It looks like the range support on USD/CAD held once again!
Can this fresh bounce make it all the way up to the long-term top?
Take a look at these levels I’m watching on the daily time frame.
USD/CAD Daily Forex Chart by TV
Dollar bulls sprang back to action and defended the bottom of USD/CAD’s daily range, as the FOMC minutes revealed that policymakers are in no rush to cut interest rates for now.
Even though the dot plot projections released during the Fed’s December decision signaled scope for three interest rate cuts this year, the transcript of their huddle indicated that “the actual policy path will depend on how the economy evolves.”
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the Loonie and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Or if you just got back to your trading desk after the holidays, you can also check out our 2024 FX Outlook to see what you can expect for the year ahead.
Technical indicators are also suggesting that the floor is more likely to hold than to break.
The 100 SMA is above the 200 SMA to reflect the presence of bullish vibes while Stochastic is already pulling up from the oversold region to signal a return in upside pressure. The oscillator has plenty of room to climb before indicating exhaustion among buyers, so USD/CAD could keep following suit as it rises.
For now, the pair is hitting a near-term roadblock at the pivot point level (1.3346), but a continuation of the rally past this point could reach the next target at R1 (1.3515) near the moving averages. Stronger bullish momentum could take it higher to R2 (1.3789) close to the top of the range.
On the other hand, if current levels hold as an upside barrier, USD/CAD could retreat to the range support or even break lower to S1 (1.3074) or S2 (1.2904).
Better keep an eye out for the next major U.S. catalyst (December 2023 NFP report) when trading this one!