend as the Bank of Canada (BoC) endorse a highly neutral tone for monetary policy.
  • With Canada’s 1Q Gross Domestic Product (GDP) anticipated to show a marked slowdown in economic activity, a dismal print may instill a more bullish outlook for USD/CAD.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short USD/CAD since May 22, with the ratio currently holding at -1.61.

AUD/USD

AUD/USD Daily Chart
  • AUD/USD faces a growing risk of giving back the rebound from April as the bullish formations falter, while the downward trending channel continues to take shape.
  • The Reserve Bank of Australia’s (RBA) June 2 interest rate decision may instill a more bearish outlook for AUD/USD should the central bank see scope for another rate cut, while Governor Glenn Stevens continues to jawbone the higher-yielding currency.
  • Need a break/close below key support around 0.7570 (50% expansion) to 0.7590 (100% expansion) to favor fresh 2015 lows in AUD/USD.

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Read More:

Price & Time: Broader Trend Resuming in USD/CAD?

US Dollar Targets Fresh Highs versus Yen, Euro - Levels to Watch

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11984.31

11997.89

11930.27

0.21

101.55%

USD/CAD at Risk for Breakout as Traders Dismiss BoC Rate DecisionUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • The near-term rally in Dow Jones-FXCM U.S. Dollar may carry into June as it clears the Fibonacci overlap around 11,951 (38.2% retracement) to 11,965 (23.6% retracement); string of higher highs & lows favors the approach to buy-dips in the greenback.
  • With San Francisco Fed President John William on the wires, will keep a close eye on the fresh comments from the 2015 Federal Open Market Committee (FOMC) voting-member as market participants greater scope for liftoff at the September 17 interest rate decision.
  • Will watch former resistance zones for new support, with the key region of interest coming in around 11,898 (50% retracement) to 11,901 (78.6% expansion).

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USD/CAD at Risk for Breakout as Traders Dismiss BoC Rate Decision

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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