USD/CAD Technical Outlook
- USD/CAD pulled again sharply in-line with expectations following a faltering in momentum
- Shares look to nonetheless be weak and on that USD/CAD seems to be poised for extra positive aspects in some unspecified time in the future
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It is a snippet from final week’s USD/CAD outlook, “Weak spot may sink USD/CAD 2-300 pips shortly even when solely a pullback given the dimensions of the run with no retracement.” The pondering was that momentum was faltering whereas shares traded across the June lows.
The pullback within the greenback and arduous bounce from round prior bear market lows was within the playing cards given a few of the extremes, however it doesn’t seem we’re but a significant turning level. On that, USD/CAD ought to agency right here shortly.
There aren’t any nice ranges within the instant neighborhood, maybe week’s present low round 13500 will turn out to be one thing significant. If not, then a pair of swing highs from a few years in the past surrounding 13400 may come into play.
On the top-side a run again to close 138500 shall be wanted to deliver resistance, however that stage isn’t anticipated to carry if certainly shares are to proceed additional into bear market territory. The down-move for the reason that summer time excessive has but to indicate actual indicators of capitulation, an occasion that would come quickly.
USD/CAD is the FX variation of an inverse S&P 500 as of late, as its 1-month correlation stands at a strongly destructive 0.99. This implies on a close to each day foundation USD/CAD is transferring reverse the inventory market.
All-in-all, nonetheless seeing how issues play out right here as shares may rally a bit additional earlier than turning again down. And with no clear ranges but in USD/CAD it’s robust from a technical standpoint to evaluate threat for longs on this decline. Quickly, although, we must always have some good readability to work with.
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USD/CAD Every day Chart
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—Written by Paul Robinson, Market Analyst
You possibly can observe Paul on Twitter at @PaulRobinsonFX
