Canadian Dollar In Focus To Close Out The Week
BlackBull Markets | Jul 22, 2021 10:27PM ET
In the channel that it is currently caught, the CAD reached a low of 1.280. This low occurred at the beginning of this week, intraday Monday.
It appears the USD got a little ahead of itself, and once the pair closed higher than the 200MA, it set out to quickly correct itself. Since this time, the Canadian Dollar has strengthened by 2.5 cents, with the USD closing lower for the past three days.
Channel support currently holds between the 61.8% and 50.0% retracement as of June 23 (Asian session).
On the shorter time scale, H4, we can see that Canadian Dollar bulls have tested the 1.252 price level. The rejection at this level might indicate that the bullish impetus that the CAD held earlier in the week has begun to run itself down. For one thing, WTI Crude/Brent Oil prices have settled down. Barring more conflict among the OPEC+ members, the price of oil should affect the USD/CAD pair a little less moving forward.
Keep an eye on US stocks and the possibility of another big selloff. Much like that experienced on Monday this week, where the SPX500 dropped ~100 points. If the SPX repeats this situation, expect the CAD to be denied a pass down through the 1.252 price level in the short term.
US stocks have been on a three-day run with impressive earnings reports, injecting a buoyancy to the markets.
Friday’s earning reports are not as interesting (from a media perspective) as those dropped earlier in the week. On Friday, we will be keeping an eye on American Express (NYSE:AXP) and Honeywell International (NASDAQ:HON). However, the market at large it probably the better target of your focus on Friday. It will be interesting to see if the market euphoria carries into the close of the week, or if fatigue sets in, and the US indices finish the week in red./h5
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