USD/CAD To Breach 1.3300 Key Level As Commodities Weaken

The USD/CAD currency pair has spent most of the year thus far below the 1.3300 key level breaching the mark just a handful of occasions since the start of the year. In February, the pair rallied above the 1.3300 last week (Feb. 7, 2019) before dropping again on the following day to end the week below the mark.

USD/CAD Fundamental Analyses

According forex trading Indonesia , While the Canadian Jobs numbers for January beat expectations (actual figure of 66.8k versus 65k estimate), traders focused their decision making more on the unemployment rate, which went up from the previous period by 2 percentage points to 5.8%. Analysts had predicted an unemployment rate of 5.7% in January while in December 2018, the unemployment rate stood at 5.6%. To add to the pressure on the CAD sometimes called the Loonie, pressure on crude oil prices intensified following recovery by the USD.

Canada is highly dependent on Crude oil exports and a decline in oil prices affects the CAD negatively. The rising US crude oil stockpiles also helped to push prices lower. In addition, news that it is not all well in the US-China trade talks affected China, which in turn affected Canada’s economic outlook. Recently, White House Adviser, Larry Kudlow said that US-China trade talks are nowhere near to a conclusion.

USD/CAD Technical Analyses (4-Hourly Chart)

uSDCAD H4 Chart February 11, 2019Looking at the 4-hourly chart above, the USD/CAD currency pair is trading within a downward trending channel that formed at around mid-January this year. The pair appears to have recently hit the upper limit of that downward trending channel, which also appears to coincide with the current immediate resistance level R1 (1.3320). The pair recently bounced off this region to trade at the current level of about 1.3290.

The Loonie seems to suggest that there is more room for movement down below the 1.3200 level, which could make the bears interested despite the recent recovery by the USD. As such this creates an interesting scenario for both the bears and the bulls to pounce.

The bulls will be targeting short-term profit opportunities at around the 1.3320 level (R1), which could yield up to 30 pips worth of profits but should the pair break the current resistance zone (both horizontally and diagonally), then R2 (from 1.3500-1.3600) becomes the next target and this could yield better profits.

On the other hand, the bears will be hoping for an unlikely change in market sentiment, which could see the pair pullback, if only momentarily. As such, S1 at around 1.3200 range will be a major target in the short-term. In the intermediate time frame, the traders will be hoping that with US-China trade talks can soften in the near future. This could boost sentiment towards China and thus improve the views about the CAD. A continuous movement further down would make S2 at around the 1.3100 level a key bearish target, with a potential profit of up to 200 pips.

USD/CAD Technical Analyses (The Daily Chart)

 USDCAD February 11, 2019

The daily chart offers a more comprehensive picture of how things could unfold in the next few weeks. Generally, the USD/CAD currency pair appears to be on an upward trending movement since the plunge between June and September last year. And while the recovery has not been as sharp as the decline, it all seems to be leading towards the May-June highs of about 1.3600.1.3700 range.

On the other hand, while the climb up top continues, more room down below continues to form. This creates an interesting scenario going into the second and third weeks of February, and potentially through March 2019. As such, the bears will be looking to pounce on the potential pullback on the current rebound, by targeting profits at S1 at around 1.3100-1.3000 region in the intermediate term. For longer time frames, S2 at around 1.2850 region looks like a realistic target for massive profits.

Nonetheless, given the current momentum, the bulls will be more optimistic. Currently, R1 at around 1.3370 looks like the immediate target while R2 at around 1.3670 provides a longer time frame target, which could be realized in a few weeks time should the current bullish momentum continue to dictate trading patterns for the USD/CAD currency pair in the market.