Dollar/CAD enjoyed some volatility, but eventually didn’t go anywhere fast, despite a rate hike. Will NAFTA worries continue holding it back? The upcoming week features the all-important inflation and retail sales numbers. Here are the highlights and an updated technical analysis for USD/CAD.
The Bank of Canada raised rates as expected and also sounded bullish about the economy. However, they repeated one big thing: uncertainty about NAFTA. This concern also weighed on the Canadian dollar, that failed to rally on the good news. The weakness of the US dollar wasn’t really felt in Dollar/CAD, but perhaps the government shutdown could send the greenback to lower ground.
USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
* All times are GMT
USD/CAD Technical Analysis
Dollar/CAD traded in the same known ranges. A drop under 1.24 did not reach the 1.2335 trough (mentioned last week).
Technical lines from top to bottom:
1.2920 capped the pair in late October and turned into a double-top in No. It is followed by 1.2840 capped the pair in mid-November and also had a role in the past.
1.2790 was the high in mid-November and serves as resistance. 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. 1.2540 capped the pair in early October when it traded in a narrow range.
1.2435 was a cushion for the pair during the month of October. 1.2335 gave support to the pair in late September and it worked well in January 2018.
Even lower, 1.2260 is a stepping stone on the way down, while strong support only awaits at 1.2070.
I remain bearish on USD/CAD
It is hard to see how the Canadian dollar will be held back for much longer. The rate hike, optimism about the economy, and rising prices of petrol all favor a stronger loonie. The dark clouds of NAFTA uncertainty hold the C$ back, but the energy could eventually be unleashed.
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