USD/CAD Eyes Larger Recovery Above 1.3160, BoC Next10 July, 2019 by Aayush Jindal in Market Analysis
- The US Dollar declined to 1.3037 and recently corrected higher against the Canadian Dollar.
- USD/CAD traded above a bearish trend line with resistance near 1.3080 on the 4-hours chart.
- The NFIB Business Optimism Index declined from 105.0 to 103.3 in June 2019.
- The Bank of Canada is likely to keep interest rates at 1.75% in today’s rate decision.
USDCAD Technical Analysis
After a downside break below 1.3200, the US Dollar declined heavily against the Canadian Dollar. The USD/CAD pair even broke the 1.3160 and 1.3100 support levels to move into a bearish zone.
Looking at the 4-hours chart, the pair settled below the key 1.3160 support plus the 100 simple moving average (red, 4-hours). A new multi-month low was formed near 1.3037 and the pair recently started an upside correction.
It broke the 1.3050 resistance area and the 23.6% Fib retracement level of the downward move from the 1.3229 high to 1.3037 low. Moreover, the pair traded above a bearish trend line with resistance near 1.3080 on the same chart.
Finally, the pair surpassed the 1.3100 resistance and tested the 50% Fib retracement level of the downward move from the 1.3229 high to 1.3037 low.
On the upside, there is a strong resistance waiting near the 1.3160 level and the 100 simple moving average (red, 4-hours). A convincing close above 1.3160 and follow through above the 100 SMA could start a larger recovery towards the 1.3200 and 1.3240 levels.
Conversely, if USD/CAD fails to climb above the 1.3160 resistance, it could slide back towards the 1.3080 or 1.3050 support. Any further losses might open the doors for a test of the 1.3000 handle.
Today, there are two important events lined up – BoC Interest rate decision and FOMC meeting minutes. Both are high risk events and are likely to spark swing moves in EUR/USD, GBP/USD, AUD/USD, USD/JPY, gold price, oil price, USD/CAD and NZD/USD.
Economic Releases to Watch Today
- UK Industrial Production for May 2019 (MoM) – Forecast +1.1%, versus -1.0% previous.
- UK Manufacturing Production for May 2019 (MoM) – Forecast +2.1%, versus -3.9% previous.
- UK Trade Balance non-EU for May 2019 – Forecast £-4.7000B, versus £-4.595B previous.
- BoC Interest Rate Decision – Forecast 1.75%, versus 1.75% previous.
- FOMC Meeting Minutes.