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CAD Analysis and Talking Points

  • USDCAD slow grind lower
  • CADJPY Gains slow, 84.60 breach needed to resume rally
  • EURCAD upside runs in resistance

See our Q3 FX forecast to learn what will drive the currency through the quarter.

USDCAD grinds lower

A relatively subdued week thus far for USDCAD with lower volumes leading to somewhat static price action with support at 1.3132 holding for now (61.8% Fibonacci retracement of the 1.3793-1.2061 fall). Nonetheless, the slow grind lower continues for the greenback, which in turn has kept USDCAD on the backfoot, while falling RSI indicators, suggest downside is set to persist. A close below 1.3132 could signal an exacerbation of the USD losses, to make a run in on the 1.30 area. On the upside, key resistance is situated at the 76.4% Fibonacci retracement, at 1.3385, USDCAD has rejected this on two occasions, while near term resistance resides around the 20DMA (1.3220).

IG Client Positioning Sentiment states recent changes in sentiment warn that current USDCAD price trend may soon reverse lower. For full client positioning click here

USDCAD PRICE CHART: Daily Time Frame (February 2018-July 2018)

CAD Technical Analysis Overview: CAD Gains Tepid for now

Chart by IG

CADJPY gains slow, 84.60 breach needed to resume rally

Muted price action for CADJPY with recent gains beginning to slow. Consolidation currently in play, while a breach above 84.60 (Fibonacci Retracement of the 80.54-87.10 rise) level is needed for the rally to resume. Last week’s bullish reversal off the key support at 82.10 (76.4% Fibonacci Retracement) suggests momentum is on the upside. Eyes on the mid-85s for an initial target.

CADJPY PRICE CHART: Daily Time Frame (January 2018 – July 2018)

CAD Technical Analysis Overview: CAD Gains Tepid for now

Chart by IG

EURCAD upside runs in resistance

The cross nudging higher, however, resistance is situated with the 200DMA and 38.2% Fibonacci retracement situated at 1.5390 potentially leaving limited scope for further upside in the cross. Alongside this, previous trendline support has switched to resistance, while last week’s bearish price action suggest trend signals are weak. As such, a reversal would bring into focus the 1.52. However, if indeed we do break above near term key resistance, eyes will be on for a move towards 1.55-56.

EURCAD PRICE CHART: Daily Time Frame (February 2018-July 2018)

CAD Technical Analysis Overview: CAD Gains Tepid for now

Chart by IG

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX