| Scenario | |
|---|---|
| Timeframe | Weekly |
| Recommendation | SELL |
| Entry Point | 1.3493 |
| Take Profit | 1.3427, 1.3305 |
| Stop Loss | 1.3550 |
| Key Levels | 1.3305, 1.3427, 1.3575, 1.3671, 1.3793 |
| Alternative scenario | |
|---|---|
| Recommendation | BUY STOP |
| Entry Point | 1.3575 |
| Take Profit | 1.3671, 1.3793 |
| Stop Loss | 1.3400 |
| Key Levels | 1.3305, 1.3427, 1.3575, 1.3671, 1.3793 |
Current trend
This week, the USD/CAD pair rose to the 1.3565 area but then lost the gained ground, falling to the level of 1.3485.
The initial weakening of the Canadian currency was due to the Bank of Canada’s decision to cut the interest rate from 4.50% to 4.25%. The head of the department Tiff Macklem announced the likelihood of more active easing of monetary policy since economic growth remains poor. : The June gross domestic product (GDP) indicator remained at the same level, although experts expected it to reach 0.1%. Meanwhile, inflation is slowing: the July consumer price index fell from 2.7% to 2.5% YoY, creating conditions for an adjustment in the cost of borrowing.
Currently, the American dollar is showing negative dynamics, as investors are waiting for the publication of statistics from the labor market. In case of an increase in unemployment, the US Fed officials may change the interest rate by –50 basis points. However, if the indicator remains at the same level or, as forecasts suggest, decreases by 4.2%, the adjustment in the cost of borrowing will be –25 basis points. Most experts believe that by the end of the year, the overall decline will be about 100 basis points, putting pressure on the national currency in the medium term.
Support and resistance
The trading instrument is moving within the forming downward trend to the area of 1.3427 (Murrey level [–2/8]) and 1.3305 (Murrey level [1/8], W1). If the middle line of Bollinger Bands 1.3575 is broken upwards, growth may resume to 1.3671 (Murrey level [0/8]), and 1.3793 (Murrey level [1/8]).
Technical indicators maintain a sell signal: Bollinger Bands and Stochastic are directed downwards, and the MACD histogram is stable in the negative zone.
Resistance levels: 1.3575, 1.3671, 1.3793.
Support levels: 1.3427, 1.3305.
Trading tips
Short positions may be opened from the current level, with the targets at 1.3427, 1.3305, and stop loss 1.3550. Implementation period: 5–7 days.
Long positions may be opened above 1.3575, with the targets at 1.3671, 1.3793, and stop loss 1.3400.
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