Forex: USD/CAD Technical Analysis – Aiming for Support Below 1.09
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- USD/CAD Technical Strategy: Flat
- Support: 1.0892 (50% Fib ret.), 1.0813 (61.8% Fib ret.)
- Resistance: 1.0970 (38.2% Fib ret.), 1.1067 (23.6% Fib ret.)
The Canadian Dollar continued to press higher against its US namesake as expected after clearing support at 1.0670, the 38.2% Fibonacci retracement. The 50% level at 1.0892 lines up as the next key downside barrier, with a further push below that exposing the 61.8% Fib at 1.0813. Alternatively, a move back above 1.0970 targets for the 23.6% retracement at 1.1067.
A short position triggered no lower than 1.0931 with a target at 1.0892 and a stop-loss triggered on a close above 1.0970 satisfies the minimum acceptable 1:1 risk/reward ratio. We will opt to stand aside on the basis of tactical considerations however.Prices have closely tracked the two-year yield spread, hinting the monetary policy outlook is in the driver’s seat. That bodes ill for the Loonie considering markets are pricing in no changes in BOC policy over the coming 12 months (according to data from Credit Suisse) while the Fed is seen delivering an effective 31bps in tightening over the same period.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com