USD/CAD Analysis: Exchange Rate Rises for Seven Consecutive Days
Data shows that USD/CAD has formed seven consecutive bullish candles since 3 October, and today could mark the eighth in this sequence.
This strong rise in the pair has been driven by the strengthening of the US dollar amid several fundamental factors. Media reports suggest that traders are reassessing the likelihood of further Federal Reserve rate cuts after yesterdays inflation data release (as reported by Forex Factory):
Core Consumer Price Index (CPI) month-on-month: actual = 0.3%, expected = 0.2%, previous = 0.3%;
CPI month-on-month: actual = 0.2%, expected = 0.1%, previous = 0.2%;
CPI year-on-year: actual = 2.4%, expected = 2.3%, previous = 2.5%.
Market participants may be speculating that the Fed will hold off on further monetary easing. Will the US dollar continue to strengthen against the CAD?
Technical analysis of the 4-hour USD/CAD chart shows that:
The RSI indicator remains above 80, a rare occurrence in 2024;
The price is nearing the upper boundary of a descending channel (drawn from key reversal points marked by arrows);
The price is below the 1.3800 level, which acted as support in August but was broken, suggesting potential resistance.
These technical factors point to the possibility of at least a bearish correction from overbought levels after a 2% rise in USD/CAD from its October low. The long upper wicks on recent candles further support this idea.
Bears may attempt to take control with the release of key news today:
15:30 GMT+3 Canadian labour market data;
15:30 GMT+3 US Producer Price Index (PPI) data.
Read more: https://fxopen.com/blog/en/oa-usd-cad-analysis-exchange-rate-rises-for-seven-consecutive-days/
Text source: Forex Trading Blog
