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USD/CAD Approaches Apex Ahead of Bank of Canada (BoC) Meeting

USD/CAD Approaches Apex Ahead of Bank of Canada (BoC) Meeting

Talking Points:

- USD/CAD Retail Crowd Remains Net-Long Ahead of Bank of Canada (BoC) Meeting.

- USDOLLAR Preserves Monthly Range Amid More of Same Fed Rhetoric.

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USD/CAD Daily Chart

Chart - Created by David Song

  • USD/CAD may face a major move over the coming days as the pair approaches the apex of the wedge/triangle formation, while the Relative Strength Index (RSI) appears to be threatening the bearish formation carried over from earlier this year.
  • Even though the Bank of Canada (BoC) is widely anticipated to retain its current policy in July, the fresh batch of central bank rhetoric may spark a larger pullback in USD/CAD should Governor Stephen Poloz and Co. sound increasingly upbeat on the economy and show a greater willingness to gradually move away from the easing cycle.
  • Failure to break/close above 1.3130 (38.2% retracement) may open up the downside targets, with the first hurdle coming in around 1.2930 (61.8% expansion) to 1.2980 (23.6% retracement) followed by 1.2620 (50% retracement) to 1.2650 (50% retracement).
  • The DailyFX Speculative Sentiment Index (SSI) shows the retail crowd remains net-long USD/CAD since June 28, with the ratio hitting an extreme back in April at it advanced to +2.25.
  • The ratio currently sits at +1.11 as 53% of traders are long, with short positions 8.6% higher from the previous week even as open interest stands 2.2% below the monthly average.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
US Dollar Index12010.9812033.3211977.34-0.1677.16%
USDOLLAR Daily Chart

Chart - Created by David Song

  • Failure to break the monthly opening range may continue to produce range-bound prices for the USDOLLAR, with the broader outlook tilted to the topside as the greenback breaks out of the bearish formation from earlier this year.
  • Nevertheless, the USDOLLAR stands at risk of facing near-term headwinds as Fed Governor Daniel Tarullo and St. Louis Fed President James Bullard offer little guidance for the monetary policy outlook; may see another unanimous vote to retain the current policy at the Federal Open Market Committee (FOMC) interest-rate decision on July 27 as central bank officials appear to be in no rush to implement higher borrowing-costs.
  • Waiting for a break of the near-term rangewith support coming in around 11,951 (38.2% expansion) to 11,965 (23.6% retracement), while the topside hurdle stands around 12,049 (78.6% retracement) to 12,064 (61.8% retracement).
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Read More:

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USD/JPY Technical Analysis: The Proverbial Falling Knife

--- Written by David Song, Currency Analyst

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

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