Forex technical analysis: USDCAD trades the technical range
200 hour MA below at 1.2490. 100 day MA above at 1.2590. A hundred pip trading range.
Yesterday, the USDCAD surged higher on the back of comments from a Canada official that the US would back out of NAFTA. The surge took the price above the 200 hour MA (green line in the chart below) and moved toward the 100 day MA (blue overlay line at 1.25903).
The White House later denied the accusation and the price rotated back lower. The fall stalled ahead of the 200 hour MA.
Today, the price moved back higher and retested the 100 day MA, only to find sellers leaning again. The price is back down trading near day lows at 1.25228.
Of course the BOC decision next week is to come in play too. The market is still pricing in a 79% chance for a hike.
A NAFTA failure should be bullish for USDCAD (bearish for the CAD), but I hike or a more positive NAFTA progression (maybe the intention was to prod the US to be more two-way in finding solutions) would be more bearish for the pair (CAD bullish).
As a result, the pair may waffle between the 1.2490 level below (200 hour MA) and the 1.2590 level above (100 day MA). Then let the BOC make the deciding vote with their decision on the 17th. That kind of makes sense to me.
Interim levels to eye would include the 1.2570 level (38.2% retracement) and the 1.25145 (swing low/high area from Jan 4/5).