USD/CAD Buyers Aim to Cement Short-Term Uptrend Amid Market Volatility

Monday Market Overview:

Following a low-volume session in Asia due to a holiday in Japan, the US dollar broadly strengthened on Monday. Cryptocurrencies also surged as markets reacted to increased speculation of a Donald Trump victory in the upcoming US elections, following an assassination attempt on the former president.

Technical Analysis:

The USD/CAD pair has shown signs of a bullish reversal, forming an inverse head and shoulders pattern on the four-hour chart. Buyers have gained control, pushing the price above the key resistance at 1.36477 and maintaining momentum above the 100 and 34-period moving averages. The immediate challenge is sustaining this momentum, as the price has encountered resistance at 1.36577, with both the RSI flattening above 50 and the short candle bodies indicating a potential slowdown.

If buyers can hold the price above this resistance during the London market opening, the next targets are 1.36704 and 1.36845. Breaking through these levels could pave the way for further gains towards 1.37072.

Alternative Scenario:

Should a bearish candlestick pattern form at the 1.36577 resistance level, attention will shift to the supports at 1.36477 and 1.36336, aligned with the 34 and 100-period moving averages, respectively. A sustained break below the recent low of 1.36109 would be necessary to confirm a bearish trend.

Key Levels:

Resistance Levels:

• Resistance 3: 1.37072
• Resistance 2: 1.36845
• Resistance 1: 1.36704

Current Price (at the time of analysis): 1.36584

Support Levels:

• Support 1: 1.36577
• Support 2: 1.36477
• Support 3: 1.36336
• Support 4: 1.36109

Impactful Events:

Chinese economic data released recently indicates that the world’s second-largest economy grew much slower than expected in the second quarter, with prolonged property market woes and job insecurity pressuring domestic demand. This has increased demand for the US dollar as a safer currency. Key economic events impacting the USD/CAD pair include Canadian wholesale trade data, expected to show reduced growth, and a speech by Federal Reserve Chairman Jerome Powell.

Oscillators and Risk Warnings:

RSI (Relative Strength Index): Bullish, indicating strong buying momentum.

MACD (Moving Average Convergence Divergence): Bullish, supporting the upward trend.

Moving Averages: Mixed, reflecting current consolidation and cautious optimism.

Conclusion:

The USD/CAD pair is at a critical juncture, with buyers attempting to establish a short-term uptrend after a period of consolidation. A successful hold above 1.36577 could drive the price towards 1.36704 and 1.36845, with further gains targeting 1.37072. However, failure to maintain this momentum could see the price retreat to supports at 1.36477 and 1.36336, with a potential bearish reversal confirmed below 1.36109.

Investors should closely monitor upcoming economic data from China and Canada, as well as Powell’s speech, for further clues on market direction and potential impacts on the USD/CAD pair. Staying attuned to these key events and technical levels will help traders navigate the current market environment effectively.