USD/CAD Targeting the 1.3650 Resistance Zone After Closing Another Bullish Week
USD/CAD turned bearish in June after forming a resistance zone in April and May at around 1.3650-60, which buyers failed to break. This pair fell to 1.31 lows although it stopped there and during July we saw a consolidation as the price traded in a range.
Now it seems like August will end up being pretty bullish for this pair as buyers picked up USD/CAD and sent it back up to the resistance zone, which is within reach. The price reversed at the end of the day after Jerome Powell’s comments at the Jackson Hole Symposium and closed around 1.36, but that’s pretty close to the resistance zone and it seems like it will be broken next week, as buyers seem strong and Powell didn’t sound too dovish, which would have ruined the rally for the USD. He said that they are prepared to raise rates further if appropriate, and will proceed carefully.
USD/CAD continued the upward trend for the second consecutive day, reaching new three-month highs at 1.3640. This movement was attributed to a speech by Federal Reserve Chair Powell, which had a hawkish tone and led to increased volatility in various markets. Subsequently, Patrick Harker from the Philadelphia Fed emphasized that interest rates are currently set in a restrictive manner. As of now, the USD/CAD pair is trading above 1.36 and we remain long on this pair, buying retreats lower.
Advance July Wholesale Sales Reading from Statistics Canada
- Canada prelim July wholesale sales +1.4%
- Food, beverage and tobacco products: +0.3%
- Personal and household goods: +1.1%
- Motor vehicles and motor vehicle parts and accessories: +5.8%
- Building material and supplies: +3.5%
- Machinery, equipment and supplies: -1.9%
- Miscellaneous goods: +0.4%
On the other hand, the Bank of Canada has given signals of stopping here with rate hikes. The advance July Wholesale Sales posted a strong number but they didn’t help the CAD much. According to Statistics Canada, the rise in numbers can be attributed to increased sales in the subsectors of motor vehicles, motor vehicle parts, accessories, as well as building materials and supplies.
USD/CAD Live Chart
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