The USDCAD pair dropped lower yesterday, as the US dollar weakened against most of the major currencies. The pair traded below the 1.0900 level, as the sellers took charge. However, I think the pair might correct higher in the short term, as it is heading towards an important support level, which can hold the downside in the pair.
Looking at the hourly chart of USDCAD, there is a monster support at around the 1.0860-70 levels. There is also a bullish divergence forming on the hourly chart. So, if the pair falls closer to the support level, makes a stop and forms a divergence, then we can jump into a buy trade. Remember, we need the pair to hold the 1.0830 support level for this trade to be valid.
Initial target should be around 1.0920, and final target could be around the 1.0950 level. Stop should be placed below the 1.0830 level.
Reviewing yesterday’s events and trades
Yesterday, was an interesting day, as the US dollar collapsed against most of the major currencies. The best performers against the US dollar were the Euro, British pound and the Japanese yen. The economic data released during the European session yesterday came better than expected, which lifted the European currencies and in turn increased the pressure on the US dollar. It made the dollar lose ground against other currencies as well. As of writing, the US dollar was seen consolidating the recent losses.
Fundamental Outlook for the day
Today, the fed chairwoman Janet Yellen will be speaking later during the NY session, which can ignite some swing moves in the US dollar. It would be interesting to see what she has to say about the recent labor data. Later during the next Asian session the Australia’s employment, Chinese imports, exports and trade balance figures data will be published. The pairs such as AUDUSD and NZDUSD could be affected after the data release. So, we need to be very careful trading ahead of these risk events.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, NZDUSD, USDJPY, AUDUSD, EURCHF and OIL.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
