The USD/CAD sprang higher late last night as the U.S Federal Reserve announced its interest rate policy and resistance levels crumbled quickly.
The USD/CAD has produced a volatile spike higher and has soared past short-term resistance levels with ease. The U.S Fed’s FOMC Statement sparked a reaction within the USD/CAD and the Forex pair is now traversing below highs last seen in early May. The long-term bearish trend within the USD/CAD is certainly under question as of this writing, as speculators contemplate mid-term charts and consider the direction.
As of this writing, the USD/CAD is trading slightly above the 1.23000 juncture and the next level of resistance that should be monitored is the 1.23200 to 1.23400 values. Yesterday’s abrupt move higher and this morning’s ability to sustain the bullish surge need to be given attention. Traders need to decide if the trend which has emerged will continue, or if a bearish reaction to the spike higher will develop sooner rather than later.
Many speculators have likely been pursuing the bearish momentum within the USD/CAD mid-term and they may be skeptical about the sudden move higher. There is a possibility that the move by the USD/CAD has been overdone, meaning it was too exaggerated. If this perspective is proven to be correct, there are no guarantees that the low of 1.21700 will be achieved. This ratio was the value the USD/CAD was trading near when the surge higher broke loose yesterday. However, even if this value which is well below current market conditions is not touched, it should serve as a consideration for traders with a bearish perspective.
The USD/CAD, however, continues to sustain its price in the short term over the 1.23000 juncture. The short term will likely see additional volatility within the Forex pair as financial houses try to find equilibrium and deal with the bullish momentum demonstrated the past day.
The gains of the USD/CAD do appear to have been exaggerated, but before traders decide to wager on downside price action being reignited they may want to remain rather cautious. Allowing the short-term bullish move to run out of power will be important.
While it may seem like a dangerous wager to allow the USD/CAD to traverse slightly higher and sell the Forex pair near higher resistance levels, it may prove to be a worthwhile wager. Yes, the USD/CAD may move higher in the short term, but if the early May high values of 1.23200 to 1.23400 begin to hold back the rise, a reversal lower may develop again.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.23240
Current Support: 1.22600
High Target: 1.23670
Low Target: 1.21750