The USD/CAD currency pair on Monday plunged to retest the current multi-year lows of about 1.2273 following the latest round of ISM Manufacturing (ISMM) data. The currency pair continues to trade within a downward trend in the 60-min chart.
It has now fallen below the 100-hour and the 200-hour SMA lines. The latest pullback prevented the currency pair from reaching overbought levels of the 14-hour RSI. It has now moved closer to the oversold levels of the strength index indicator.
USD/CAD Fundamentals Overview
The USD/CAD currency pair is trading at the back of a relatively busy period in the US market. On Monday, the US ISM Manufacturing PMI for April missed the expectation of 65 with 60.7. The ISM Manufacturing employment index also came short of 61.5 with 55.1 while the Manufacturing New Orders index missed 66.6 with 61.3. On the other hand, the ISM Manufacturing Prices Paid beat 86.1 with 89.6 while the Markit Manufacturing PMI narrowly missed 60.6 with 60.5.
Looking forward, traders will be watching closely for the ISM Services data in mid-week and the non-farm payrolls later in the week. In Canada, the Markit Manufacturing PMI for April fell slightly to 57.2 down from 58.5 in March. Traders will also be watching out for Canada’s job numbers later in the week.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair appears to be trading within a descending trend formation in the 60-min chart. The trend has a Pearson’s correlation coefficient of 0.956, which means that it is likely to continue to the foreseeable future.
The bulls will be targeting short-term rebound profits at 1.2316, or higher at 1.2363 in case of a reversal. On the other hand, the bears will target pullbacks at 1.2250 around the mean of the regression trend, or lower at 1.2200.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency is pinned within a descending channel. The steepness of the channel suggests that the pair is still experiencing a strong long-term bearish bias in the market sentiment.
The bulls will be targeting potential rebounds at around 1.2450 or higher at 1.2635. On the other hand, the bears will look to ride the current trend towards 1.2075 or lower to 1.1883.