With a forex calendar naked of main financial catalysts, USD/CAD is among the few pairs that might see some motion with high tier occasions from each the U.S. and Canada forward. Will they preserve the bullish run stepping into USD/CAD?
USD/CAD Uptrend Retracement Forward?
USD/CAD has been very form to the bulls as of late, probably on the latest focus of rising COVID-19 circumstances across the globe sparking fears of lockdowns and slowing financial exercise, and risk aversion market habits.
This atmosphere additionally after all has a destructive have an effect on on oil costs (down -9.6% previously month), and provided that oil is Canada’s high export, it’s no shock the Loonie has been falling as nicely. Because the Omicron variant began popping up on the information wires close to the tip of November, USD/CAD is up over 260 pips (+2.10%).
With little signal of the Omicron variant even starting to decelerate, these market fears might persist within the medium time period. However within the short-term there could also be catalysts that might take USD/CAD merchants’ focus away this week, doubtlessly creating longer-term setups.
On Thursday, we’ll get a sizeable chunk of financial updates from the U.S. and Canada, with essentially the most notable being the newest GDP knowledge from Canada and the newest Core PCE value index knowledge from the U.S. (the Federal Reserve’s most popular device for measuring client inflation).
Expectations are that Canada will put up enchancment in October over the 0.1% m/m rise in September, and the November Core PCE index quantity will probably develop on the identical tempo because the 0.4% earlier learn in October.
If this situation performs out, we might see a dip in USD/CAD within the short-term, which can get some assist from technical merchants. On the 4 hour chart above, we will see short-term bearish technical arguments as stochastic shouldn’t be solely exhibiting overbought circumstances, but additionally diverging with price action. That is additionally notable given the formation is going on at a significant psychological space (the 1.3000 deal with).
So, in the event you’re a short-term dealer, there could also be a chance for fast counter pattern pips this week round 1.3000, however remember that the pattern continues to be to the upside and the broad atmosphere is mostly risk-off.
For the swing and longer-term gamers, if a dip does materialize, then be careful for a retest of the November resistance area round 1.2450 – 1.2830. If the market retraces there, then longer-term pattern merchants and basic bulls might hop again in lengthy to commerce the online destructive danger atmosphere we’re at present seeing, a minimum of till we get contemporary catalysts that present Omicron as much less of a menace to the worldwide economic system going ahead.
What do you guys suppose? Is USD/CAD due for a dip or will USD/CAD bulls lower down the 1.3000 deal with like a sizzling knife via butter?
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