The USDCAD holds firm tone and hit new nine-week high at 1.2698 on Wednesday, extending steep ascend into the fifth straight day. Bulls eye next key barrier at 1.2722 (Fibo 38.2% of 1.3793/1.2061 Apr-Sep descend), break of which would expose next strong barrier at 1.2778 (15 Aug high).
Tuesday’s break and close above falling 100SMA was a bullish signal for further advance, however, bulls may show hesitation ahead of key barriers as slow stochastic is strongly overbought on daily chart and RSI turned sideways just ahead of overbought zone border line.
Bank of Canada’s policy meeting is in focus today, with BoC widely expected to stay pat after recent two rate hikes by 0.25% to the current 1% level. Recent weak Canada’s inflation data and markets still digesting two hikes in July and September, would be the reasons for policymakers to stay on hold today.
Canadian dollar was significantly lower against its US counterpart since last rate hike in September, being in corrective phase of larger USDCAD fall from 2017 peak at 1.3739 to year-to-date low at 1.2061, posted in early September.
Sustained break above 1.2722 Fibo barrier would provide strong bullish signal for further extension of recovery leg from 1.2061, as weaker Canadian dollar would further improve the environment for Canadian exporters.
Broken 100SMA offers support at 1.2653 with other solid supports at 1.2610/1.2597 (broken weekly 20SMA / former top of 06 Oct). Only return below converged 10/20SMA’s (1.2556/1.2527) would soften the structure and shift bias towards higher base at 1.2450 zone.
Res: 1.2722, 1.2778, 1.2822, 1.2922
Sup: 1.2653, 1.2600, 1.2556, 1.2527
