The USDCAD currency pair faced a downturn last week, closing 16 basis points lower and ending two consecutive weeks of gains. This decline underscores the prevailing bearish sentiment, with the pair trading 52 basis points lower in the current week.
Selling pressures intensified following higher-than-expected Canadian inflation, bolstering the Canadian Dollar, while the U.S. Dollar retreated amidst diminished safe-haven demand. Assurances from Iran regarding no retaliatory action against Israel further dampened the Greenback, compounded by sluggishness in the U.S. manufacturing and services sectors, fuelling expectations for interest rate cuts.
Notably, the USDCAD pair has witnessed five consecutive days in the red, reflecting market dynamics and sentiment. Moving forward, traders are eyeing the Fed’s preferred consumer inflation measure, the PCE Price Index, as a potential catalyst influencing the pair’s trajectory, highlighting the significance of upcoming economic data releases in shaping market movements and trading opportunities.
Technical
The USDCAD pair has been navigating an uptrend, maintaining a position above the 100-day moving average.
Initially propelled higher by U.S. Dollar strength, the pair found support at the 1.34778 level. However, as it approached the 1.38461 level, a resistance level formed amidst overbought RSI conditions, triggering a downturn.
Currently, the pair has retraced towards the 50% Fibonacci Retracement level, indicating a potential pivot point. If selling pressures persist, the 61.80% Golden Ratio may attract attention as a point of interest for traders. Conversely, if the 50% level holds as intermediate support, a rebound could occur, leading to a retest of the 1.38461 resistance level. This price action reflects the delicate balance between bullish and bearish forces in the market, with traders closely monitoring key technical levels for insights into future price movements and trading opportunities.
Summary
With the USDCAD pair experiencing a downturn amidst intensified selling pressures, the trajectory appears to lean towards bearish territory. Key technical levels, including the 50% Fibonacci Retracement and 1.38461 resistance levels, will be pivotal in determining future price movements and trading opportunities. Investors remain watchful for market cues.
Sources: Statistics Canada, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them
