EUR Tango Down

In today’s analysis, we will focus on the EUR as we have a nice depreciation movement here caused by one of the ECB members. In his interview, Olli Rehn from European Central Bank said, the ECB “will announce a package of stimulus measures at its next policy meeting in September that should overshoot investors’ expectations.” That was enough for the Euro bears to increase their selling activities. EUR plunged.

We were expecting bigger movement on EURUSD on Wednesday. Everything thanks to the sideways trend locked inside of the triangle pattern. EURUSD decided to brake the lower line of this pattern, which was in line with those fundamental comments from the ECB official. Yesterday, we got a small flag and another leg down. Currently, the price paused but considering the general sentiment, we are anticipating a further slide here.

EURGBP was going up for the past 14 weeks in a row! Seems that the time for a correction has finally come. We do have a good place for that as we are on the long-term horizontal resistance. Sellers obviously got a boost from the comments from the ECB and they needed that as the situation on the GBP was not encouraging to purchase Sterling. Correction should aim the mid-term support around 0.91

Last one is EURCAD, where we do also have a good bearish setup. Few days ago, the price successfully tested the combination of horizontal and dynamic resistances. The price went down, giving us a sell signal. In addition to that, EURCAD is currently attacking a mid-term support around 1.477. Once the price will close a day below the yellow area, the sell signal will be triggered.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

CHF and EUR aim to end May on the Front Foot

First instrument in this video will be the USDCHF, where You can clearly see the strength of the Swiss Frank. It all started at the beginning of the month, when the price made a false breakout from the pennant. Proper sell signal was triggered on the 10th of May, when the USDCHF broke two major long-term supports. Yesterday, the price renewed the sell signal by breaking the lower line of the flag and mid-term dynamic support. Current target for this drop is the long-term up trendline connecting higher lows since the February 2018.

Now, EURUSD, which made a significant reversal and created a strong bullish candle with a long tail and large green body. This can be a proper double bottom formation but the buy signal will be triggered only when the price will beat this month’s highs.

EURCAD is also having a good time. Here, it all started with a false breakout of the lower line of the symmetric triangle pattern. Currently, buyers are on the run and they have high chances of reaching the upper line of this formation, which would mean a mid-term buy signal.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Friday’s Trading Setups

Yesterday, we had few interesting movements but I think that the most important one, happened on the EURUSD.

With yesterday’s upswing. The main pair, managed to break the upper line of the symmetric triangle, which was a mid-term, dynamic resistance. In addition to that, we broke the horizontal resistance, which was with us, since the 2nd of May. Today, buyers successfully used that line as a support. With this kind of movement, the sentiment is positive.

Next instrument is the EURCAD, which yesterday went higher in line with the EURUSD, but today, the price is going down. The drop is still fresh and was caused by the better employment data from Canada. Both setups were very similar but it seems that in this case, the breakout will be false, which will be a great occasion to sell.

Now, two pairs with RUB. Both of them are one step from a major buy signal. USDRUB has a flag bouncing from the support and EURRUB has a bullish rectangle. In both cases, price closing a day above the upper lines of those patterns, will be an invitation to go long.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Technical Overview of Important CAD Pairs: 18.01.2019

USD/CAD

Having reversed from 1.3325-15 resistance, the USDCAD is declining towards 1.3210 but the ten-week old ascending support-line, at 1.3185, could confine the pair’s downside then after. Should prices continue trading southwards past-1.3185, the 1.3125 and the 1.3080 may offer intermediate halts during the pair’s slip to 1.3055. If at all the pair manage to surpass the 1.3325 upside barrier, the 1.3380 & the 1.3420 can please buyers prior to challenging them with 1.3440-45 resistance-region. Given the pair’s ability to cross the 1.3445 mark, the 1.3500 & the 1.3565 might gain market attention.

EUR/CAD

Alike USDCAD, the EURCAD is also gradually slipping in direction to a TL support, at 1.5060, which if broken highlights the importance of 1.5000 psychological magnet. During the pair’s sustained dip beneath 1.5000, the 1.4950 & the 1.4900 seem to be buffers ahead of fetching the quote to 1.4845 support. Alternatively, the 1.5170 trend-line resistance can limit the pair’s nearby advances, breaking which 1.5180 & 1.5240 could appear on Bulls’ radars. However, the 1.5300-1.5310 horizontal-zone may restrict the pair’s rally above 1.5240, if not then 1.5400 can come back on the chart.

NZD/CAD

Failure to overcome the 0.9075-85 resistance-area presently drags the NZDCAD to 0.8950 support-line, breaking which the 0.8930, the 0.8915 and the 0.8900 may entertain the sellers. Though, pair’s refrain to respect the 0.8900 round-figure might not hesitate calling the 61.8% FE level of 0.8870 as a quote. Meanwhile, the 0.9000 & the 0.9030 can act as adjacent resistances for the pair before fueling it to the 0.9060 resistance-line. Should prices surge past-0.9060, the 0.9075-85 and the 0.9110 can become optimists favorites.

Draghi Can Break the Euro Trend

The demand for risky assets is gradually recovering, supported by the US-China’s “trade truce” which is not in hurry to ends. Futures on S&P500 rose by 0.4% this morning, after growth by 0.8% the day earlier. The Shanghai A50 is growing by more than 2% in hope of Chinese government stimulus.

Positive dynamics of stock markets caused the US Dollar to be rolled back from monthly highs on DXY. EURUSD has received the local support near 1.1300 levels yesterday.

Over the past month, the pair fluctuations’ amplitude has decreased noticeably, but it looks more likely to squeezed spring, rather than calm.

Today, in the EU markets’ focus is the ECB meeting, which often causes strong volatility. Mario Draghi is expected to confirm that the Central Bank will finally stop buying assets by the end of this year. For EUR, definitely, the vital impact will be from any comments on the monetary policy prospects.

Earlier, the ECB was about to start raising rates next autumn at least, but now these dates are in risk to move after the Fed’s rhetoric softening and general slowdown of the world economy. In this case, the euro can be hit, so that the technical factors will come into play.

Falling below 1.13 mark, which was an important support previously, can launch a new wave of decline. Two previous stages of the retreat were turned into the 7%- and 5%- fall of the single currency.

Commensurate with the previous two, the new downward spiral may send EURUSD below 1.08. More distant bearish targets and news key support are possible as well: as low as to 1.05 on the chart.

Note that the ECB tone mitigation seems the most likely to take place.

Also, we can not exclude completely that Draghi will prefer to take a wait and observe how the things unfold: confidence in the EU economic growth and the inflationary pressure build-up will significantly reduce the difference between the ECB and the Fed policies. Under these conditions, EURUSD will be able to rebound to the upper boundary of the November’s trading range near 1.15. Growth above this mark will display clearly a significant outlook revision and, perhaps, become a pivot point of the recent trend.

This article was written by FxPro

Technical Outlook For USD/CAD, EUR/CAD & AUD/CAD: 02.11.2018

USD/CAD

Five-week old “Rising-Wedge” is again at test with the USDCAD’s latest dip beneath the formation support. If the pair sustains recent breakdown, it confirms the bearish chart pattern that theoretically signal its plunge to 1.2770, which is below October lows. However, the 1.3000 and the 1.2930-25 could offer immediate supports to the pair prior to fetching it to the 1.2885-80 horizontal rest-zone. In case prices continue declining past-1.2880, the 1.2840 & 1.2800 are likely buffers that may be availed ahead of visiting the aforesaid 1.2770 mark. Meanwhile, an uptick beyond 1.3070 support-turned-resistance can put the Bearish formation on hold and push the quote towards 1.3110 & 1.3150 barriers to north before making it confront the 1.3170 resistance-line. Assuming the pair’s successful rise above 1.3170, the 1.3200, the 1.3225 and the 1.3290 might entertain the Bulls.

EUR/CAD

Unlike USDCAD, the EURCAD still struggles with 1.4950-40 area, breaking which it can surge to the 1.5000 round-figure but a downward slanting TL, at 1.5015 may limit the pair’s further advances. Given the pair’s ability to surpass the 1.5015 hurdle, the 1.5050 & the 1.5090 can act as intermediate halts during its rally to 1.5130-35 horizontal-region. Alternatively, the 1.4900 and an ascending trend-line, at 1.4865, might confine the pair’s short-term downturn, which if broken highlights the importance of 1.4840 support-level. Should sellers refrain to respect the 1.4840 mark, the 1.4800 & the 1.4750 could flash in their radars to target.

AUD/CAD

Having clearly breached the 50-day SMA & descending trend-line confluence around 0.9325-20, the AUDCAD is expected to aim at 100-day SMA level of 0.9510. If at all the pair continue being favorite to buyers after 0.9510, the 0.9550, the 0.9590 and the 200-day SMA level of 0.9680 could be their next bets. On the downside, the 0.9365 seem nearby support for the pair prior to retesting the 0.9325-20 support-confluence. It should also be noted that the pair’s D1 close below 0.9320 may again highlight the 0.9290, the 0.9220 and the 0.9190 for Bears to observe.

 

Can Italy Be the Next Greece?

Though there is a significant amount of disagreement regarding the politics of controlling an economy, there are still a few things that fundamentally all economists can agree on: high employment is generally desirable, low inflation is generally desirable, and—perhaps above all else—a stable economy is one that can operate in a predictable way. Any time a national economy deviates from these objectives—and possesses high levels of unemployment and general economic instability—there ought to be at least some reason for outside speculators to be concerned.

Less than one decade ago, the Greek economy experienced one of the worst depressions to ever occur in the developed world. In an incredibly short amount of time, unemployment dramatically increased, the interest rate on government bonds skyrocketed, and seemingly all other economic metrics inspired panic to some degree.

Few economists were able to correctly predict just how bad the Greek economic crisis would actually be, but—especially with 20/20 hindsight—the existence of this crisis still remains relatively unsurprising. When compared to other countries tied to the Euro, the Greek economy had been measurably underperforming for quite some time.

Now, roughly six years following the peak of Greece’s economic crisis, Italy finds themselves in a situation that is all too familiar. In this article, we will briefly compare and contrast the economic situations of Greece and Italy, and also discuss ways active investors can potentially exploit the current situation to their advantage.

Similarities between the Situation in Greece and Italy

In order to understand the risks presented by the Italian economy, it is important to recognize why the situation in 2018 is so familiar to what we witnessed in 2011. Both Southern European nations have experienced relatively high rates of unemployment, though Italy’s current unemployment (about 10.2%) is nowhere near as bad as Greece was during its recent peak (27.9%).

Both nations have also experienced tremendously high amounts of national debt (Italy currently has a national debt over 2.3 trillion EUR, 131% of GDP), which have triggered talks of austerity measures and even declaring independence from the Euro. In 2011, Greece began to impose various austerity measures which—at least according to Keynesian economics—seems to have been the incorrect move for a country that was already tremendously low on working capital.

Consequently, austerity measures in Greece witnessed the government become even more desperate for funds and increase 10-year bond yields from roughly 5% to nearly 40% in less than one year. Italy’s reaction to its current economic situation is yet to be seen, but an increased interest in populist politics (5 Star) and Euro-skepticism suggests that it may be moving in the same direction that Greece once was.

Differences between the Situation in Greece and Italy

The details involved in international economics can be quite complex and comparing Greece to Italy will naturally involve a more nuanced and comprehensive approach. There are still some things that make Greece and Italy significantly different and the effects of these differences will vary tremendously.

