BoC decides to hold rate hike – USD GDP in Focus
USD/CAD Fundamental Analysis
On Thursday, the USD/CAD currency pair was declining by -0.10% at 1.3380. The forex currency pair was facing pressure as a result of the strengthened Canadian dollar. The CAD was moving higher amid the recent Bank of Canada rate hike. Furthermore, the rising power of CAD could also be attributed to the rising prices of Crude Oil WTI.
Crude Oil WTI was rising with +1.65% and trading at $81.44 per barrel on 26th January. The commodity-driven currency CAD received support from surging oil prices. Hence USD/CAD declined.
Whereas, the USD Index (DXY) was also on a positive pace with +0.30% gains ahead of the critical GDP data. The US economic docket is going to release Advance GDP, goods trade balance, and wholesale inventories data. Additionally, durable goods orders and new home sales data will also be released in the next trading hours of the American trading session.
All of these economic reports will have a significant impact on USD prices, ultimately on USD/CAD prices. Therefore, traders will be keeping a close eye on the data.
USD/CAD Technical Analysis
The daily chart of the USD/CAD pair shows that the currency pair is trading at the edge of the symmetrical triangle. The pair is already hovering below the 20-Day Simple Moving Average line (pink line). It means there are chances for a further decline in prices in the coming days.
However, upon taking a closer look at the Stochastic Oscillator, the reading suggests that the pair has reached the oversold zone, meaning a reversal is highly likely. Furthermore, the Williams %R is also backing the signal with already moving past the oversold region. Both indicators suggest a possible reversal in short-term price fluctuation.
If the pair continues to fall, the immediate support level is provided by the previous day’s lowest level at 1.33401. It is the same price level that is touching the symmetrical triangle at the upward-sloping line. As the prices move further downwards, the next support is standing at 1.32351. Any break below this level would trigger a massive bearish trend towards the 1.30645 level.
However, in the bullish scenario, the USD/CAD technical analysis shows that the first resistance is faced at 20-Day Simple Moving Average at 1.34450. Any break above this level would push the prices towards the next resistance (R2) at the 50-Day Simple Moving Average of 1.35025 level. If the buyers keep on supporting the pair, it could easily trigger a bullish trend towards psychological resistance at 1.36628.
USD/CAD Daily Technical Levels
Pivot Point: 1.3387