USD/CAD Rebounds From Its Lowest Level in 2.5 Months
The pair’s recent slump was driven largely by a rapid shift in market sentiment and growing divergence between expectations for monetary policy in the US and Canada.
→ Canada: Friday’s labour-market report surprised to the upside, showing much stronger hiring than anticipated. This prompted traders to sharply scale back expectations of a Bank of Canada rate cut at the upcoming meeting, as the data suggested the economy is sturdy enough for policymakers to pause their easing cycle.
→ United States: In contrast, markets are heavily pricing in a Federal Reserve rate reduction at tomorrow’s decision (22:00 GMT+3).
These opposing policy outlooks pushed USD/CAD down to a 2.5-month low. Even so, the chart suggests the bulls may still have something to cling to.
Technical View on USD/CAD
In our 1 December analysis of the USD/CAD chart, we:
→ identified an upward channel (marked in blue) and pointed out a cluster of bearish signals;
→ argued that the 1.4000 level was likely to cap gains in the near term, with bears attempting to reassert downward pressure on the pair.
This scenario played out as expected. As indicated by the arrow, tradeers regained control, resulting in:
→ a breakdown below the lower line of the blue channel;
→ the formation of a newly established descending structure (shown in red), whose midline may act as resistance going forward.
Within this setup, there are a few factors that may offer short-term encouragement for the bulls:
→ the price is currently bouncing off the lower boundary of the red channel, hinting at renewed purchaseing interest;
→ the RSI has lifted out of extreme oversold conditions;
→ the candle highlighted by the second arrow carries bullish characteristics, closing near its high while forming a long lower wick.
Taking all this into account, traders should remain open to the possibility of a corrective USD/CAD rebound—at least until the Federal Reserve’s announcement, which could trigger sharp moves across financial markets.
offers spreads from 0.0 pips and commissions from $1.50 per lot. Enjoy trading on MT4, MT5, TickTrader or TradingView trading platforms!
The is a dedicated mobile application designed to give traders full control of their accounts anytime, anywhere.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
