USD/CAD is poppin’ up red candlesticks just below a key technical support area!
Are we looking at a breakout in the making?
Or are dollar bulls about to stomp in and say, “Not today, bears!”?
The U.S. dollar is down bad in August, thanks to U.S. data releases and FOMC member speeches supporting expectations of a Fed rate cut by September.
However, at least some traders are now taking in weak U.S. economic reports and reading “slower global growth” and reduced risk appetite. The Canadian dollar, in particular, could also have trouble finding fresh bullish momentum after Canada just printed cooler-than-expected and dovish inflation figures in July.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. and Canadian dollars, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Can USD/CAD sustain its downswing long enough to force a bearish breakout?
USD/CAD, which is already flirting with the 1.3600 psychological level, is also testing the daily chart’s 200 SMA and the bottom of a range that hasn’t been invalidated since April this year.
If USD/CAD sees more bearish candlesticks below 1.3600, then the pair could draw in enough sellers to drag it down to the 1.3520 inflection point of the S2 (1.3471) Pivot Point line.
But if USD/CAD pops up long bullish wicks and starts seeing green candlesticks above the 1.3600 support, then the pair may attract buyers looking to buy USD/CAD at cheaper prices.
USD/CAD may see enough bullish pressure to retest the 1.3700 psychological handle, or the 1.3750 mid-range zone near the Pivot Point line.
Keep your eyes on the latest market headlines so you don’t miss potential catalysts that may make or break USD/CAD’s long-term range!