Canadian Dollar Outlook: USD/CAD Probing 200-DMA Support Again
USD/CAD – CAUGHT IN A MOVING AVERAGE PINCER MOVEMENT
The Canadian dollar’s multi-month rally against its neighbor continues and the pair are now pressing down on the 200-day moving average again. This indicator has underpinned USD/CAD since late-January this year until the early-June break and rebound. If the 200-dma gives way again, USD/CAD may find it harder to regain the long-term moving average and further losses look increasingly likely. Keeping with moving averages, the 20-dma is now in play and has acted as resistance over the last week. With the 20-dma and the 200-dma close to crossing over, one of these indicators is going to have to give in the next few days.
Canadian data spread out over the rest of the week may be a catalyst for the next move, with today’s inflation reading (13:30 UK), Thursday’s ADP employment change and new house price index (13:30 UK) and Friday’s retail sales (13:30 UK) all potential sparks of volatility. Add into the mix the current US dollar price action – nudging higher but with little conviction – and today’s tight trading range and it looks likely that USD/CAD will make a breakout in the near-term.
Resistance levels start at 1.3548 (20-dma) ahead of the 61.8% Fibonacci retracement level at 1.3608 and Monday’s 1.3690 print. Short-term support starts at 1.3528 (200-dma), followed by a few recent lows before the June 10 multi-week low at 1.3314 comes into focus.
USD/CAD DAILY PRICE CHART (NOVEMBER 2019 – JUNE 17, 2020)
(Click on image to enlarge)
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