- USD/CAD is making a sprint for a bullish position on the charts ahead of the BoC tomorrow.
- USD/CAD is currently trading at 1.3356 between a range of 1.3296 and 1.3359.
- USD/CAD is trading higher within a series of 4 daily bullish candles, reaching to the bearish cloud’s span A resistance albeit above a series of daily moving averages including 200, 21, 100 and 50, Tenken-sen and Kijun-sen.
The greenback is on fire today,supported by strong data, extending upon the recent recovery where the price in the DXY was supported in Feb by the 200-D SMA, capped at 97.38, supported again at the 200-D SMA on the reversal and climbed back in a series of four daily bullish candles and testing the 97 handle again today.
WTI is creeping higher in the 56 handle having broken the trend line resistance at 56.50 with a score on the 57 handle although supply there is strong, keeping the bulls in check and the price back to the resistance/turned support around 56.50.
As far as domestics go, markets will hold out for the BoC. Analysts at TD Securities explained that the BoC will likely leave the overnight rate unchanged on Wednesday, in line with market expectations:
- “The communique is likely to have a dovish tilt to it, as the recent deterioration in economic data ought to outweigh the impact of higher oil prices.
- Our base case is for the Bank to leave their forward-looking language mostly unchanged, warning of higher policy rates over time subject to the evolution of the data.
- Still, the GDP figures do raise valid questions over the Bank’s ability to tighten further, and as such we see a material risk that the Bank pivots to a purely neutral policy stance. We are therefore biased towards long positions in CAD front-end rates and higher USDCAD ahead of the release.”
The outlook for the pair is technically bullish according to the Ichimoku Cloud on a number of time frames. The weekly sticks are recovering from the Dec sell-off at 1.3664 and Span A’s support and bullish cloud top at 1.3068 with price now above the weekly 21 SMA. Daily MACD and RSI are leaning bullish as price meets Span As resistance at the bearish cloud space above a series of daily moving averages including 200, 21, 100 and 50, Tenken-sen and Kijun-sen. A break of the bearish cloud top and the confluence of R3 at 1.3411 will give rise to the prospects of an extended rally towards the 76.4% Fibo retracement of the Dec highs to recent swing lows around 1.3520 – An outcome that is so far supported by the 4hr and 1hr Ichimoku Cloud. However, momentum in the near term is dwindling according to RSI and MACD that lean bearish. 4HR stochastics is especially overbought. Resistance at the 50% fibo and R2 between 1.3360/74 could result in a pullback to the 38.2% Fibo and pivot point around 1.3290/00 first, at this juncture.