In the first trading week of the New Year USD/CAD pair traded in a small range. The pair traded in a range of just 50-70 pips.
Major Canadian economic data will be released this week and also its counterpart US will release high impact data like Manufacturing PMI, Unemployment rate, NFP.
The value of the CAD dollar, or the loonie, has a strong correlation with oil prices. That means increases in oil prices will result in increases in the value of the loonie versus the U.S. dollar. Crude oil imparts more than 10% of Canada’s foreign earnings Apart from this no any service or goods provide foreign income to Canada to gain foreign exchange reserve.
The slump in Crude oil prices put a major impact on growth and GDP of Canada.
Last Month Canadian employment change number showed improvement to 94.1K vs. 10.5K. The central bank of Canada had hawkish tone on its December policy meet.
WTI crude, which is currently selling at $45 a barrel, has plunged more than 30% in just three months. Weaker economic conditions worldwide could weigh on mean that oil prices in the coming months.
Rise in Crude oil prices in the year 2019 will benefit CAD currency.
The USDCAD pair broke minor support 1.3620 yesterday and trade below it, pair facing resistance around 1.3650-1.3655. The pair can correct in sideways consolidation with lower support comes at 1.3560-1.3555. Break of this can lead pair to test strong support of 1.3480-1.3500.
On upside price need to break 1.3660 to test swing high 1.3700-1.3750 made in May 2017. If price not able to hold 1.3600 this is the first sign of momentum reversal.
If upcoming data will not come as anticipated than dollar index comes under pressure
As per trader point of view near 1.3660 is good to reduce long exposure / raise protective stops.
On daily time frame pair forms an exhausted candlestick pattern near the level of 1.3650-1.3655, price rejection selling on upper side expected.
Price now trading near 5 days short-term moving averages with a widening gap between moving averages, any entry on the long side at this level not suggested.
Price broke from upside trending channel and taking support near breakout area. If the price falls below this it increases momentum on downside and pair can again trade in the channel with lower support at 1.3450-1.3460. On upside above 1.3660 pairs can test 1.3710-1.3754.
Doji pattern and a long led candle near 1.3660 acts as strong resistance.
Rsi momentum indicator also crosses below 70 marks from overbought zone suggest time wise and price wise correction will come.
Major support and resistance levels as below: