This week, RBC + Ivey PMI ,and Payrolls are main data affecting to USDCAD.
Recent days, market calls for a rate hike to BOC because of pressure of inflation : current number 2.1%
While housing bubble in Vancouver and Toronto is a big problem to deal, BOC needs a 25bp rate hike to cool down housing market, but this is not good for economic health.
I don't think BOC would hike rate at least in this year, but a call of rate hike is a good reason to BUY Loonie despite of falling oil.
Back to Technical, the question in my head is how much does USDCAD fall ?
Last week, USDCAD broke three important supports:
Look at on the chart,
- 1.3640 support level.
- Long term ascending trend line ( red line)
- SMA100
- 38.2% Fib retracement
All of them also are strong levels.
Base on Technical view, USDCAD should fall more and more.
However, I see it nearly reaches to its limit.
- First is SMA200 , USDCAD hold above SMA200 for 4 years : That is a big deal if USDCAD wants to break it. I don't believe in this option.
- Second is 50% Fib retracement. This is the limit for a correction. Any break 50% Fib level will reverse the trend to downtrend.
- Third is RSI indicator. There is floor for it, and I see RSI is testing this floor.
- Fourth is 1.400 level, this was a strong resistane level, now will become a meaningful support.
Loonie needs a strong catalyst to break those supports.
USDCAD could fall more, but should stop at 1.3400 where it meets some buyers there. I am one buyer at 1.3400