In Friday's London session, the USD/CAD pair is making strides towards the 1.3750 mark, but faces a formidable barrier at a strong area of resistance. This resistance zone coincides with the 78.6% - 88.6% Fibonacci area, further compounded by the RSI indicating overbought conditions in the D1 timeframe. Such confluence signals a potential reversal point, particularly considering historical trends that indicate a seasonal decline for USD/CAD during this time of year.
Anticipating a bearish movement, traders are positioning themselves with a reasonable stop loss and a proportionate 2X take profit target, aiming to capitalize on a potential reversal.
Turning to current economic news, speculation surrounding potential rate cuts by the Federal Reserve has diminished as consumer price inflation in the United States has shown resilience, particularly in March. Additionally, the core Producer Price Index (PPI), which excludes volatile food and energy prices, has exceeded expectations, growing by 2.4% annually compared to estimates of 2.3% and a previous reading of 2.0%.
Investors are now looking ahead to the possibility of the Fed initiating rate reductions post-September meeting, though expectations have tempered, with forecasts now suggesting two rate cuts instead of the previously projected three, as indicated by the latest dot plot from Fed policymakers.
In summary, as the USD/CAD pair nears a critical resistance level amidst economic speculation, traders are closely monitoring for signs of a potential reversal. With a keen eye on technical indicators and economic developments, investors are preparing to navigate potential shifts in market sentiment and capitalize on emerging opportunities.
Nice analysis. I noticed you used the Fibonacci retracement to align with the sell zone. That's a good kind of confluence. Let's see how the price reacts at the level. I'll keep an eye on it.