Though Italy is suffering from many of the same economic woes that Greece experienced a decade earlier, the degree to which they are suffering is not nearly as bad. The Debt-GDP ratio is more sustainable (suggesting that austerity might not be necessary), unemployment is lower, and Italian bonds have experienced comparatively little volatility. All of these figures suggest that if there is a “tipping point” that caused the Greek economy to collapse, then Italy has not passed it (yet).

One difference that should be more concerning, however, is the scale at which the Italian economy operates. While, in terms of nominal GDP, the Greek economy is only 53rd largest in the world, the Italian economy ranks 9th (and is the 4th largest in Europe). This means that the relations between Italy and the rest of the economic world will be significantly more important. Furthermore, while Greece’s crisis took place in a “pre-Brexit” world, the fact that Europe has already witnessed one major power (slowly) begin the process of leaving suggests the Italians may consider a similar route as well.

Opportunities for Investment

Though, as a collective, we should be rooting for the world economy to fare well, there is still no doubt that any sign of systematic volatility means there will be opportunities for some highly rewarding (and risky) investments. In response to what has been happening in Italy, there are several good chances to earn a return on your investment:

  • Exploit the likelihood of increased bond yields by shorting Italian 10-year issues
  • Monitor the situation in Italy and invest heavily in other currencies as soon as the Euro begins to lose value
  • Buy the Italian/German bond spread to take advantage of the likely widening differences between them
  • Short Italian stocks (FTSE Milano Indice di Borsa)
  • Wait until the Italian economy reaches its probable low-point (likely in the next few years) and then invest heavily in Italian stocks

These are just a few of the potential options you have available. The investment that makes the most sense for you will depend on your risk tolerance and overall portfolio strategy.

Conclusion

The obvious weaknesses in the Italian economy are reminding investors of similar conditions in Greece not so long ago. Though the probability of a total economic collapse is small, the high probability of there being at least some economic turmoil gives investors a wide range of opportunities to act.

EUR/CAD Flat Top Triangle Below the Trend Line

The EUR/CAD has formed a flat top triangle below the trend line that coincides with both Murrey Math and Camarilla bearish levels.

The price is below W H3 and trend line, while at the same time is rejecting the 5/8 Murrey Math Sell zone. A successful rejection should target 1.4892 followed by 1.4840-30 confluence point. The target confluence is W L3 and 3/8 zone. The MACD indicator also signals a possible downtrend cont based on MTF calculations.

How to Trade the CAD Ahead of the BOC Meeting?

Traders like central bank meetings as they drive markets a lot. It doesn’t matter whether it is a rate hike or just clues on the economic conditions, the currency suffers a high volatility. The Bank of Canada will release the interest rate on October 24. The market is looking for the rate hike. As a result, the Canadian dollar is anticipated to appreciate against other currencies. Let’s consider currency pairs that will be affected by the decision of the BOC the most.

USD/CAD

It is logical to start with the USD/CAD pair.  Last week, the Canadian dollar suffered because of the negative figures of two the most important indicators such as CPI (consumer price index) that reflects the inflation level and core retail sales data. However, the rate hike may support the CAD.

How to trade the pair?

On Tuesday, USD/CAD keeps rising. But ahead of the rate hike, the CAD will be able to recover and the pair may break the support at 1.3050 (100-day MA). The next the support is at 1.3014.

One small tip: as traders are sure that the BOC will increase the interest rate, this decision will be priced in. So be ready, that after the release, the CAD will weaken. Don’t try to catch a signal to sell after the BOC decision.

But what if the BOC doesn’t raise the interest rate?

This scenario is unlikely, however, traders should be ready for any possibilities. In this case, the CAD won’t avoid a great plunge. As a result, the pair will rise significantly. The USD/CAD pair will appear above the trendline at 1.3117. The next resistance will be at 1.3185.

USD/CAD Daily Chart
USD/CAD Daily Chart

GBP/CAD

The British pound is under big pressure as the Brexit deal is far from its logical end. At the beginning of the week, the British currency plunged because of the risks that Theresa May could face a vote of no confidence.  Up to now, the GBP has been recovering, pushing the GBP/CAD pair up.

On Wednesday, we can anticipate a fall of the pair as the traders will buy the Canadian dollar. Important support levels will lie at 1.6929 and 1.6863. After the release of the rate, we can anticipate that the pair will keep trading within the horizontal channel of 1.6988-1.7088, as MAs are moving in the horizontal channel and the RSI indicator is between 30 and 70 levels.

What if there is no hike?

A cancellation of the rate hike will boost the pair up. As a result, GBP/CAD will be able to break the resistance at 1.7088 (pivot point and 100-day MA) and move further up to 1.7213.

GBP/CAD Daily Chart
GBP/CAD Daily Chart

EUR/CAD

The EUR is still under threat because of Italy’s budget issue. The level of debt overcomes the European Union limit more than twice. Italy has already denied compromising on its economic targets. However, the EU won’t be happy with this budget prospects as well. As a result, risks of the prolonged discussions are increasing.

EUR/CAD has been trying to recover. However, the rate hike will pull the pair down. The first support is at 1.4961. After the interest rate is released, the pair may recover. The market is waiting for the comments from the ECB on Thursday. If traders are satisfied with the mood of the central bank, the euro will recover. The pair will continue trading within the channel of 1.4961-1.5125.

What if the BOC changes its decision?

The pair will move directly to the resistance at 1.5125.

EUR/CAD Daily Chart
EUR/CAD Daily Chart

Making a conclusion, we can say that if the BOC satisfies the market expectations, the CAD will rise and as a result, all three pairs will move in the favor of the Canadian dollar. If the BOC surprises with the cancellation of the rate hike (that is unlikely), the CAD will plunge.

Here’s Why You Should Follow the Italian/German Bond Yield Gap?

