It is more likely that the US Dollar is pressured by bears in this session and even during this week; however, the strong support of the 55– and 100-hour SMAs is likely to hinder a swift breakout from this area.
In general, it is expected that the pair remains between this support and its nearest resistance—the weekly R1 at 1.2950. The rate should eventually gain momentum and move south. It should be noted that various fundamental events that are likely to affect the rate are scheduled for this session.
The 1.2907/1.2809 trading range that had confined the rate since October 27 once again proved to be a strong barrier on Thursday. Even though the Greenback was testing the latter for several hours, it lacked the necessary momentum to move past this line and the 200-hour SMA.
This push was provided by the combined data release from both the US and Canada. Even though the latter reported worse results, the mixed performance of the former resulted in a massive 93 pip fall down to 1.1.2735 within 30 minutes after the release.
It is likely that the rate edges even lower during the following hours; however, this plunge should be followed by a recovery. The scope of this move is yet unknown.
In case of a strong momentum, the rate could return back to the 1.28 area.
Following the massive plunge in the wake of combined data release from the US and Canada at 1230GMT on Friday, the US Dollar made a slight recovery up to the 1.2775 mark.
This upward movement, however, was not long-lived, as the pair entered a short-term consolidation period between the above level and the monthly PP at 1.2745.
It is likely that the pair continues to remain flat and gradually approaches the upper channel line circa 1.2780.
It seems that a further fall in the drawn channel is no longer sustainable; thus, an upside breakout might occur either in this session or early on Tuesday.
The Greenback should not fall below the monthly PP. However, the upside target is yet unclear. The pair could halt near the psychological 1.28 level or try to test the 200– and 100-hour SMAs circa 1.2830.
The resulting surge forced the Buck into the resistance of the medium term channel down pattern near the 1.2760 mark. That resistance in a combination with the close by monthly pivot point at the 1.2747 level and the 55-hour SMA at 1.2758 created a complicated situation. The rate could be squeezed in until the end of the day.
However, the resulting break out would have ranges of at least 50 base points to both sides.
USD/CAD was squeezed between the weekly and monthly PP for the majority of session. However, given the downward-sloping movement, a breakout south was not a big surprise.
By mid-Wednesday, the US Dollar was trading near the upper boundary of the breached channel down. All indications point to the prevalence of the bullish sentiment during the following 24 hours, including the newly-drawn descending channel that should guide the pair towards its upper line.
However, the rate faces the strong resistance of the 100-hour SMA—a line which has limited the Greenback for the past four sessions. Reinforced by the 55-hour SMA and the monthly PP, bulls might be reluctant to push considerably higher, thus pressuring the pair to move sideways.
After meeting the strong resistance of the 55-hour SMA mid-Wednesday, the US Dollar remained stable against the Loonie for most of the session. This calm movement sideways was disrupted when the pair returned near the upper boundary of the short-term descending channel.
Technical indicators have still remained generally bullish, as the rate failed to move higher early in this session.
It is apparent on the chart that the Greenback remains stranded between the weekly S1 and the combined resistance of the 55– and 100-hour SMAs and the monthly PP at 1.2677 and 1.2750, respectively.
Given the existing upside potential until the latter, it is likely that this range is maintained until the end of Friday, as no massive leaps are expected due to the US having a Bank Holiday tomorrow.
The common European currency was stranded between the 100-hour SMA and the weekly S1 on Thursday. Subsequently, the rate tested the former for several hours and eventually breached its resistance.
The Euro, however, failed to accelerate and thus remained in the 130.00/20 territory during Friday’s morning session.
In general, the pair has reached the upper boundary of a descending channel. This suggests a soon breakout. However, given the strong barriers on both sides, rather strong push is needed to move past any of these lines.
The steepness of the channel suggests that a breakout might occur to the upside. This increase in price, however, is unlikely to be steep during Monday, thus setting the monthly PP at 132.80 as the upside target.
USD/CAD continued to follow bearish pressure on Thursday, as it fell 49 pips during the session. As a result, the US Dollar reached the lower channel boundary circa 1.2670.
The pair’s subsequent movement was characterised by a minor consolidation period which has since stranded the rate in a narrow range between the bottom channel boundary and the weekly S1.
It is likely that such a still market would soon accelerate. The base scenario favours the rate edging higher towards the 55– and 100-hour SMAs at 1.2706 and 1.2727, respectively.
In case bears take the dominant hand, there are no barriers limited the US Dollar down to the 1.26 mark where the weekly S2 is located.
Friday’s trading session marked no changes for USD/CAD, as the rate remained in the 1.2960/65 area for the whole session. The US Dollar was hindered by the 55-hour SMA for several hours early on Monday, but this level was breached, thus leaving the pair between the 55– and 100-hour SMAs by mid-session.
In terms of fundamentals, no market shakers are scheduled for today; thus, the Greenback could remain between these moving averages until early Tuesday.
Apart from the 100-hour SMA, the northern side is guarded by the weekly PP at 1.2723. It is likely that bulls are unable to push past the monthly PP at 1.2647 and thus leave the rate near the 55-hour SMA by mid-Tuesday. This scenario is likewise supported by technical indicators.
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