- The Fed raises investor’s concerns over the US economic recovery prospects.
- Risk-off correlations are hiring the commodity-FX complex, including the CAD.
The commodity complex has been knocked by the Fed on Wednesday and such high beta currencies as the loonie has been damaged in the process.
Fed’s Powell presser replay
The US dollar is bid as it picks up safe-haven demand while stocks fall ad US yields rise.
The following 60-min chart shows the negative correlation between the S&P 500 and USD/CAD:
USD/CAD’s bullish perspective
Meanwhile, the long game’s outlook for USD/CAD would coincide with the current trajectory for a restest of old support:
The monthly target is some way off, but there are lower time frame opportunities son the way there.
The weekly chart above has a level of resistance to overcome first.
Meanwhile, the daily chart is in the throes of a W-formation.
A rejection at this resistance will open prospects for a correction to old resistance that would be expected to act as support.
This level also has a confluence with a 38.2% Fibonacci retracement level.
A continuation would then be expected to fully move beyond the weekly resistance and on the road to the monthly resistance.