USD/CAD Breaks to New 2017 Highs

2017-05-02 17:21:00 Walker England, Forex Trading Instructor

Talking Points:

USD/CAD Breaks to New 2017 Highs
Sentiment Remains Extreme; IG Client Sentiment Reads at -2.13
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The USD/CAD has broken to new yearly highs this afternoon, despite a general US Dollar selloff in the market. As this trend develops, traders should continue to monitor upcoming new that may help provide further direction for the pair. This includes both US and Canadian employment figures which are set for release at 12:30 GMT this Friday. Expectations for US Non-farm Payrolls (APR) are set at 190k, while CAD Net Change in Employment (APR) is expected in at 10.0k

Technically, the USD/CAD remains in an uptrend going into Friday’s news. If the standing trend is set to continue, traders should watch for a breakout above the new 2017 high found at 1.3757. However in the event of a price reversal, traders should look for the pair to first decline below its 10 day EMA (exponential moving average). This line is currently found at 1.3607 and continues to act as a critical values of support. A breakout below this point would suggest a shift in the pair’s short term trend.

USD/CAD, Daily Chart with 10 Day EMA

(Created Using IG Charts)

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Traders should note that IG Client Sentiment (IGCS) for the USD/CAD remains at negative extremes for the week. Currently IGCS stands at -2.13 with only 31.9% of traders net long the currency pair. Typically a negative extreme in sentiment may suggest that prices may continue to trade higher. If the USD/CAD trades to new yearly highs, it would be expected to see sentiment figures remain at negative extremes. Alternatively if prices reverse from their highs, traders may look for sentiment values to also reverse back towards more neutral readings.