The USD/CAD nearly hit the 1.35680 ratios in early trading yesterday as it kept climbing. Before going into the weekend the USD/CAD touched the 1.35655 level. These highs came after lows were produced early last week on Monday which challenged the 1.33140 mark, and Wednesday’s low close to the 1.33350 ratio, making it appear that the lows in the middle of April around 1.33000 could be targeted via wagering tests.
However, the USD/CAD Reversed Significantly on Thursday and Kept a Higher Pace on Friday
Speculators who were looking for downside price action late last week from the USD/CAD likely found their wagers in trouble quickly, and hopefully stop losses protected them from the momentum higher which proved strong. After hitting highs yesterday, however, the USD/CAD did start to sell off slightly and is near a price of 1.34700 as of this writing.
While financial institutions have seemingly shown a belief the U.S. Federal Reserve will become more cautious regarding its interest rate hikes as soon as June, some nervousness obviously still exists in the broad markets which may be fueling momentary reversals higher in the USD/CAD. Yesterday’s U.S Empire State Manufacturing Index report came in wildly below expectations and the negative report may have given traders another signal the Fed may have to halt interest rate hikes. However, the U.S. will release Retail Sales numbers today and the outcome will impact the USD/CAD, this is making traders nervous as they await the results.
Nervous Sentiment Affecting Outlook for the USD/CAD
- While lows made early last week brought the USD/CAD into sight of important support, nervous buying remains a threat and today’s U.S Retail Sales figures will be important.
- Weaker than anticipated Retail Sales could spur on selling of the USD/CAD and the 1.34550 ratio should be watched as a barometer.
- Stronger Retail Sales numbers would likely increase nervousness among financial institutions and may make support levels durable in the near term, meaning the USD/CAD could climb again.
The near term is likely to remain cautious, but today’s data from the U.S. will certainly push the USD/CAD and cause short-term volatility. The move lower in the USD/CAD has not been killed off completely, and some speculators may believe the currency pair will eventually start to traverse lower again. However short-term conditions remain nervous and traders should be conservative and use their risk management wisely. Looking for lower USD/CAD moves may feel attractive, but risk-taking tactics need to be fully implemented to guard against surprises.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.34850
Current Support: 1.34600
High Target: 1.35225
Low Target: 1.34090
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