USDCAD Forex Forecast – Pullback to Broken Resistance

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USDCAD Forex Forecast - Pullback to Broken Resistance

USDCAD Forex Forecast - Pullback to Broken Resistance

USDCAD just broke past the resistance around the 1.3300 level and might be due for a pullback before heading further north. The Fibonacci tool applied on the swing low and high on the 1-hour chart shows that the 38.2% level lines up with the broken resistance, which might now hold as support.

The 100 SMA is also near this potential support zone, with the short-term moving average treading above the longer-term 200 SMA. This suggests that the path of least resistance is to the upside and that further gains are likely.

In addition, stochastic is on the move up, confirming the presence of bullish momentum. However, RSI is heading down, indicating that a larger correction might be possible for USDCAD. In that case, price could retreat until the lower Fib levels to draw buying support later on.

USDCAD Fundamental Factors

Data from the US economy has been mixed, with the durable goods orders report falling short of expectations as the headline figure showed a 2.0% decline while the core version printed a flat reading. New home sales came in better than expected at 552K versus the projected 516K figure.

FOMC officials have been reiterating their rate hike biases before the end of this year, even though they’ve stopped short of actually tightening monetary policy in their latest rate statement. According to Yellen, the labor market has been consistently improving but inflation has been subpar, but they are more inclined to tighten sooner rather than later. She also noted that the domestic economy is still facing headwinds and that they are uncertain how long these might last.

As for the Canadian dollar, the pickup in oil prices has failed to sustain its momentum from the previous weeks, reviving the selloff for the positively-correlated currency. There are no reports due from Canada today but the US is set to release its final GDP reading for Q2.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.