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Oversold USD/CAD Ready to Bounce Off - Fibonacci Retracement Looms!   


The USD/CAD pair was closed at 1.32630 after a high of 1.33300 and a low of 1.32332. Overall the movement of the USD/CAD pair remained bearish throughout the day. The USD/CAD pair dropped for the4th consecutive day and fell to the lowest level near February at 1.3230 on Wednesday. It was all caused by the broad-based US dollar weakness and the rising crude oil prices.

The risk-on market environment boosted crude oil prices on Wednesday, and the barrel of West Texas Intermediate jumped to a fresh five months high of $43.50. Adding in the gains of crude oil was also the US Energy Information Administration data on Wednesday that showed that crude oil stocks in the US were declined by 7.3M barrels last week and provided additional strength to WTI.

However, the WTI Crude oil could not remain in the 43 territories as the profit-taking caused a decline in the prices. But WTI managed to remain bullish throughout the day, and that gave strength to commodity-linked Loonie. The strong Loonie then weighed heavily on the USD/CAD pair, and the pair started to decline.

Meanwhile, Canada's statistics released a report of Trade Balance in June that showed a deficit of 3.2B against the expected deficit of 0.6B and weighed on the Canadian Dollar. This lead to the limited losses in the USD/CAD pair on Wednesday.

However, On the US side, the ADP Non-Farm Employment Change was released at 17:15 GMT. It showed that the US created 167K jobs in July compared to anticipated 1200K and weighed on the US dollar. This added further into the losses of USD/CAD pair on Wednesday.

At 17:30 GMT, the Trade Balance from the US cam in line with the expectations of -50.7B, The Final Services from the US side rose to 50.0 against the anticipated 49.6. The ISM-Non Manufacturing PMI rose to 58.1 against the estimated 55.0. Though most data from the US was in favor of the US dollar, due to broad-based US dollar weakness and other factors, USD remained stressful and kept the pair USD/CAD under pressure also.

Daily Technical Levels

Support Resistance

1.3221 1.3323

1.3175 1.3379

1.3119 1.3425

Pivot point: 1.3277

The USD/CAD is trading at 1.3275 level, holding right above a solid support area of 1.3238 level. Closing of Doji candles above 1.3240 level is suggesting odds of bullish trend continuation in the market. On the higher side, the USD/CAD may head for 38.2% Fibonacci retracement level, which stays at 1.3319 level before showing off another round of selling. However, the violation of the 1.3237 level can trigger selling until 1.3185 level. Let's keep an eye on 1.3235 to take a sell trade today. Good luck!

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