USD/CAD has been moving sideways for almost a month already, which is not at all surprising for this pair that usually ranges and forms forex signals at the top and bottom. The pair has found support near the 1.0830 level and resistance at 1.0920, creating a 90-pip range.
Forex signals show that price is ready to test the range resistance with stochastic indicating overbought conditions and heading lower. A bounce from the ceiling could lead to a move back down to the bottom for a 90-pip trade. Using a 30-pip stop right around the previous spike higher around May 21 could yield a 3:1 return on risk.
There are no major economic events due from both the US and Canada today, which suggests that there’s a good chance the pair could stay inside this range.
Forex Signals and Forecast
A bounce from the top of the range could lead to a 90-pip drop to the bottom at 1.0830 or even a break lower. Take note that data from Canada has shown a few signs of weakness here and there, yet the Loonie continues to draw support from rising oil prices.
As for the US economy, data has shown signs of stabilizing, with the US ISM manufacturing PMI coming in line with expectations during yesterday’s release. Only medium-tier data such as factory orders and total vehicle sales are due from the US today and strong figures might trigger a bounce and a forex signal to go long.
However, a return of risk aversion could lead to more rallies for the safe-haven Greenback and possibly trigger a break from the top of the range. In this case, further gains could be in the cards, which could push USD/CAD up by as much as 90 pips or the same size as the range.
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