Indicators For USD/CAD – 3:2 In Favor Of Shorts
Skerdian Meta • 2 min read
USD/CAD has been in a slight but consistent uptrend for about a year, but in the last few months, the fundamentals have been shifting towards shorts.
So, I´ve been building an opinion that we´re getting close to a point where a long-term sell forex signal would make sense. Risk/reward ratio is pretty good and I have been posting a few updates about this forex pair in the last couple of weeks.
But in the last few days, a couple events have occurred which has mixed my view on this pair. Both are statements by Trump and both are against the Canadian Dollar. Although we know that Trump doesn´t like a strong USD, that's what happens when you´re chaotic in everything you do.
Anyway, here are the technical and fundamental indicators pro and against the CAD (USD/CAD) shorts:
- Overbought technicals – All technical indicators are overbought in all timeframes up to monthly
- The decline in oil prices has stalled and are not expected to fall much lower
- Canadian economic data has been upbeat and house prices have been rising, as I mentioned in yesterday´s post
- Trump´s fiscal plan is supposed to be published this week, hopefully, today which might send this pair either way, but the risk remains to the upside if we see some real steps
- In the last couple of weeks, Trump has been trying to impose tariffs on Canada to win a few votes in Wisconsin, which is been the reason for the spike above 1.36 yesterday
So, the indicators have clearly been in favor of a long-term sell trade, but in the last few days, Trump is interfering with market forces once again. Therefore, I think it would be better to wait a few more days so we can see what happens with Trump´s fiscal plan and tariffs on Canadian farmers.