USD/CAD stalls below new six-year high
James Chen July 20, 2015 9:51 PM
<p>After hitting a new six-year high just above 1.3000 resistance late last week, USD/CAD (daily chart shown below) opened the new trading week by reaching […]</p>
After hitting a new six-year high just above 1.3000 resistance late last week, USD/CAD (daily chart shown below) opened the new trading week by reaching a higher high of 1.3023 before stalling and retreating slightly on Monday.
The currency pair has reached its previously projected 1.3000 target after a steep, month-long ascent that saw several combined factors contributing to continued US dollar strengthening and progressive Canadian dollar weakening.
Chief among these factors have been rising expectations of an impending Fed rate hike, last week’s Bank of Canada interest rate cut, and plunging crude oil prices.
This latest USD/CAD run began after a downswing in mid-June that turned back to the upside just above both the 200-day moving average and a key uptrend line that has been in place for the past year. That turn was accentuated by a clear bullish hammer candle. Since then, the currency pair has climbed virtually unremittingly.
With the US dollar continuing to dominate against other major currencies and the Canadian dollar weakened considerably from the BOC rate cut and low oil prices, the outlook for USD/CAD remains bullish.
In the event of a sustained breakout above the noted 1.3000 resistance level, the next major upside target is 1.3200, last reached in 2004. To the downside, any pullback from the current highs should meet strong support around the 1.2800 level, a key prior resistance level.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.