As of early this Monday morning the USD/CAD has held onto plenty of the gains established by the Forex pair before going into the weekend. As of this writing the USD/CAD currency pair is near the 1.32900 mark, on Friday a high of nearly 1.33090 was touched briefly. A low on the 13th of September saw the USD/CAD around the 1.29520 realm.
Inflation Data and Concerns about U.S Interest Rates to Come
The U.S Federal Reserve will be conducting their interest rate meeting this coming Wednesday and a hike of 0.75% is forecasted. Inflation data in the U.S remains stubborn and tomorrow Canada will publish Consumer Price Index statistics, along with other inflation reports. The mark of 1.33000 being penetrated before going into the weekend, hit values last seen in November of 2020.
- Technically these high values have been traded before by the USD/CAD, the range of the forex pair may appear overbought, but the bullish trend is evident.
- Volatile conditions are likely over the next few days, as investment houses react to the interest rate outlook of the U.S Federal Reserve, which will be heard this Wednesday.
Contrarian Traders looking for Reversals Lower Should be Cautious
As the USD/CAD continues to challenge new highs, traders who believe this is an opportunity to seek reversals lower should remain cautious. While it may be true in the long term the USD/CAD has been overbought, picking the correct time when a new downward trend is going to emerge may prove difficult. Short term trades which seek natural cycles lower briefly cannot be faulted, but risk taking tactics will need to be effective.
The coming three days of trading in the USD/CAD will remain dynamic. The sudden elevator ride upwards generated after touching lows on the 13th of September, which had not been seen since the 26th of August shows behavioral sentiment can shift swiftly. Highs made on Friday clearly remain in sight early this morning for the USD/CAD and if the 1.33000 were to be toppled again and sustained, fast conditions could be dangerous.
The old adage of buy the rumor sell the fact may come into play over the next couple of days, but traders of the USD/CAD will need to time their trades well as the U.S Federal Reserve makes news. Wagers on the USD/CAD need to remain realistic and should target quick hitting goals, which do not allow profits to linger and simply disappear into thin air if reversals suddenly occur. The bullish trend of the USD/CAD may not disappear quite yet and speculators who want to bet on higher moves being demonstrated short term may want to pursue positions, but caution is advised.
Canadian Dollar Short Term Outlook:
Current Resistance: 1.32930
Current Support: 1.32719
High Target: 1.33195
Low Target: 1.32488
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