USD/CAD Breaks Resistance Unfazed by Trade Deficits
Technical Sentiment: Bullish
Key Takeaways
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- Canadian Trade Balance posted a surprising uptick to 0.7B for September, however plummeting oil prices didn’t help the domestic currency gain against its counterparts;
- U.S. Trade Deficit Widened to -43.0B on declining exports;
- USD/CAD broke above October’s High at 1.1382, signaling more gains for the pair;
USD/CAD uptrend continues to accelerate despite a ballooning U.S. trade deficit, underlining investors’ confidence in the greenback.
Technical Analysis
A fresh Higher High is being pursued by USD/CAD bulls now that price has successfully rallied above 15th October high at 1.1384. Only last week price broke above the resistance of a bearish channel (temporary consolidation in the shape of flag pattern on Daily timeframe), and in less than three days the pair has successfully recovered all losses from previous weeks. This solidifies the uptrend configuration while paving the way for more gains in the near future.
Spot is currently trading at 1.1405, stabilizing above last month’s resistance. Although buying pressure is showing no signs of decreasing, overbought conditions are likely to take their toll soon. We expect rallies to continue towards 1.4160/70, with a possible dip soon afterwards in order to re-test 1.1382 and confirm this level as support.
Long term targets towards the upside include 1.1600, currently the resistance of a bullish channel dating back to 2012, with an even larger target at 1.1750, where a multi-year price pivot zone should be the ultimate target for long-term buyers.
