The USDCAD has trended higher over the last 10 hours or so trading. Over that time, the price has move from a low of 1.29703 to a spike high of 1.32228. That run to the upside has seen a rotation back down toward 1.3170 as volatile market conditions persist. Nevertheless, the pair is the strongest of the majors vs the USD. The pair is up over 1.4% on the day.
Looking at the hourly chart, the run to the upside accelerated after breaking above swing highs from July 5 and July 6 near 1.3079 to 1.3083. Earlier in the day, the price based against the 100 hour moving average (blue line in the chart above), and cracked above a swing area between 1.3051 and 1.3055 as well. Bullish
Recall from yesterday's trade the price briefly moved above those levels only to back off and race back to the downside helped by a 100 basis point hike by the BOC.
However, that move to the downside stalled near swing lows from July 8 and July 11 at 1.29353. The inability to move below that level, gave buyers more confidence. That confidence was confirmed with the breaks of the aforementioned technical level on the upside today.
Taking a broader look at the daily chart, while the EURUSD and the USDJPY are trading a multi-decade levels, the USDCAD is only trading at swing highs going back to November 2020. In the process, the pair has reentered above what was a floor from 2020 near 1.2960 level. That level was broken in May and June but could not sustain momentum and eventually moved back below the level.
That 1.2960 level will be a longer term risk level going forward now. Stay above is more bullish.
The move higher today also broke above a topside trend line connecting recent highs. That trendline cuts across at 1.3123 and represents closer support target on dips going forward. Stay above it, is the best case scenario now for buyers/bulls in the pair. The current price trades at 1.3184 as I type.
On the topside, the 50% midpoint of the move down from the 2020 high cuts across at 1.33364. That represents the next key upside target on further momentum. Getting above would give the buyers more confidence and control from a longer term perspective.
The CAD has been helped by higher oil prices. However, oil prices are now coming off - trading to a low of $90.56 in trading today. The current price is at $92.58 in volatile trading. The Bank of Canada has also been matching the US rate hikes. Yesterday, the BOC one-upped the Fed when they preemptively hiked by 100 basis points. That sent the USDCAD lower but when support on the hourly chart held and oil continued its move lower, it was all over for the CAD strength.