It’s going to be a BUSY day for U.S. and Canadian dollar traders with both the Fed and the BOC dropping policy decisions.
Will today’s headlines confirm the recent downside breakout in USD/CAD?
We’re taking a closer look at the daily time frame!
USD/CAD Daily Forex Chart by TradingView
Increased speculations of a December Fed rate cut got traders selling the U.S. dollar against major counterparts like the Loonie.
At the same time, the less dovish tone from commodity-linked central banks such as the RBA and the RBNZ, and Canada’s blockbuster jobs report last Friday, had traders thinking the Bank of Canada (BOC) may be the next one to signal that its easing cycle is nearing the finish line.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
USD/CAD has been climbing since July, but it hit a ceiling at 1.4150. The pair has since slipped under a trend line support and is now trading near the 1.3800 to 1.3850 zone.
If green candlesticks show up and momentum builds above the 1.3800 psychological handle, that would hint that buyers stepped in around the S2 Pivot Point at 1.3814 and the 78.60% Fibonacci retracement of the September upswing.
From there, USD/CAD could make a run at the 100 and 200 SMAs near 1.3900 or even revisit the broken trend line closer to 1.4000.
But if the pair prints more red candles and stays below the 1.3800 area of interest, that would confirm the downside breakout and could attract sellers toward 1.3750 or even the 1.3600 previous lows.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
