In the first ten days of October, the USD/CAD pair broke through an important support level (EMA144, EMA200 on the daily chart), which at that time passed through the 1.3230 mark and reached a local minimum near the 1.3042 mark by the end of October.
Nevertheless, there was no further decline of USD / CAD, and after the meeting of the Bank of Canada and the Fed, at which the Fed leaders announced the suspension of the rate reduction cycle, the US dollar began to strengthen, including in the USD / CAD pair.
The long-term positive dynamics of the US dollar and, accordingly, the USD / CAD pair, which continues to trade above the key and long-term support level of 1.2920 (EMA200 on the weekly chart), remains.
At the beginning of the European session, USD / CAD is trading above 1.3300 mark, developing an upward trend.
While USD / CAD is trading in the zone above the support level of 1.3227 (EMA200 on the daily chart, EMA200 on the 1-hour chart), you should look for the opportunity to enter long positions.
A signal for sales will be a breakdown of the support level of 1.3227. In this case, the reduction targets will be the support levels 1.3200, 1.3138 (September lows), 1.3100, 1.3060, 1.3042.
From the news for today it is worth paying attention to the publication (at 13:30 GMT) of consumer price indices in Canada, as well as weekly data on oil reserves in the USA (at 15:30 GMT). Forecast for October: the consumer price index will come out with a value of +1.9% (in annual terms). Core CPI is also expected to increase by +1.9% in October. Data better than expected and above the previous values will strengthen the Canadian dollar. If the data for October is worse than the previous values, then this will negatively affect CAD.
Also, CAD may be negatively affected by the publication of US Department of Energy data on oil reserves, which are expected to rise again last week (+1.1 million barrels).
Pessimism over US-China trade relations is forcing investors to give up risk by raising demand for safe assets and the dollar, as well as putting pressure on commodity goods prices and commodity currencies, such as CAD.
Oil prices are falling, as the stalled US-China trade negotiations causes worry about demand prospects. The overall decline in oil prices this week was already 4.7%.
As Carolyn Wilkins, Bank of Canada Deputy Governor, said on Tuesday, “the risks for global GDP growth have intensified”, and “the uncertainty surrounding foreign trade remains heightened”. “We cannot afford to lose our vigilance”, she said, “especially when it comes to recession”. The next meeting of the Bank of Canada on the issue of monetary policy is scheduled for December 4.
Volatility growth in the financial market today is also expected at 19:00 (GMT), when the minutes from the October meeting of the Fed will be published, especially if they contain unexpected information regarding the issue of monetary policy of the US central bank.
Support Levels: 1.3300, 1.3270, 1.3227, 1.3200, 1.3138, 1.3100, 1.3060, 1.3042, 1.3015
Resistance Levels: 1.3345, 1.3380, 1.3400, 1.3452
Trading Scenarios
Sell Stop 1.3250. Stop-Loss 1.3320. Take-Profit 1.3227, 1.3200, 1.3138, 1.3100, 1.3060, 1.3042, 1.3015
Buy Stop 1.3320. Buy Limit 1.3270. Stop-Loss 1.3250. Take-Profit 1.3345, 1.3380, 1.3400, 1.3452
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