Despite narrowing in the last few days, the spread between the yield on German and Italian bonds remains at its highest levels since early 2013. The spread narrowed to 282 bps from 306 two days earlier as risk appetite returned to markets.

Italy’s 10-year bonds now yield 3.63%, just 1.02% below Greece. German 10-year yields are 0.54% despite almost doubling this year.

The spread has widened over the course of the year amidst growing concerns over Italy’s fiscal position and the fact that the European Commission is unlikely to accept Italy’s budget proposals. The Italian Finance Minister most recently proposed raising the budget deficit to 2.4% of GDP next year – something the European Commission has so far flatly rejected.

In early September, Fitch lowered Italy’s credit rating, highlighting the weakness of the country’s fiscal position.

The proposed budget includes growth assumptions of 1.5% in 2019, 1.6% in 2020 and 1.4% in 2021. This is ahead of the forecasts made by a Bloomberg survey of economists which had a median forecast of 1.2%.

Furthermore, it is feared the situation is putting pressure on the fragile coalition between Italy’s Lega Norda and the 5-Star Movement that governs Italy.

While the situation is a long way from the full-blown crisis that threatened the Eurozone’s existence in 2011 and 2012, predictably the market is nervous that it could escalate. Already some politicians have stated that if Italy had its own currency these problems wouldn’t exist.

Adding fuel to the fire is the fact that European Central Bank is winding down its monthly asset purchase program and will be reducing its bond purchases by 50% in October. This will remove an underpin supporting Italian bond prices.

EUR/USD traders will want to keep an eye on the spread between Italian and German bond yields as it may well dominate the market narrative in the months to come. Even if the actual economic impact is limited, it will give substance to the effects growing populism could have on European economic policy. It could also create further tension between the European countries with strong economies and those with weaker balance sheets.

The Euro has lost ground against the USD since the FOMC meeting last week, and further losses are likely if the situation escalates. After reaffirming resistance above 1.18, the EUR/USD pair has fallen sharply. The pair is now trying to reclaim support at 1.1454. If it can’t hold this level, the immediate target is the major low at 1.1301 recorded in August.

The narrow price action over the past two days suggests an impending larger move in one direction or another early next week. The current consolidation has support at 1.1394 and resistance at 1.1592, although those levels could be tested further before we see a convincing move.

In the absence of news flow, the Euro is very oversold, and a bounce to at least the midpoint of the downtrend (1.1632) is highly likely. Beyond that, we will need to look at the strength of the USD. Gold, which also highly affected by rising bonds yields, is trading in a bearish sentiment since the bond market crash.

However, given the technical picture, any news flow, particularly comments from European or Italian leaders, could trigger a sharp reaction. For now, traders should watch the consolidation range carefully, especially the price action at the upper end of the range.

Technical Outlook For USD/CAD, EUR/CAD, GBP/CAD & AUD/CAD: 20.09.2018

USD/CAD

Having breached five-month long ascending trend-line, the USDCAD seems well inclined to test the 200-day SMA level of 1.2865, which if broken could open the door for the pair’s drop to 1.2810-2800 support-zone. In case sellers refrain to respect the 1.2800 mark, the 1.2730, the 1.2700 and the 1.2620 are likely following numbers to appear on the chart. Should prices witness pullback from present levels, the support-turned-resistance line near 1.2955 and the 1.3000 round-figure could entertain short-term buyers prior to challenging them with 1.3050, comprising 100-day SMA. Moreover, pair’s sustained trading beyond 1.3050 can avail 1.3100 as an intermediate halt while aiming the 1.3170 TL resistance.

EUR/CAD

EURCAD’s bounce off the 1.5060-5050 support-zone can help it revisit the 1.5140 and the 1.5170 resistance but immediate downward slanting TL, at 1.5230, may limit the pair’s further upside. Even if the pair manage to surpass the 1.5230 barrier, it could only target 1.5300 level as a bit longer resistance-line, at 1.5345, might confine the quote’s additional rise. Meanwhile, a downside break of 1.5050 highlights the importance of 1.5000 psychological magnet, breaking which 1.4940 and the 1.4900 can please the Bears. Given the pair’s extended downturn beneath 1.4900, the 1.4840 and the 1.4800 may gain market attention.

GBP/CAD

In spite of the GBPCAD’s recent U-turn, the pair might find it hard to justify its strength unless clearing the 1.7165-70 resistance-confluence, including 100-day SMA & six-month descending trend-line. If at all there is a D1 close beyond 1.7170 by the pair, the 1.7280 and the 200-day SMA level of 1.7385 can become Bulls’ favorites. Alternatively, 1.6920-10 can offer nearby support to the pair during its decline, which if broken could drag it to 1.6825 and the 1.6720 numbers. Additionally, the 1.6590 and the 61.8% FE level of 1.6450 might appear in the pessimists radar past-1.6720 break.

AUD/CAD

With the adjacent upward slanting trend-line indicating AUDCAD’s strength, the pair is likely heading towards 0.9430 resistance-line but overbought RSI might disappoint optimists then. In case the pair crosses the 0.9430 upside hurdle, the 0.9475, the 0.9515 and the 0.9560 should be watched carefully while holding long positions. On the downside, 0.9370 TL and the 0.9330 can act as buffers ahead of visiting the 0.9315 rest-point. However, pair’s dip beneath the 0.9315 might not hesitate recalling the 0.9270 and the 0.9215, encompassing 61.8% FE, as quotes.

Technical Outlook For USD/CAD, EUR/CAD, GBP/CAD & NZD/CAD: 05.09.2018

USD/CAD

Having breached 50-day SMA & near-term important TL, the USDCAD seems all set to challenge the 1.3265-70 horizontal-region but overbought RSI might question the pair’s further upside. Though, pair’s sustained rise beyond 1.3270 can help it aim for the 1.3330 and the 1.3385 resistances. Meanwhile, the 1.3160 could offer immediate support during the pair’s pullback before highlighting the resistance-turned-support confluence of 1.3100-3090. Given the sellers fetch prices beneath 1.3090 on a daily closing basis, the 1.3000, the 1.2910 and the 200-day SMA level of 1.2850 may gain market attention.

