Buying dips has been a winning strategy in USD/CAD since July as the pair tracked up to 1.1099 from 1.0620.
The latest round of strength began with a test of the 55-day moving average at 1.0800 in early September. Midway through last week, there was a dip before making new highs.
- The high-to-low magnitude of that dip was 96 pips and it fell between the 38.2% and 50% retracements of the Sept 4-9 rally. It also touched the 100-hour moving avg.
- The high-to-low magnitude of this dip so far is 63 pips and it’s just approaching the 38.2% retracement at 1.1036 (the 50% mark is at 1.1016). The 100-hour moving avg is at 1.1025.
So technically we’re getting close to the same zone.
Fundamentally, no two days are the same but the real worry is the Fed decision on Thursday. We’re starting to see some broader US dollar weakness, likely on profit taking. There’s talk the Fed could remove ‘considerable time’ and that would give the US dollar a jolt but the tea leaves I’ve been reading don’t point to a meaningful change in Fed language.
USDCAD with 100 hour moving avg
