Yesterday’s headlines got traders sellin’ the U.S. dollar against major counterparts like the Loonie!
Will this lead to USD/CAD extending its month-long downtrend?
Here’s what we’re looking at!
USD/CAD 4-hour Forex Chart by TradingView
In case you missed it, the U.S. dollar has been on the back foot lately, weighed down by fresh Middle East tensions after the U.S. got involved over the weekend, a drop in 10-year Treasury yields, and a handful of dovish remarks from FOMC members.
Meanwhile, the Canadian dollar got a brief lift from higher oil prices, but that pop faded just as quickly. Potential profit-taking and a shift toward improved risk sentiment dragged the comdoll lower by the end of the day.
Will the anti-dollar themes persist in the next trading sessions?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. and Canadian dollars, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
USD/CAD pulled back from the 1.3800 mark, and it’s no surprise when you look at the chart.
See, that level lines up with the 4-hour chart’s 200 SMA, R1 Pivot Point at 1.3806, and the 78.6% Fib retracement of the early June dip. It’s also right at the top of the ascending channel that’s been in play since early May.
If the pair breaks below the 1.3700 support area, it opens the door for a slide toward 1.3650 or even the 1.3500 lows from earlier this month.
But if dollar bulls hold the line at 1.3700, and we start seeing green candlesticks stack up, then we could be looking at another run at 1.3800, maybe even the 1.3900 previous area of interest.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
