The Canadian dollar weakness is far from over, and for the same reason, I think that the rally in USDCAD is not completed. The pair might still continue to find buyers around the lower levels. Recently, the pair bounced from the daily 20 moving average, as can be seen in the chart shown below. I think buying dips could offer good risk/reward in the short term.
Looking at the 4 hour chart of USDCAD, the pair has breached an important down-move trend line, and the same is acting as a support to the pair. The pair tested the same trend line more than a couple of times, but failed to break it. So, I think buying around the same trend line can be a good deal. If the pair manages to move a bit lower from the current levels, makes a stop and forms a bullish divergence on the lower timeframe, then we can jump into a buy trade.
Initial target should be around the 1.1150 level, and final target could be around the 1.1200 level. Stop should be placed below the 1.1040 level.
Reviewing yesterday’s events and trades
Yesterday, was a very volatile day, as a lot of movements were noticed in the market. The highlight was the EURUSD pair, which collapsed more than 100 pips after the Draghi delivered a dovish statement. The tensions in the Ukraine also escalated, which resulted in a risk-off theme. The JPY and CHF buying interest were seen across the board, as the pairs like the USDJPY and EURCHF moved down sharply. The AUDUSD and NZDUSD pairs also moved lower, and trimmed most of the gains of jobs and rate decision data. The GBPUSD traded higher in the European session, but fell back in the NY session.
Fundamental Outlook for the day
Today, the news on the Ukraine tensions can drive the market. So, one need to keep an eye on the updates and news wires. Remember, it’s Friday, and with such impact news, we can witness major moves in the market. So, I would advise not to jump into a risky trade. In the NY session, the US Producer Price Index (PPI) and Michigan consumer sentiment data will be published. Let’s wait and see whether these events can cause some moves in the US dollar or not. The US dollar can climb if the PPI data exceeds the expectations, and registers a healthy reading.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURCHF, AUDUSD, NZDUSD, AUDJPY, EURCAD, GBPCAD and INDICES.
Get it HERE: Vladimir’s Markets Forecast
Have a nice weekend friends. Happy trading!