EUR/CAD

Even after taking a U-turn from resistance-line of short-term “Rising Wedge”, the EURCAD can’t be considered weak unless declining beneath the 1.5165 support-line. As a result, chances of the pair’s pullback to 1.5290 and consequent advances to 1.5320-25 horizontal-line can’t be denied. Should the pair crosses 1.5325 barrier, the 1.5370, the 1.5415 and the 1.5440 can entertain buyers prior to pleasing them with 1.5465 mark. On the downside, the 1.5185 and the 1.5165 may limit the pair’s nearby downside, break of which can confirm the bearish technical pattern with theoretical targets of 1.5050 and the 1.5010-5000. Moreover, pair’s weakness below 1.5000 might not hesitate testing the 1.4885, the 1.4830 and the 1.4800 rest-points.

GBP/CAD

GBPCAD’s bounce off the 1.6595-85 support-zone has to surpass the 50-day SMA level of 1.7035 in order to be capable of visiting the 1.7155 mark but its further upside might find it hard to conquer the 100-day SMA & five-month old descending TL, around 1.7240-50. Assuming that the quote closes beyond 1.7250 on a D1 basis, the 1.7465-70 may flash in the Bulls’ radar. In case prices fail to hold recent recovery, the 1.6800 can act as adjacent support for the pair, breaking which the 1.6750 and the 1.6585-75 could play their roles. It should also be noted that the pair’s drop below 1.6575 can make it vulnerable to plunge towards 1.6355-50 support-area.

NZD/CAD

With the five-week old descending trend-line restricting the NZDCAD’s immediate rise around 0.8660, the pair is likely to revisit the 0.8615 and the 0.8600-0.8595 support-region. Though, refrain to respect the 0.8595 can drag the quote to 0.8560 and then to the 61.8% FE level of 0.8495. Alternatively, a clear break of 0.8660 could escalate the pair’s recovery towards 0.8685 and the 0.8740 levels ahead of highlighting the 0.8775 and the 0.8825-30. If the pair continue trading north-wards after 0.8830 then the 0.8875 and the 0.8920 might become traders’ favorites.

USD/CAD Daily Price Forecast – Fading NAFTA Optimism Pressures Canadian Loonie.

The USD/CAD pair failed to capitalize on the weekly bullish gap and was now seen consolidating in a range, just above mid-1.3000s. The pair broke to the upside last Friday and reached a fresh weekly high at 1.3087. Price was holding near the highs, with a bullish tone, consolidating important daily gains. From the weekly low the pair raised almost 200 pips.

The move to the upside followed comments from Canadian negotiator Freeland who said “we’re not there yet” regarding the trade deal with the US and Mexico. PM Trudeau added that a “no deal” on NAFTA was better than a bad one. Also, the pair moved higher on the back of a stronger US dollar which gained momentum amid risk aversion market sentiment. Meanwhile, US President Donald Trump on Saturday threatened to exclude Canada from a new NAFTA agreement after the recent US-Canada trade negotiations ended without any agreement. Trump also warned the Congress not to interfere with these negotiations or he would simply terminate the trilateral NAFTA pact altogether.

Exit From NAFTA Looks Highly Likely For Canada

While Canadian Prime minister is ready for NAFTA exit instead of agreeing to a bad deal, Loonie struggles to come to terms on NAFTA proceedings which kept weighing on the Canadian Dollar at the start of a new trading week. The pair touched an intraday high level of 1.3077, albeit struggled to gain any follow-through traction despite a combination of supporting factors. A modest US Dollar uptick, coupled with a mildly negative tone around crude oil prices, which tend to undermine demand for the commodity-linked currency – Loonie, did little to inspire the bulls and eventually led to a subdued/range-bounce price action through the early European session earlier today.

Moreover, traders also seemed reluctant to place any aggressive bets amid holiday-thinned liquidity conditions on the back of a bank holiday, both in the US and Canada. Moving ahead, this week’s important macro releases scheduled at the beginning of a new month, including the keenly watched US non-farm payrolls data, and the latest BoC monetary policy update on Wednesday will play a key role in determining the pair’s next leg of directional move.

Despite last week’s strong up-move, the pair remains within a short-term descending trend-channel held over the past two months or so. Hence, it would be prudent to wait for a decisive move beyond the channel resistance, currently near the 1.3100 handles, before placing any major bets in Greenback’s favor. On the flip side, a slide back below the key 1.30 psychological mark would reinforce the trend-channel and turn the pair vulnerable to head back towards challenging the 1.2900 handle support.

 

Important CAD Pairs’ Technical Checks: 31.08.2018

USD/CAD

With the fortnight long descending trend-line still being untouched, the USDCAD can continue being weaker and may revisit the 1.2960, adjacent to 1.2935 supports. Should prices dip beneath the 1.2935, the 1.2885 and the 1.2845, comprising 61.8% FE level, might please the sellers. Alternatively, successful break of 1.3030 TL could escalate the pair’s recovery towards the 1.3100 and the 1.3110 trend-line resistance, clearing which 1.3170 may appear on the chart. Additionally, pair’s sustained trading beyond 1.3170 can recall the 1.3220 and the 1.3285 levels as quotes.

EUR/CAD

Alike USDCAD, the EURCAD also needs to surpass the 50-day SMA level of 1.5220 in order to confront two-month old descending TL, at 1.5295. However, breach of 1.5295 may only have 1.5300 as a small barrier prior to targeting the 1.5360, the 1.5440 and the 1.5465-70 numbers to north. Meanwhile, the 1.5050 and the 1.5010-1.5000 can offer immediate supports to the pair, breaking which 1.4880 can entertain the Bears. Given the pair’s extended downturn beneath 1.4880, the 1.4800 may gain market attention.

