USDCAD Failed to Rally with 61.8% Retracement’s Support
By: Eddy Peng Jan 25, 2018
U.S President Donald Trump’s economics team arrived in Davos, Switzerland, bringing with them “America First” agenda. In order to reduce trade deficit, U.S. Treasury Secretary Steven Mnuchin welcomed a weaker dollar on Wednesday, sending the greenback reeling and underscoring concerns that U.S. President Donald Trump is stepping up his attack on his big trading partner, such as China and Korea.
Since Canadian economy keeps in a robust pace of growth and oil prices hit its three-year’s high and continue to rise, the loonie is likely keeping in a strong performance. If we turn to look at the technical chart on the USD/CAD, the daily breakout of the current level may lead to further loss in the greenback’s value.
On the daily chart, Fibonacci retracement is providing traders with an alarm of a potential trend reversal, however, after struggling in the level supported by Fibo (61.8%) the price broke out for continuously moving down.
On the other hand, if it fails to edge lower, a reversal of Relative Strength Index (RSI) and MACD will form a bullish divergence compared with the price. In this case, a potentially stronger rally in USD/CAD will occur.
In the event of declining further, it’s coming down to test Sept. 8’s low, which is considered as a key support.Figure 1: USDCAD Daily
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