The USD/CAD continues to demonstrate an ability to pursue an upwards trend which ignited in earnest on the 1st of June.
The USD/CAD has almost enjoyed a two-month bullish trend, and while traders who have stubbornly stuck to their bearish approach may be looking for downward reversals, speculative buyers are likely considering long-term highs which are in sight. As of this writing, the USD/CAD is trading above the 1.27000 juncture. The Forex pair was able to achieve a high of nearly 1.27850 yesterday which came within sight of Monday’s highs which actually traded above the 1.28000 ratio briefly.
While bearish traders may believe the USD/CAD is overbought and may be proven correct long term, the short term and mid-term have provided a cold splash of water to the face of sellers. On the 1st of June, the USD/CAD was trading near the 1.20000 juncture and many traders believed the Forex pair could move lower. Technically, at that time, the USD/CAD was testing lows not seen since August of 2017. Commodity prices and fears about the potential of higher costs for supplies certainly helped the USD/CAD achieve those lower values.
However, in the middle of June, the U.S Federal Reserve made a rather loud promise that it could raise interest rates in a couple of years. While that may have been enough to drive the USD/CAD higher short term, the addition of inflation data published in the U.S afterwards also added some impetus to the bullish trend in the USD/CAD.
The Forex pair is now challenging March values, but intriguingly, it is also within resistance levels from November and December of 2020. This notion could actually give credence to bearish trading perspectives which believe the USD/CAD has climbed within a price range that may be considered overvalued and a potential selling opportunity. However, the trend since the beginning of June remains rather demonstrative and bullish. Thus, the 1.28000 juncture should be monitored closely. If this resistance level holds and is not punctured, it may signal that some downward price action could develop and sellers can take advantage.
Momentum traders may actually want to use the 1.27000 support juncture which is nearby as a key indicator too. If this support level doesn’t hold and the 1.26800 price is challenged, bearish traders may believe that further downside momentum will continue. However, the USD/CAD has produced many reversals higher the past seven weeks after producing slight downside action, and bullish traders may want to wait for slight moves lower in order to target higher ground which they believe will be easier to attain.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.27850
Current Support: 1.26800
High Target: 1.28650
Low Target: 1.25880