USD/CAD Rejects Daily 50% Fibonacci Level

The action in the USD/CAD has been hot and heavy today, featuring the rejection of a key Fibonacci support level. A suddenly-strong WTI crude oil market and robust ISM Non-Manufacturing PMI (August) have played leading roles in short-term price action. For the time being, it appears the Loonie is content to settle somewhere between 1.3200 and 1.3250.

Friday’s economic calendar is jam-packed and will likely bring more volatility to the USD/CAD. Here is a quick look at the slate:

Country                   Event

U.S.                         Average Hourly Earnings (August)

U.S.                         Non-Farm Payrolls (August)

Canada                   Unemployment Rate (August)

Canada                   Net Change In Employment (August)

These events are scheduled for release at 8:30 AM EST. In addition, FED Chairman Jerome Powell is due to speak at 12:30 PM EST, which always has the potential to shake things up. Factor in an active WTI market and the USD/CAD may be positioned to revisit today’s area of Fibonacci support.

50% Fibonacci Retracement Checks Bearish Trend In The USD/CAD

In a Live Market Update from yesterday, I issued a long trade recommendation from Fibonacci support. The play proved to be a winner, producing 30 pips profit. So, is this key level going to hold or are we headed lower?

Here are the levels to watch as we roll toward Friday’s session:

• Resistance(1): Bollinger MP, 1.3280
• Resistance(2): Daily SMA, 1.3295
• Support(1): Macro Wave 50% Fibonacci Retracement, 1.3198

Overview: Going into the weekend break, price action in the USD/CAD is going to be all about news and crude oil. While it is tempting to hold position longs from the 50% Fibonacci level, the risk is enhanced due to the news cycle. Ultimately, it may be better to take a wait-and-see approach during tomorrow’s pre-market news releases and build a plan from there. 

In any case, be sure to stay tuned to FX Leaders for what is sure to be an active Friday for the Loonie.