Canadian Greenback Forecast: USD/CAD Bounce from Key Zone

CANADIAN DOLLAR TECHNICAL PRICE OUTLOOK: USD/CAD WEEKLY TRADE LEVELS

• USD/CAD has began to point out consolidation after the bullish bounce pushed by the June FOMC charge determination.
• After a chronic sell-off, bears had been thwarted in early-June with a swing-low simply above the 1.2000 deal with. However after that failed breakdown, patrons have develop into progressively extra bullish in the course of the month of June and there now seems to be authentic reversal themes brewing within the pair.
• The evaluation contained in article depends on value motion and chart formations. To study extra about value motion or chart patterns, try our DailyFX Schooling part.

USD/CAD put in one of many extra concerted sell-offs to associate with the latest theme of USD-weakness. After topping out final March, together with the US Greenback, USD/CAD then went on to spend the following fourteen months in various levels of a sell-off. Whereas the US Greenback was weak throughout the board, a robust Canadian Greenback, helped alongside by rising oil costs, saved USD/CAD pinned under a bearish trendline for a lot of this time.

Within the month of April, this theme caught one other shot-in-the-arm because the Financial institution of Canada began speaking in regards to the prospect of post-pandemic coverage. The Fed hadn’t but executed so and this deviation created much more motive for USD-bears, and USD/CAD plunged all the way down to a recent six-year-low.

However, it was round that low level on the chart that issues began to shift, and I highlighted this theme in late-Might because the pair was beginning to look beleaguered after failing to interrupt by the psychological 1.2000 deal with.

To study extra about psychological ranges, try DailyFX Schooling

USD/CAD Every day Worth Chart

Chart ready by James Stanley; USDCAD on Tradingview

Costs in USD/CAD has began to point out vary tendencies forward of the BoC charge determination in early-June, with USD/CAD exhibiting oversold ranges that hadn’t been seen in additional than a decade. And when the BoC got here out a bit much less hawkish than in April, the pair started to pattern larger with a contact of further CAD-weakness; and that led into the FOMC charge determination at which level a surge of USD-strength was now meshed with this CAD-weakness to create a robust rally within the pair.

Within the aftermath of the FOMC charge determination, I began taking a look at potential setups for bullish continuation in USD/CAD, within the occasion that this pullback might flip into one thing extra. I highlighted a zone of potential higher-low assist, taken from across the 1.2250 psychological stage.

That zone got here into play final week and that value of 1.2250 got here in to assist set the low on Wednesday. Since then, patrons have been pushing a bit tougher, making a short-term higher-high and, as of this morning, a higher-low from the secondary zone of assist checked out in that very same article.

USD/CAD 4-Hour Worth Chart

Chart ready by James Stanley; USDCAD on Tradingview

USD/CAD Technique Close to-Time period

At this level, USD/CAD holds some attract for long-USD methods. The 1.2500 stage looms above, and past that’s the 1.2622 Fibonacci stage. It is a huge zone that took USD/CAD just a little over three months to break-below, so if this space does come into play, it might result in some imply reversion and back-and-forth value motion till a extra outstanding driver turns into clear, and at this level, one of the best guess on that will be the Jackson Gap Financial Symposium later this summer time.

On the underside of present value motion, short-term assist is at the moment exhibiting within the 1.2352-1.2361 zone, and under that’s the 1.2250-1.2300 zone. If patrons can’t maintain up the 1.2250 low, these bullish prognostications might quickly come into query.

USD/CAD Eight Hour Worth Chart

Chart ready by James Stanley; USDCAD on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and observe James on Twitter: @JStanleyFX