The US Dollar after trading near 1.3300 against the Canadian dollar found sellers, and as a result the USD/CAD is currently in a bearish trend.
USD/CAD Weekly Analysis – US Dollar Losing Control Vs CAD
· The US dollar traded below 1.3200 against the Canadian dollar and looks poised for more declines.
· There was a bullish trend line formed on the 4-hours of the USD/CAD pair, which was broken recently.
· The pair also moved below the 100 simple moving average and the 1.3180 support, which is a bearish sign.
USD/CAD Technical Analysis
The US Dollar traded lower against the CAD, and broke a major support area at 1.3180. The USD/CAD pair also moved below the 100 simple moving average on the 4-hours chart.
The worst thing was a break below a bullish trend line formed on the 4-hours, which ignited a close below 1.3200. The pair is currently finding bids near 1.3100, but every recovery attempt is facing sellers on the upside.
The H4 RSI is now below 40, which is a bearish sign, and may prompt more losses. The broken 100 simple moving average might now act as a resistance.
Trade Idea – If you are looking to enter a sell trade, then consider it near the 100 simple moving average with a tight stop of around 20-25 pips.
This week started with a negative market sentiment for the US Dollar, which prompted a minor selling. There were no major events for far. Today, the Empire State Manufacturing index by the Federal Reserve Bank of New York was released. The market was not expecting any decline, but in fact it was aligned for a rise to 1 in Oct 2016.
However, the result was disappointing, as there was a sharp decline from the last reading of -1.99 to -6.80. The report added that “The new orders index edged up but remained negative at -5.6, indicating an ongoing drop in orders, and the shipments index increased to -0.6, suggesting that shipments were essentially flat. Labor market conditions remained weak“.
Overall, the US Dollar has very less reasons for a move higher against the Canadian dollar, which may result in more losses for the USD/CAD pair.