GBP/CAD

The GBPCAD is different from above mentioned two pairs as it has already conquered two important resistance-lines; though, overbought RSI dragged the pair that may retest the 1.6855-50 support-zone. If prices dip below 1.6850, the 1.6800 and the 1.6720 might become intermediate stops ahead of highlighting the 1.6585 level. On the upside, the 1.6960, the 1.7000 and the 1.7050 are likely nearby resistances that the pair should cross before challenging the 1.7165-75 resistance-area. It should also be noted that break of 1.7175 might not hesitate pushing the quote to 1.7290-1.7300 zone.

The GBPCAD is different from above mentioned two pairs as it has already conquered two important resistance-lines; though, overbought RSI dragged the pair that may retest the 1.6855-50 support-zone. If prices dip below 1.6850, the 1.6800 and the 1.6720 might become intermediate stops ahead of highlighting the 1.6585 level. On the upside, the 1.6960, the 1.7000 and the 1.7050 are likely nearby resistances that the pair should cross before challenging the 1.7165-75 resistance-area. It should also be noted that break of 1.7175 might not hesitate pushing the quote to 1.7290-1.7300 zone.

Technical Update For USD/CAD, EUR/CAD & CAD/JPY: 24.08.2018

USD/CAD

USDCAD’s another bounce off the 100-day SMA & seven-month old ascending trend-line indicates its readiness to confront the downward slanting TL stretched since late-June, at 1.3145. Should the pair registers a daily closing beyond 1.3145 barrier, the 1.3215 and the 1.3255 are likely intermediate halts that it could avail prior to aiming the 1.3385 mark. In case Bulls keep ruling the trade-sentiment past-1.3385, the 61.8% FE level of 1.3490 may prove its worth as strong resistance. Alternatively, the 1.2990-85 support-zone, comprising 100-day SMA & aforementioned trend-line, may restrict the pair’s near-term declines, failing to which can drag the quote to 1.2915 and the 200-day SMA level of 1.2840. Given the pair’s additional downturn beneath the 1.2840, the 1.2750-45 and the 1.2700 might please the sellers.

EUR/CAD

Even after recovering from 1.4800, the EURCAD might find it hard to remain strong for longer as the 1.5170-75 and the 1.5290 descending trend-line still stand tall to challenge the pair buyers. If prices rise above 1.5290, the 1.5320, the 1.5370 and the 1.5440 are expected consecutives hurdles that needs to be cleared in order to target the 1.5500 round-figure. Meanwhile, the 1.5050 and the 1.5025 support-line may limit the pair immediate drops, breaking which the 1.5000, the 1.4915 and the 1.4800 can witness market attention.

CAD/JPY

Having repeatedly defeated by the 200-day SMA, CADJPY again looks to question the strength of 85.55 SMA figure, which holds door for the pair’s advances towards 86.05 trend-line. However, pair’s successful trading above 86.05 can fuel it to the 86.75 and the 87.20 resistances. On the downside, the 84.70, the 84.25 and the 83.70 could continue troubling the pessimists, breaking which an ascending trend-line, at 83.10, might become crucial to observe. Assuming the pair’s extended south-run below 83.10, the 82.15 and the 81.35 may appear in the Bears’ radars.

Technical Update For USD/CAD, EUR/CAD, GBP/CAD & AUD/CAD: 16.08.2018

USD/CAD

Although short-term ascending trend-line favors the USDCAD‘s rise, seven-week long downward slanting TL, at 1.3175 now, becomes a tough challenge for the pair to clear in order to justify its strength in targeting the 1.3215-20 and the 1.3285-90 resistances. In case the pair manage to conquer 1.3290, the 1.3325 and the 1.3385 can please the buyers. On the downside, the 1.3070 TL support and the 1.3020 seem nearby rests for the pair to avail during its declines before visiting the 1.2960-55 support-zone. However, pair’s drop beneath the 1.2955 might not hesitate testing the 1.2920 and the 1.2855 levels.

EUR/CAD

EURCAD’s U-turn from 1.4800-1.4795 can’t be considered as a sign of its strength as 1.5005-10 and the 1.5060 barriers still stand tall to restrict the pair’s upside momentum. In case prices surpass 1.5060 hurdle, the 1.5100 and the 1.5185 are likely following numbers to appear on the chart. Meanwhile, the 1.4900 and the 1.4840 can offer intermediate halts to the pair’s downturn prior to dragging it to 1.4800-1.4795 area. Additionally, pair’s extended south-run past-1.4795 may aim for 61.8% FE level of 1.4745 and the 1.4700 round-figure.

GBP/CAD

With the oversold RSI & 1.6585-1.6600 region playing their roles to trigger the GBPCAD’s pullback, the pair may revisit the 1.6770-80 horizontal-resistance, breaking which the 1.6920 and the 1.7000 may entertain the Bulls. Though, the 1.7050-70 area could confine the pair’s advances beyond 1.7000, if not then the 1.7160 & 1.7220 might gain market attention. Assuming that the pair fails to hold its recent recovery and dips below 1.6585 on a daily closing basis, the 1.6475 and the 1.6380-60 can flash in the sellers’ radar. Should the quote keep trading southwards after 1.6360 then chances of its plunge to the 1.6200 and to the 1.6000 can’t be denied.

AUD/CAD

Alike EURCAD, the AUDCAD also seems recovering and may soon question the 0.9575 resistance but its further escalation can be limited by the 0.9625 and the 0.9665 resistances. Given the pair rallies above 0.9665, the 0.9700 and the 0.9725 could mark their presence as quotes. Alternatively, the 0.9485, the 0.9445 and the 0.9415 may keep troubling the pessimists prior to offering them the 61.8% FE level of 0.9375.

