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Talking Points:
- USD/CAD Technical Strategy: Flat
- Support: 1.2556, 1.2421, 1.2187
- Resistance: 1.2801, 1.2881, 1.3036
The US Dollar declined against its Canadian counterpart as expected after putting in a Bearish Engulfing candlestick pattern. Near-term support is in the 1.2381-2421 area marked by the January 27 low and the 23.6% Fibonacci retracement, with a break below that on a daily closing basis exposing the 38.2% level at 1.2187. Alternatively, a reversal above the 14.6% Fib at 1.2566 opens the door for a challenge of the January 30 high at 1.2801.
Prices are too close to support to justify entering short from a risk/reward perspective. On the other hand, the absence of a defined bullish reversal signal suggests that taking up the long side is premature. With that in mind, we will remain flat for now.
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Daily Chart - Created Using FXCM Marketscope
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
