The USDCAD is in the process of extending losses that began in late June. Ever since the daily close back below ascending channel resistance on June 29th, I’ve been relatively bearish.
Then came the July 25th break below short-term trend line support. Yesterday’s session didn’t quite make it back to the 1.3120 area, but it did revert to the daily mean as represented by the 10 and 20 EMAs.
Another level I’ve mentioned a few times recently is 1.3015. Yesterday’s session appears to have cleared the level, and so far today sellers have defended the area.
It seems then that the USDCAD has entered the next leg down. This new range extends from the 1.2870/80 support area to resistance at 1.3015. Of course, if today’s session closes back above 1.3015, we’ll need to reevaluate things.
Remember, I use New York close charts, so everything is based on the 5 pm EST close.
At the moment the bearish reversal that began late last month is alive and well. And as I stated in the previous commentary, I do see the potential for an extended move lower toward channel support near 1.2550.
To do that, sellers would need to clear 1.2870/80 followed by 1.2740/50. Those are the next two key support areas I’m keeping an eye on.
As for noteworthy market movers, we have a Fed rate decision and statement in a few hours at 2 pm EST. Then on Friday, we have non-payroll along with the latest trade balance out of Canada at 8:30 am EST. All of the above will move the needle for the USDCAD.
I won’t be trading the pair anytime soon given that I’m still short the EURCAD from late June and probably will be for some time, and I’d rather not double up on the Canadian dollar.