Important CAD Pairs’ Technical Outlook: 09.08.2018

USD/CAD

Although 50-day & 100-day SMA has been restricting the USDCAD moves since last fortnight, the 1.2960-55 support-confluence, comprising 100-day SMA & an ascending TL, could keep indicating the pair’s upside with 1.3060 being immediate resistances to tackle before confronting the 50-day SMA level of 1.3115. Given the pair’s ability to close beyond the 1.3115, the 1.3190 and the downward slanting trend-line, at 1.3215, seem crucial to watch as they hold the door for the quote’s rally towards the 1.3265, the 1.3340 and the 1.3385 resistances. In case the pair dips beneath the 1.2960 on a daily closing basis, the 1.2900, the 1.2865 and the 1.2800 can mark their presence on the chart ahead of highlighting the 1.2730 and the 1.2625 rest-points.

EUR/CAD

Although 50-day & 100-day SMA has been restricting the USDCAD moves since last fortnight, the 1.2960-55 support-confluence, comprising 100-day SMA & an ascending TL, could keep indicating the pair’s upside with 1.3060 being immediate resistances to tackle before confronting the 50-day SMA level of 1.3115. Given the pair’s ability to close beyond the 1.3115, the 1.3190 and the downward slanting trend-line, at 1.3215, seem crucial to watch as they hold the door for the quote’s rally towards the 1.3265, the 1.3340 and the 1.3385 resistances. In case the pair dips beneath the 1.2960 on a daily closing basis, the 1.2900, the 1.2865 and the 1.2800 can mark their presence on the chart ahead of highlighting the 1.2730 and the 1.2625 rest-points.

NZD/CAD

Even after testing the lowest levels of 2018, mainly due to RBNZ’s dovish statement, the NZDCAD still has to close beneath the five-year old upward slanting trend-line, at 0.8640, on a weekly closing basis in order to stretch its downturn to 0.8580 and the 0.8510 supports. Should prices continue declining beneath the 0.8510, the 0.8430 and the 0.8350 can flash in the Bears’ radar. Alternatively, the 0.8730, the 0.8820 and the 0.8850 can act as adjacent resistances for the pair, breaking which the 0.8980 and the 0.9000 might play their role of upside hurdle. If the pair manage to surpass the 0.9000 mark, the 0.9100-0.9110 resistance-area, including the 200-week SMA level & descending TL, can be targeted if holding long positions.

CAD/CHF

Unless breaking the seven-week long ascending trend-line, at 0.7600 now, chances of the CADCHF’s pullback to 0.7650 and then to the 0.7665 can’t be denied; though, recent high of 0.7675, ascending TL figure of 0.7685 and the 61.8% FE level of 0.7700 could check the pair’s strength afterwards. Assuming the pair’s rise above 0.7700, the 0.7735 and the 0.7765 can become buyers favorite. Meanwhile, a downside break of 0.7600 can drag the quote to the 0.7585 and the 0.7560 supports prior to increasing the importance of 0.7500 round-figure. Also, pair’s plunge past-0.7500 can avail the 0.7460, the 0.7425 and the 0.7390 rest-points during further weakness.

Technical Checks For USD/CAD, EUR/CAD & CAD/JPY: 03.08.2018

USD/CAD

Absence of strong up-moves after the USDCAD’s recent U-turn isn’t a sign of its fresh south-run as 100-day SMA and support-line of short-term descending trend-channel, at 1.2965-60, still stand tall to limit the pair’s decline. In case if the pair refrains to respect the 1.2965-60 support-confluence, more than six-month old ascending trend-line, near 1.2920, followed by the 1.2900 round-figure, could challenge the sellers. Assuming that the quote closes beneath the 1.2900 mark on a D1 basis, then it can plunge to 1.2800 and the 1.2740 support-levels. On the upside, the 1.3040, the 1.3080 and the 50-day SMA level of 1.3110 seem immediate resistances for the pair to confront during its advances. Should prices rally beyond 1.3110, the 1.3160, the 1.3220 and the channel-resistance figure of 1.3235 may gain market attention.

EUR/CAD

Ever since the EURCAD slipped below 50-day SMA, it never climbed it back on the daily closing basis, which in-turn signal brighter chances for the pair’s further downturn to 1.5000 psychological magnet. However, an upward slanting trend-line, at 1.4950, could restrict the pair’s additional drop past-1.5000, if not then the 1.4855, the 1.4800 and the 1.4730-20 horizontal-region may appear in the Bears’ radar to target. Meanwhile, the 1.5145, the 1.5200 and the 1.5255, comprising 50-day SMA & 50% Fibonacci Retracement, are likely adjacent resistances that might question the pair’s recovery. Given the pair’s ability to surpass 1.5255 barrier, the 1.5315, the 1.5370 and the 100-day SMA level of 1.5420 can entertain the buyers prior to troubling them with 1.5510 resistance-line.

CAD/JPY

Not only 200-day SMA but upper-line of “Rising-Wedge” Bearish technical pattern also confines the CADJPY’s rise around 85.85 and the 86.05 respectively. As a result, pair’s profit-booking to 85.20 and the 85.00 formation support can’t be ignored. Though, break of 85.00 could confirm the bearish pattern and might quickly drag the quote to 50-day & 100-day SMA confluence region of 84.40-35, the 83.80 and the 83.50-45 consecutive rest-points. Alternatively, pair’s successful break of 86.05 negates the downturn signaling formation and may escalate the up-moves in direction to the 86.45 and the 87.00 nearby resistances. If the pair clears the 87.00 hurdle to north, it can jump to 87.75 and the 88.15-20 levels.

