In 2015 so far, the USD/CAD has continued its prevailing uptrend. To start this week, it pushed to 1.20 before stalling. The USD was consolidating yesterday across the board after poor negative retail sales data.
Today, the SNB shook the market with its announcement of negative libor rates and more importantly that it would stop supporting the EUR/CHF floor at 1.20. This cased a strong flow into the swiss franc. An indirect effect was that a slide in the USD because both USD and CHF are safe-haven destinations and now that the SNB lifted the cap on CHF, the flow went from USD to CHF.
In the USD/CAD, we can see that the pair retreated from 1.20. Then during the US session, there were mixed data in PPI, jobless claims, and manufacturing. The USD/CAD fell sharply, but found support at 1.18.
The 4H chart shows the “clear-out” break below some recent resistance pivots as well as the 4H 50-period SMA. However, after the dip, price rebounded just as sharply, back above 1.19. Now, with price back above the 50-period SMA, and the 4H RSI still above 40, even above 50, the USD/CAD still looks bullish and looks poised to test and maybe break above 1.20.
1.20 is a key psychological level, but a combination of a strong USD and a weak CAD suggests it will be broken. Now, if price continues to hold below 1.20 and then eventually break below 1.18, we have a price top that can result in a consolidation, bearish correction scenario.
In the monthly chart we can see that the RSI is overbought. However, it has been bullish since 2008 and is poised to push towards the next key support/resistance area around 1.2644 later this year.
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