The USD/CAD currency pair on Tuesday rallied to 1.3030 before pulling back late on to find support at 1.3000 despite a positive US ISM non-Manufacturing PMI. The currency pair remains relatively on a bearish movement but it also enjoys strong short-term support from the 100-hour SMA while the 200-hour counterpart could prove to be a key resistance leveler at around 1.3050.
The currency pair has now resumed to the normal trading zone of the RSI indicator in the 60-min chart after hitting overbought levels early on in the day.
USD/CAD Fundamentals Overview
From a fundamental perspective, the USD/CAD currency pair is trading at the back of some key market and geopolitical developments that appear to even the ground between the Loonie and the greenback. On Tuesday, the US ISM non-Manufacturing PMI for December beat the expectation of 54.5 with a reading 55 up from 53.9 in the previous period. The US Trade Balance for November also improved to $-43.1B up from $-46.9B beating the expectation of $-43.8B.
In Canada, the International Merchandise Trade Balance for November edged higher to CAD-1.09B up from CAD-1.61B beating the expectation of CAD-1.15B while the seasonally-adjusted Ivey Purchasing Manager’s Index for December came short of the expectation of 53.8 with 51.9 edging lower from the previous reading of 60.
On Monday, the US Markit Services PMI and the Markit PMI Composite beat the expectations of 52.2 each with 52.8 and 52.7 respectively. On the other hand, Canada’s Imports and Exports for November missed expectations while the raw materials price index and the industrial product price (MoM) were better than expected.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAd currency pair appears to be trading under significant bearish pressure despite the recent rebound. This indicates that the bulls have failed in their attempt to take control of the market from the bears in the short-term.
Therefore, the bears will be targeting short-term profits at around 1.2975 or lower at 1.2950. On the other hand, the bulls will hope that the recovery can continue towards 1.3030 or higher at 1.3055.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency pair appears to be trading in a slightly descending wedge, which again supports the case of long-term bearish pressure in the market sentiment. The currency pair has recently bounced off oversold levels in the RSI indicator of the daily chart but still remains relatively close to the zone.
Therefore, this creates bearish opportunities at around 1.2917, 1.2825 and lower at 1.2750. On the other hand, bullish opportunities can be found at around 1.3107, 1.3202 and higher at 1.3335.