USD/CAD Technical & Fundamental Outlook

Like other USD pairs, USD/CAD too fell on Thursday and gave a daily closing at 1.0647, thus retracing all of the gains from Wednesday. However, the pair is still under a strong bullish trend.

Major Support & Resistance Levels

At the moment in Asian session, spot is around 1.0662 and the pair is likely to find a strong support around 1.0602. Bias on USD/CAD will remain bullish until it breaks and closes below 1.0600 handle (monthly trendline support) which is being considered a very significant support area. Below 1.0600, other key support levels are 1.0548, 1.0493 and 1.0443.

On upside, the pair is likely to find a strong resistance around 1.0800 handle which is 38.2% fib level of last major move from 1.3063 to 0.9406. A break and close above 1.800 resistance area may push USD/CAD into relatively stronger bullish trend.

Technical Indicators

Relative Strength Index (RSI) is neutral on hourly and four hours timeframe and just below overbought level in daily timeframe. MACD is still bullish on daily timeframe; however slight divergence can also be noted on four hour chart. 55 DMA is still above 200 DMA and 100 DMA which suggests continuation of bullish trend.

Fundamental Scenario

Today both the US and Canadian baskets are loaded with a number of major economic reports that include:

  • Canada Unemployment Rate (Nov)
  • Canada Net Change in Employment (Nov)
  • US Non-Farm Payrolls (Nov)
  • US Unemployment Rate (Nov)
  • Core Personal Consumption Expenditure – Price Index (MoM) (Oct)
  • Core Personal Consumption Expenditure – Price Index (YoY) (Oct)
  • Personal Consumption Expenditures – Price Index (MoM) (Oct)
  • Personal Consumption Expenditures – Price Index (YoY) (Oct)
  • Reuters/Michigan Consumer Sentiment Index (Dec)

No volatility is expected in London session as investors are cautious ahead of crucial US session. A better than expected non-farm payrolls may encourage Federal Reserve to consider tapering in on-going asset purchase program during December meeting, in turn triggering a strong bullish trend in the US Dollar.

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