USD/CAD Poised For More Correction After FOMC Minutes

USD/CAD extended downside movement yesterday after dovish FOMC minutes. The pair is headed towards the long term channel support around 1.0750.

Technical Analysis

As of this writing, USD/CAD is being traded near 1.0884. Resistance may be seen around 1.0906, the 100 Daily Moving Average (DMA) ahead of 1.1016, the 23.6% fib level. The pair turned the sentiment to bearish last week after a long time by breaking the multi-month trendline support.

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On the downside, the pair is expected to find support around 1.0857, the 38.2% fib level before 1.0740 that is the channel support as demonstrated in the above chart. A break and daily closing below the channel support could push the pair into much stronger bearish trend, targeting new multi-month lows around the 1.0400 handle.

FOMC Minutes

Yesterday the Federal Reserve released the minutes from the Federal Open Market Committee (FOMC) monetary policy meeting which was held last month. The minutes revealed that the policymakers had no intentions to raise the interest rate anytime in the near future as indicated by the Fed chair Janet Yellen during the monetary policy press conference. Investors took the minutes as dovish which consequently aggravated the ongoing bearish trend in the dollar.

Canada House Prices

Today the Statistics Canada will release the New House Prices Index. According to median projection of different analysts, the average price of new houses in Canada rose by 0.2% in March as compared to 0.3% in the same month of the year before, better than expected actual outcome will be seen as bearish for USD/CAD and vice versa.

Conclusion

USD/CAD is expected to test the long-term channel support in the near future which could be a great buying opportunity for long term traders. 

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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