If you’ve been watching USD/CAD this month, then you’ll know that the pair has been in an observable uptrend since bouncing from the 1.3600 handle a few weeks ago.
But it looks like the bulls have been having a hard time breaking ceilings just under the 1.3900 psychological handle. In fact, USD/CAD is forming a potential Head and Shoulders pattern in the 1-hour time frame.
Are USD/CAD traders gunning for a bearish reversal?
USD/CAD 1-hour Forex Chart by TradingView
A bit of profit-taking at the end of the month and ahead of this week’s BIG economic calendar events may incentivize USD/CAD bulls into closing their positions.
Canada’s monthly GDP scheduled during the U.S. session is also expected to improve from 0.0% to 0.1% in August, which may attract some CAD buying.
Before you sell USD/CAD like there’s no tomorrow, though, you should note that traders are generally expecting the Fed to remain hawkish in its policy announcement later this week. Expectations of more hawkish rhetoric may increase USD demand.
Meanwhile, the Bank of Japan’s (BOJ) decision to mostly stick to its accommodative policies boosted USD/JPY earlier today and may take the USD higher against its other major counterparts including CAD.
Unless we see anti-USD catalysts, or unless traders focus on a risk-friendly trading environment, then we’re leaning bullish as USD/CAD may draw in more buyers.
The 1.3800 psychological handle could attract attention but USD traders may also pay closer attention to the 1-hour chart’s 100 SMA or trend line support.
If USD/CAD does see buying pressure around the support levels we’ve marked, then we may look at the 1.3880 previous highs or the 1.3900 psychological level as initial targets.
Of course, USD/CAD’s next moves or direction will depend on the headlines that catch the market’s attention in the next trading sessions. Make sure to stick around so you don’t have trouble managing your risks!
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.