USD/CAD: Where Do We Go From Here?

As covered in detail by my colleagues Rowan, Arslan and Skerdian earlier in the electronic session, the Bank of Canada (BOC) release turned out to be a market mover. The BOC raised interest rates ¼ point to 1.00%. This move came as a surprise to many, with a consensus believing that rates were to stay unchanged.

An unexpected rate hike always brings action to the markets. When coupled with the current bull run in WTI crude oil, the USD/CAD is pushing yearly lows.

Technicals

Macro factors typically trump technicals. Hurricanes, geopolitical strife, and shifting monetary policy have all played a crucial role in valuation models facing the USD/CAD.

USD/CAD Daily Chart: Look Out Below!

The technicals are straightforward: a pronounced trend day, week, month and year down! Currently, the USD/CAD is trading levels last seen in 2015 and failing to sustain any sort of bullish momentum.

Aside from the round number of 1.2000 and Spring of 2015’s swing low of 1.1919, there just isn’t much support to hang your hat on.

Trade Ideas: In this situation, there is no reason to reinvent the wheel. A short from the 38% Fibonacci retracement level of 1.2367 with a stop above today’s high at 1.2414 is a solid 1:1 intermediate term position trade.

I am looking for this market to move sideways for several sessions while today’s price action and data release are fully digested. The 38% short outlined above will give us a chance to profit as long as today’s low remains in tact.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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