USDCAD – Is this a Real Turn?

USDCAD – Is this a Real Turn?

USDCAD – Is this a Real Turn?

In the last 24 hours we’ve seen a dramatic turnaround in USD/CAD. The currency pair bottomed and made its way to a high of 1.2965, now everyone is wondering whether we’ve seen a final bottom. Fundamentally after an extended uptrend, oil is due for a pullback to $45 a barrel and last week’s Canadian economic reports support a bottom in USD/CAD. Retail sales and consumer prices declined, putting pressure on the Bank of Canada to keep monetary policy easy.

Technically however, the outlook is trickier. Having bounced off the 61.8% Fibonacci retracement of the May to July rally, there’s no question that USD/CAD bottomed. However today’s move has taken the pair to 100-day SMA and 38.2% Fib of the same move. We would not be surprised to see a bit of a pullback before an attempt to break the 50-day SMA and 23.6% Fib of this year’s decline at 1.3000. As long as 1.2850 holds, we are confident that we will see 1.30.

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