Support On The Horizon For The USD/CAD
Shain Vernier • 2 min read
The forex is showing signs of life on this Tuesday session. One day ahead of the FOMC Minutes release, the USD is seeing mixed returns against the majors. Losses vs the euro and pound sterling, as well as a sell-off in the USD/CAD, have highlighted the early U.S. session. However, solid performances vs the Swiss franc and Japanese yen show that the Greenback is hanging tough against safe-havens.
Things are looking up for the Canadian dollar. Crude oil pricing remains above $70.00, the new USMCA agreement has smoothed trade uncertainties, and the Bank of Canada (BoC) is reporting that “optimism” is spreading throughout the business community. Given these fundamentals, it is little surprise that the USD/CAD is giving back the gains of early October.
Today has extended the losses of the past three sessions for the USD/CAD. At press time, the Canadian dollar is on the march vs the Greenback, bringing several key technical levels into play.
Here are the levels to watch for the rest of the session:
- Resistance(1): Bollinger MP, 1.2959
- Support(1): Daily SMA, 1.2930
- Support(2): 62% Current Wave Retracement, 1.2892
Bottom Line: The USD/CAD is trending hard to the bear on intraday time frames. Price is pushing lows and support at the Daily SMA. In the event the Daily SMA is taken out, the 62% Retracement of October’s range may be tested in the near future.
For the remainder of the week, I will have buys queued up from 1.2896. With an initial stop at 1.2868, this trade produces 25 pips on a sub-1:1 risk vs reward management plan.
With a bit of luck, the long entry at 1.2896 will go live ahead of the coming WTI inventory cycle. If not, reduce leverage and have your stops down in anticipation of volatility stemming from the API and EIA stocks reports.