The February forex month has kicked off and the Greenback is turning in a mixed performance against the majors. Losses against the Canadian dollar and Euro have been offset by gains vs the Japanese yen and Australian dollar. As of now, traders are exercising caution toward the USD in this first trading day of the month.
Over the course of the past week, the USD/CAD has put on a show. Rates have fallen more than 250 pips since last Friday, reminding traders of early January’s bearish action. So, is there more room to the downside? If WTI prices continue to rise and the FED embraces patience, then the answer has to be yes.
February Forex Action Is In Full Swing For The USD/CAD
For the third straight session, the USD/CAD is being dominated by bearish price action. With $55.00 WTI crude oil and Wednesday’s dovish FOMC Statements, the string of red candlesticks is no surprise.
Bottom Line: At press time, this market is trading just beneath the 1.3100 handle. Given the prevailing market dynamics, further bearish extension is likely. In the event rates continue to fall, a long trade from just above the big-round-number of 1.3000 will come into play.
Until elected, I will have buy orders queued up from 1.3011. With an initial stop at 1.2998, this trade produces 26 pips on a 1:2 risk vs reward management plan. With a bit of luck, this recommendation will go live on Monday or Tuesday of next week.