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Talking Points:
- USD/CAD Technical Strategy: Flat
- Support: 1.2213, 1.2105, 1.1997
- Resistance: 1.2384, 1.2562, 1.2673
The US Dollar turned lower against its Canadian counterpart as expected after producing a Bearish Engulfing candlestick pattern. A daily close below the 38.2% Fibonacci expansion at 1.2213 exposes the 50% level at 1.2105. Alternatively, a rebound above the 1.2346-84 area (horizontal pivot, 23.6% Fib) opens the door for a challenge of the June 1 high at 1.2562.
A short position seems compelling from a purely technical perspective but we will tactically opt to stand aside. The upcoming FOMC monetary policy announcement represents significant event risk that may disrupt the current chart setup. With this in mind, we will wait for the release to pass before committing to a directional bias.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
