USD/CAD poised to resume advance?

<p>USD/CAD (daily chart shown below) continues to consolidate its recent gains after hitting close to an 11-year high of 1.3212 last week, only slightly higher […]</p>

USD/CAD (daily chart shown below) continues to consolidate its recent gains after hitting close to an 11-year high of 1.3212 last week, only slightly higher than our original upside resistance target of 1.3200.

After reaching that high, the currency pair promptly pulled back but only dropped to hit a relatively shallow low of 1.3047 on Friday before bouncing and rebounding back up towards its highs once again.

USD/CAD Daily Chart

 

Recent price action displays a rather clear market inclination towards buying price dips, as the US dollar is widely expected to appreciate even further on a likely Fed rate hike this year, and the Canadian dollar continues to be dragged lower by crude oil prices that have not been able to find a sustainable bottom for the past month and a half.

Accordingly, USD/CAD has been locked in an exceptionally sharp bullish trend since mid-June, hitting progressively higher price targets at 1.2800, 1.3000, and most recently, the noted 1.3200 resistance objective. From a longer-term perspective, USD/CAD has been trading for the past year within a strong bullish trend framed by a well-defined uptrend line extending back to July of last year.

With the US dollar continuing to strengthen on anticipation of an impending Fed rate hike and with crude oil continuing to be pressured by persistent oversupply conditions and production levels, USD/CAD could well have further room to run before making any substantial pullback or correction.

With any sustained breakout above the 1.3200 level, the next major upside target is at the 1.3400 resistance level. To the downside, any pullback from resistance should find strong support around the 1.3000 psychological level.

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