USD/CAD Approaches Key 38% Retracement Level - Forex News by FX Leaders
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USD/CAD Approaches Key 38% Retracement Level

Posted Thursday, March 18, 2021 by
Shain Vernier • 1 min read

The story of the day continues to be the meltdown in WTI crude oil USOIL (-5.29%). One of the key results has been a steep rally in the USD/CAD (+0.59%), the first such bullish breakout since late-February. Now, rates are on the cusp of a key 38% Fibonacci resistance level. Will bidders be able to change the long-term bearish trajectory of the Loonie?

On the economic news front, today brought the weekly U.S. jobless claims numbers. Here are the highlights:

Event                                                     Actual                 Projected           Previous

Continuing Jobless Claims                  4.124M                 4.070M                4.142M

Initial Jobless Claims                             770K                      700K                    725K

As a whole, this set of stats signals an uptick in unemployment. However, Canada’s ADP Nonfarm Employment Change came in at -100,800, well above the previous release (-65,800). So, for the USD/CAD, this morning’s jobs numbers evened each other out.

One bit of data worthy of note is today’s Philly Fed Manufacturing Index (March). Figures came in at 51.8, more than doubling projections (23.0) and the previous release (23.1). This is a historically strong report and an extremely positive sign regarding the COVID-19 recovery.

USD/CAD Surges As WTI Plunges

For the first time in more than a week, the USD/CAD is in a position to close definitively in the green. Rates are above 1.2460 and driving toward 1.2500.

USD/CAD, Daily Chart
USD/CAD, Daily Chart

As we approach the end of the week, there is one level on my radar for the Loonie:

  • Resistance(1): 38% Current Wave Retracement, 1.2507

Bottom Line: As long as the Spike Low (1.2365) is the bottom of the USD/CAD market, I’ll have sell orders in the queue from 1.2494. With an initial stop loss at 1.2529, this trade produces 25 pips on a slightly sub-1:1 risk vs reward ratio.

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About the author

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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