USD/CAD inches lower as sellers eye another test of the 100-day moving average

Technical Analysis

Author: Justin Low | usdcad

USD/CAD trades at the lows for the day near 1.3240

USD/CAD D1 30-01
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The low this week leaned on support from the 100-day MA (red line) close to 1.3200 before price rebounded. However, sellers continue to maintain the near-term momentum by leaning on the 100-hour MA and we're seeing price fall after they held a defense of the level overnight and in early Asian trading today.

USD/CAD H1 30-01
The pair continues to struggle to make a downside break sine the middle of this month as the 100-day MA continues to prove to be a tough spot for sellers to break below. Buyers are continuing to lean on that level for support despite oil prices helping to underpin the loonie this month.

At this point, the pair is very much a technical trade with the break of the 100-day MA promoting further downside with support then seen at the 200-day MA @ 1.3125. As for buyers, they will have to aim towards breaking above the key hourly moving averages @ 1.3272 and 1.3292 first. Subsequently, the 38.2 retracement level and this month's highs at around 1.3365 will prove to be the next key level for buyers to see an extension to the upside.

From a fundamental perspective, the Fed meeting today will be the next key risk event to watch out for as it will provide the next clues for the dollar as well as risk sentiment in the coming sessions. Although the Fed is likely to still take a more dovish approach by preaching patience and flexibility, a lot of that is already known to markets currently.

In that lieu, I reckon it's going to take a bit more to push USD/CAD over the extremes seen above. Taking that into consideration, US-China trade talks could be key as it could help to instigate a decisive move in risk assets i.e. oil and help to determine where the loonie is headed next.

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