USD/CAD, Evergrande and Oil – Key Loonie Levels

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Canadian Dollar Technical Forecast: Neutral

  • USD / CAD fell to critical support as sentiment remained mixed
  • Rising oil prices may continue to support a stronger Canadian dollar
  • US dollar/CAD eye key levels with explosive potential on both sides

To learn more about how to trade USD / CAD, look at ours DailyFX Education section.

Fundamentals of USD / CAD Weigh Risk Sense

After an eventful week in markets, USD / CAD rates have fallen back to the critical level of support currently firmly at 1.262.

With the FOMC and BoC rate announcements now price in the markets, the collapse of Evergrande and supply limits remain key factors that could possibly help in breaking the Loonie in both directions.

Although United States Dollar weakness may continue to support the downtrend for now, increasing geopolitical tensions combined with foundations for next week, who include US CPI (consumer index), consumer confidence and data manufacturing, perhaps still results in increased volatility, driving prices on both sides.

Price of Canadian Dollar: USD / CAD, Evergrande and Oil - Key LevelsCanadian Dollar Price Forecast: USD / CAD, Evergrande and Oil - Key Levels

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USD / CAD Technical Analysis

On the daily chart, USD / CAD traded in a well-defined range between the levels of 1.25 and 1.29. With price action currently trading above the 50-period moving average (MA), la moving average convergence / divergence (MACD) remains above the zero line.

At the time of writing, USD / CAD currently remains tied to a critical level of support firmly at 1.263. On the technical front, this level coincides with key Fibonacci levels of important historical movements.

To learn more about price action or charts, check out our DailyFX Education section.

The distance limit momentum is currently general in the main currency pair could also warn of a possible leak once the system trend is identified.

Daily USD / CAD Chart

Daily USD / CAD Chart

Diagram prepared by Tammy Da Costa using TradingView

With price action currently threatening to break down trendline support about the weekly time frame, the developments of Evergrande and commodity prices is likely to contribute to the momentum and volatility for USD / CAD over the coming weeks.

USD / CAD Weekly Chart

Canadian Dollar Price Forecast: USD / CAD, Evergrande and Oil - Key Levels

Diagram prepared by Tammy Da Costa using TradingView

USD / CAD – Key Levels

Given that price action is limited and there is no visible trend, the forecast will be neutral, looking for a break from the range that could occur in both directions.

Currently the critical level of support could continue to hold at the key psychological level of 1.26. A break below this level could see bears retest the September 2021 low at 1.25, followed by a possible retest of 1.24.

In contrast, a break above 1.27 could see bulls push prices to 1.28 and a possible retest from the September 2021 high at 1.289.

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @ Tams707



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