Euro Steady Ahead of Major Economic Data

The single currency is increasing on Tuesday against the backdrop of the inflation in Germany, which is weaker than expected. A preliminary estimate of the inflation for July showed a 0.3% increase in prices and a slowdown in the annual rate from 2.1% to 2.0%. Usually, sluggish inflation growth provokes a weakening of currency, as it implies more dovish rhetoric from Central Bank and potentially delays the increase in interest rates.

But now the situation is slightly different. Last week the ECB confirmed its desire not to raise the stakes until at least next summer. It is highly unlikely that the ECB would break its forward guidance and take this step earlier than it promises now. Under these circumstances, lower inflation increases the real value of the investment in the euro and makes the investment in this currency slightly more attractive.


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Last Thursday inflation forecasts and the promise not to raise the stakes eroded the value of the euro, but with the softening inflation, we observe the rebound of the single currency towards the levels of the last week’s highs. The EURUSD pair is currently trying to gain a foothold above 1.1717. According to technical analysis, the nearest important level of resistance will be the area of 1.1740.

Looking at the economic calendar, Germany retail sales & unemployment rate, France inflation rate, Spain GDP and the Eurozone inflation rate, GDP, and unemployment rate can affect the euro.

This article was written by FxPro

Will the USD/CAD Bulls Hold Their Nerve?

Any signs of recovery were hammered on July 20 when the pairing fell 140 pips on news that Canada’s May retail sales had shot up 2%, rather than the forecast 1.1%. Recent comments by US President Donald Trump about his disdain for domestic interest rate hikes have also put pressure on the US Dollar.

But are we seeing an end to the USD/CAD upward momentum, or is this simply a slight pullback before the chart begins moving north again? The answer will likely be determined more by what Mr. Trump and the US is doing, rather than anything happening in Canada. That’s not a dig at Canada, more a reflection of the importance of the US dollar to all world markets.

The Canadian dollar, steady as she goes

The Canadians are widely seen as being dependable folk, and their currency is also regarded as one of the world’s most stable, traded by long-term investors and intraday traders in large numbers. Interest has increased locally because residents now benefit from using brokers with $1 million protection offered by the Canadian Investor Protection Fund (CIPF), which pays out if a broker goes belly up.

Because the Canadian dollar is the fifth most commonly held currency, it usually does not show the sort of hair-raising price volatility that befalls smaller currencies. But that’s not to say traders can’t take advantage. Intraday corrections come thick and fast on the back of regular scheduled economic news announcements, just like the Retail Sales one on Friday, July 20. This is a monthly statistic, along with Labour Force Survey (Canada’s employment figures), Consumer Price Index and Industrial Price Index. Traders also eagerly await the quarterly Gross Domestic Product figures.

But it’s commodity prices that have a huge impact on the Canadian dollar. The country relies heavily on its natural resources of oil, lumber and natural gas, and exports much of this abroad. This means that not only is foreign demand a pressure factor, but also the price of crude oil itself. When the price of crude slumped from US$105 to US$45 in 2014/15, Canada’s economy took a hit, sending it into a downturn for the first time in years. It’s often said that commodity prices, especially oil, have a greater influence on the Canadian dollar than economic news, and it’s no great surprise given the country’s reliance on its natural resources. Oil prices rise since the beginning of 2018 which helped the Canadain dollar to remain strong versus the greenback and other currencies. As long as oil prices rise, the Canadian dollar might be a correct position.

For the long-term investor, most of these volatility factors (economic news and the price of crude oil, for example) can be exploited by riding on the back of a long-term trend. But as we’ve seen, in a currency pairing like USD/CAD it takes two to tango. And when you’re dance partner is the US, it tends to take the lead.

USD volatility, the Trump effect

The US dollar is subject to volatility like any other currency, with changes to supply and demand, commodity prices and regular economic data all pushing or pulling the price up or down. As the most traded currency in the world, second-guessing which way the USD will go has become an art form. But now there is a new factor influencing the currency’s fortunes, and it’s one that is becoming rather hard to predict.

Step forward Donald Trump, the US President whose habit of speaking his mind often has ripple effects in the markets. While his imposition of trade tariffs with the European Union, Canada and China buoyed sentiment, the currency dropped when he openly questioned the Fed’s policy of interest rate hikes, suggesting it was keeping the dollar too high. Mr. Trump wants a lower dollar, making it cheaper for the US to do business abroad. And if there’s one thing we’ve come to learn about Mr. Trump, it’s that he likes to get what he wants.

USD/CAD long or short?

With all this variance and the unpredictability of looming trade wars, Brexit and maybe a currency war, too, how can you call what the future movement of the USD/CAD pairing will be? You can certainly look at our own financial market forecasts and analysis, but your willingness to jump in might be influenced by your desire to try to cash in on short-term movements or to hang in there for the long term.

As we’ve seen, the long-term trend for USD/CAD is bullish. The USD has been consistently strong, while the Canadian dollar less so. If you believe Mr. Trump won’t have any influence on the Federal Reserve’s decision making on interest rates, which he really shouldn’t as its meant to be impartial to political interference, then interest rates will continue on an upward curve, which in turn will keep the US dollar high. However, even Mr. Trump talking about interest rates has brought a dollar price correction, and any hint that the Fed might actually shift policy might make the dollar price fall further.

What is clear is that the Canadian economy is going through a purple patch. While retail sales are up, so too is inflation, with the figure at a six-year high of 2.5% in June, fuelled by increasing gas costs. What that means is the possibility of another increase in interest rates, which would drive up the Canadian dollar, and potentially drive down the USD/CAD, but only if the US dollar continues to weaken.

So, with all things considered, and without a crystal ball to give you the answer, the best bet might well be to follow the long-term trend and go long on USD/CAD. But intraday traders can lick their lips at short-term volatility, so long as they’re on the right side of any correction. Following Mr. Trump on Twitter now seems as important as watching out for key financial news, and it’s probably a lot more entertaining.