USD/CAD Technical Analysis: Loonie Drops Most in 2 Months
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- USD/CAD Technical Strategy: Flat
- Support: 1.2137, 1.2057, 1.1946
- Resistance: 1.2271, 1.2379, 1.2487
The US Dollar produced its largest daily rally in two months, reclaiming a foothold above the 1.21 figure against its Canadian namesake. Near-term resistance is at 1.2271, the 38.2% Fibonacci retracement, with a break above that on a daily closing basis exposing the 50% level at 1.2379. Alternatively, a turn below the 23.6% Fib at 1.2137 clears the way for a test of trend line resistance-turned-support at 1.2057.
While entering long seems tempting from a purely technical perspective, we will tactically opt to pass. We see the threat of a deeper US Dollar pullback in the weeks ahead before the larger uptrend resumes. Furthermore, minutes from April’s FOMC meeting and April’s US CPI data represent significant event risks that may derail chart positioning in the days ahead. On balance, 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
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.