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USD/CAD Is Set to Test Downward Trendline - Is It Worth Selling? 

EagleFX

The USD/CAD was closed at 1.35483 after placing a high of 1.35706 and a low of 1.34855. Overall the movement of USD/CAD remained bullish throughout the day. The USD/CAD pair hit near the two-week lowest mark in earlier sessions but managed to recover and ended the day with gains on Tuesday. The broad-based US dollar weakness and increasing crude oil prices weighed on the pair USD/CAD and dragged it towards the lowest level.

The greenback came under some intense selling pressure and extended the previous day's losses after the White House advisor Peter Navarro said that the trade deal was over with China. The pair USD/CAD moved to its two week lowest level but managed to come back as Navarro clarified his statement afterward. Navarro said that his comments on the US-China trade agreement had been taken wildly out of context, and this clarification was also backed by US President Donald Trump, who tweeted that the phase-one deal was still intact. USD/CAD pair started moving in an upward direction after this clarification. Moreover, on Tuesday, the US Treasury Secretary Steve Mnuchin also weighed on the US dollar after he gave hints about the new stimulus package from Congress in July.

On the data front, the Flash manufacturing PMI from the US came in less than expected 50.0 as 49.6 and weighed on the US dollar. However, the Richmond Manufacturing Index came in as 0 against the expected -3 and supported the US dollar. The New Home Sales in May also came better than expected as 676K and supported the US dollar.

The better than expected Richmond Manufacturing Index and New Home Sales data gave strength to the US Dollar and pushed the USD/CAD pair on the upward track. The increasing Crude oil prices also supported commodity-linked Loonie and exerted some downside pressure on USD/CAD and limited its daily gains on Tuesday.


Daily Technical Levels

Support Resistance

1.3497 1.3584

1.3447 1.3621

1.3409 1.3671

Pivot Point: 1.3534

The USD/CAD is consolidating in a descending triangle pattern, which is extending a resistance around 1. 3580 levels. Bullish crossover of this level can extend buying until the next target level of 1.3629. Continuation of a buying trend can lead the USD/CAD prices further higher until the level of 1.3685. By the way, it's the same level that extended resistance to USD/CAD prices back on June 15. Let's consider taking a buy trade over 1.3565 area, and above this, we need to go after the 1.3650 level. Good luck!

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