The USD/CAD currency pair on Wednesday rallied to retest the current yearly highs of about 1.3209 but pulled back late on to settle below 1.3200 after the FOMC statement. The currency pair has been on a bullish run over the last nine days and this could continue through Friday, despite today’s pullback.
The pullback pushed the currency pair off overbought levels of the RSI indicator in the 60-min chart in the afternoon session. This could trigger the next rebound that carries the pair to new yearly highs.
USD/CAd Fundamentals Overview
From a fundamental perspective, the USD/CAD currency pair is trading at the back of a busy period in the US market. On Monday, the US New Homes and New Home Sales Change for December missed the (MoM) expectations of 0.73M and 1.5% respectively with 0.694M and -0.4%. Durable Goods Orders ex-transportation and e-defense also came short of 0.2% and 0.5% respectively with -0.1% and -2.5%. Nondefense capital goods orders ex-aircraft also disappointed with -0.9% versus 0.0%.
And on Wednesday, Pending Home Sales for December missed the (MoM) expectation of 0.5% with -4.9%. Later in the day, the Federal Reserve issued a statement keeping the base interest rate unchanged at 1.75%. Traders will be looking forward to the initial and continuing jobless claims data expected on Thursday.
Meanwhile, the coronavirus continues to affect global markets with the commodity-pegged Canadian Dollar losing ground in recent trading sessions. Thousands are now reported to be infected with the deadly virus while the dead are approaching 100 in China.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair appears to be trading within an ascending channel, which shows a bullish bias in the short-term market sentiment. The currency pair has recently bounced off the boundary to the overbought levels of the RSI indicator. This creates room for the bulls to target on the next rebound.
Therefore, the bulls will be targeting short-term profits at around 1.3210 or higher at 1.3223. On the other hand, the bears will hope for more downward movements towards 1.3188 or lower at 1.3173.
USD/CAd Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency pair continues to trade in a descending channel, which indicates a long-term bearish bias in the market sentiment. The currency pair is now closing on the trendline resistance up top. This could trigger the next pullback.
Therefore, the bears will be targeting long-term profits at around 1.3000 or lower at 1.2868. On the other hand, the bulls will hope that the upward momentum carries on towards 1.3356 or higher at 1.3494.