USD/CAD falls on the back of USD weakness; meanwhile, psychological resistance remains firm, with USD/CAD falling sharply to support; economic data continues to drive market sentiment, and price action remains very easy for the rest of the week affected by risk events.
USD/CAD turns sharply lower as key resistance holds steady
USD/CAD turned lower after the bulls failed to push the price above the important psychological resistance level of 1.3700.
While U.S. dollar strength provided support for USD/CAD’s gains last year, the safe-haven U.S. dollar provided a brief respite for the loonie.
The upside momentum started to fade last session as USD/CAD hit a high of 1.36851. USD/CAD then fell to near the trend line support at 1.3477. No matter from the perspective of short-term or long-term fluctuations, the 1.3500 line has played the role of support and resistance.
Is the dollar rally gone forever? Not necessarily, the US dollar is expected to regain its glory in the first quarter!
USD/CAD daily chart
USD/CAD faces additional bearish risks ahead of heavy non-farm payrolls and Canadian jobs report
Economic data could provide an additional catalyst for price moves as market participants digest the minutes of the Federal Reserve’s December monetary policy meeting. On Friday, the U.S. non-farm payrolls report (NFP) and Canadian employment data will take center stage in the market, and investors are expected to pay close attention to the performance of these reports.
While interest rate expectations and recession risk continue to drive sentiment, Fibonacci levels in historical ranges have been providing support and resistance for recent moves.
It is expected that the 78.6% Fibonacci retracement level of the 2011-2016 range, or 1.3559, will act as a short-term resistance level, while the 61.8% Fibonacci retracement level of the historical range, or 1.3462, is expected to provide additional support for USD/CAD .
USD/CAD Weekly Chart
If the bears manage to push USD/CAD below these levels as well as 1.3385, the November low of 1.3228 could come into play to leave room for further losses. (Translated by Lisa written by Tammy Da Costa)
The Fed will continue to raise interest rates in the first quarter, and the bear market in US stocks is about to restart? Is buying the dip still a viable strategy? These top deal opportunities are worth a read!
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