USDCAD trades above and below the 38.2% retracement

The USDCAD reached a high price on Tuesday near 1.30515. Today the high price retested that level (the high reached 1.30505).

Sellers leaned against the old level and pushed the price back to the downside - modestly so far.

Looking at the daily chart the 38.2% retracement of the move down from the 2020 high to the 2021 low comes in at 1.30224. The last 3 trading days has seen the price trade above and below that level. There is some cause for pause against the area and with the price currently trading at 1.3012, the shorter-term bias is favoring sellers. However a move above would tilt the bias back to the upside and have traders looking for a break of 1.30515 as the next upside target. Decision time for both buyers and sellers.

Drilling to the hourly chart, the volatility from yesterday's post CPI trading took the price down to test another 38.2% retracement of the move up from the May 5 low at 1.29221.

Buyers came in near that retracement level and pushed the price back to the upside. On the dip, the pair also tried to extend below its 100 hour moving average (blue line in the chart below). However, him him momentum could not be sustained. The rising 100 hour moving average currently comes in at 1.29798.

A move below that moving average - and staying below - would give the buyers some cause for pause, and the sellers some short-term confidence that further downside corrective probing would explore other targets. Those targets include 1.29496, the 38.2% retracement at 1.29221, and the rising 200 hour moving average (green line in the chart below) at 1.29025.

The price of the USDCAD has not been below the 200 hour moving average since May 5.

USDCAD stalled the rise near the recent ceiling

BOCs Gravelle is speaking now. Some comments:

  • BOC will likely further lift is near term inflation forecasts
  • Our current policy rate 1% is too stimulative
  • it is possible bank may have to raise rates above neutral because parts of the economy might be less sensitive to hikes than in the past
  • stronger housing activity could also cause the BOC to lift rates past neutral
  • on the other hand the bank may pause hikes as rate enters neutral range, and inflation starts to slow

The USDCAD is back above the 38.2% on the daily at 1.3030 as up and down trading persists with buyers still winning.