USD/CAD Breaks Above the 200 SMA, As the USD Reversal Continues

USD/CAD is trying to break above the 200 SMA on the H4 chart today

Skerdian Meta•Monday, January 11, 2021•1 min read

[[USD/CAD]] turned quite bullish in Q1 of last year, as the decline in crude Oil prices sent the CAD lower, pushing this forex pair more than 17 cents higher. But, the surge ended as the USD turned bearish, which turned this pair bearish and the bullish turned in crude Oil price has keep the downtrend going in USD/CAD.

The price fell to the lowest levels in three years and the decline continued so far in 2021 as well. Although, today we are seeing a bullish reversal, crude Oil has retreated around 100 pips lower. But, the retreat in Oil is minimal and the trend remains quite bullish there.

So, most of the bearish momentum in this pair today is coming from the USD side. The US Dollar seems to have turned bullish today, as markets anticipate the FED to give some hawkish hints. The FED won’t hike any time soon, not this year anyway, but it will be the first major central bank to hint at turning hawkish at some point.

So, the USD is feeling that and has been climbing higher in the last several session. USD/CAD has reversed higher as well, climbing around 200 pips off the lows. The price has moved above the 200 SMA (purple) for the firs time since the US elections, which indicates that the trend might be turning bullish in this pair. So, the trend might be shifting to bullish now, although it is too soon to tell. If the price closed above the 200 SMA, then buyers will gain more confidence, if not, then this might be just another retrace before the bearish trend resumes again.

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ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.