Fundamental View
The early raising rates of the Canadian regulator shows that it was a mistake as the consumers didn’t react positively to this event. This indicates that the consumers are not ready to embrace the new economic conditions.
Now, the oil is showing a negative attitude too, which means that the CAD may not gain momentum as oil is the most important resource of the Canadian exports. Another factor which gives further positive clues for buying USD and sell CAD is the fact that the US Federal Reserve Bank President confirmed a gradual rate hike outlook in support of the US Dollar.
Technical View
Now, in the technical side, we may see that the USDX made a clear Kumo breakout to the long side with all the lines out of the Kumo and in bullish formations and the Kumo aggressively up.
“The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners.”
Therefore, it is important to watch USDX so that to see if the dollar is gaining or losing power.
Now, in the USDCAD Chart, we may detect a significant trend to the bull side, almost the same picture as the USDX, which may give us more confidence to get in the bull side. With a valid Kumo and the breakout signal in place, we should be alert in order to find a good opportunity to ride the trend when the price bounces on the Kijun Sen (yellow line).
The Kumo is aggressively strong, and all the lines are out of the Kumo with a bullish formation. Therefore, I think that with the fundamental bullish picture we have it might be a wise move to consider to be a Bull.
About the Author:
Marios Athinodorou is TeleTrade’s market analyst and commentator. Apart from being an experienced trader, Marios is an advanced technical analyst and is interested in trading psychology. He has 7 years of trading expertise in Forex and CFDs, providing insights to share with all kinds of traders, from beginners to experts.
Among other, Marios is delivering weekly trading webinars. Sign up to upcoming webinars, here.