Dollar/CAD reacted to positive comments on NAFTA and a gain in Canadian jobs and moved lower. Is it the beginning of a trend or just a short-lived move? Here are the highlights and an updated technical analysis for USD/CAD.
Canada gained 32.3K jobs in March, better than had been expected. More importantly, Canadian Prime Minister Justin Trudeau sounded optimistic on the prospects of reaching a deal on the North American Free Trade Agreement. The breakthrough had already arrived beforehand, with the US dropping a demand for 50% American content in cars, but hearing the optimism from the most senior politician did its magic. The US gained fewer jobs than had been forecast but wage growth ticked up.
USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
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USD/CAD Technical Analysis
Dollar/CAD made an attempt to move higher but dropped quickly, falling below 1.2760 (discussed last week) at some point before closing a bit higher.
Technical lines from top to bottom:
1.3180 was a support line in 2017 and now turns into resistance. 1.3125 is the high point for 2018 so far.
1.30 is a round number that is eyed by many. 1.2945 capped the pair in early April.
1.2810 provided support in late March. 1.2760 was a swing high in late February.
1.2665 was a was a double-bottom in November and works as strong support. It is followed by 1.26, a round number that worked as resistance in October.
I am bullish on USD/CAD
Despite the recovery of the Canadian dollar, the BOC remains cautious and the recent move may prove as a correction. The NAFTA news is now even more priced in than beforehand. In the US, the Fed is leaning towards more rate hikes.
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