Canadian Dollar Analysis: Tough Road Ahead? USD/CAD, AUD/CAD, NZD/CAD, GBP/CAD
Canadian Dollar, USD/CAD, AUD/CAD, NZD/CAD, GBP/CAD – Technical Analysis
- Canadian Dollar seems at risk vs. some of its major peers
- USD/CAD ready to resume rise as AUD/CAD looks lower?
- NZD/CAD and GBP/CAD trend may favor the upside
The Canadian Dollar may be vulnerable against the US Dollar after USD/CAD formed a ‘Golden Cross’ between the 50- and 100-day Simple Moving Averages (SMAs). The pair was initially on its way lower after establishing the 1.2748 – 1.2808 resistance zone, but support seemed to be secured at 1.2423. Resuming the rise see the pair revisit the current 2021 peak at 1.2881. Otherwise, falling under the SMAs may open the door to aiming back at lows from earlier this year.
The Canadian Dollar could be setting up to resume its advance against the Australian Dollar since AUD/CAD topped in February. While the pair formed a Bullish Engulfing in early August, resistance was met at the intersection of the 0.9248 – 0.9294 inflection zone and the ceiling of a falling channel, from which the cross turned back lower. Resuming this year’s downtrend entails clearing 0.9146, exposing the 61.8% Fibonacci extension at 0.9104. In the event of a breakout above the channel, keep a close eye on the 100-day SMA. It could still reinstate the focus to the downside.
The Canadian Dollar could still be at risk against the New Zealand Dollar. While NZD/CAD’s momentum above a bullish Falling Wedge has somewhat faded, a ‘Golden Cross’ between the 50- and 100-day SMAs may form in the coming days. That could reinforce the dominant narrative to the upside. Shooting past the 38.2% Fibonacci retracement level at 0.8879 exposes the 0.8980 – 0.9011 inflection zone. On the other hand, clearing under the SMAs may open the door to retesting the 0.8577 – 0.8631 support zone.
The Canadian Dollar also remains vulnerable to the British Pound. GBP/CAD has continued to make upside progress after the pair breached a falling trendline from earlier this year. Granted, recent progress has been slow. A ‘Golden Cross’ recently formed between the 50- and 100-day SMAs, opening the door to a broader upside technical bias. That may see the pair push towards the April high. Negative RSI divergence does show that upside momentum is fading however, which can at times precede a turn lower.
--- Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.