USD/CAD Surges to a New 6-Week High After US Preliminary Markit PMIs

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The USD/CAD currency pair on Wednesday rallied to a new 6-week high of about 1.3380 following the latest round of US preliminary Markit PMIs. The currency pair continues to trade within a rising channel in the 60-min chart after performing a short-term trend reversal.

The pair has now broken out of a descending channel and surged to trade above the 100-hour and the 200-hour SMA lines. It is now approaching overbought levels of the 14-hour RSI.

USD/CAD Fundamentals Overview

The USD/CAD currency pair is trading at the back of a relatively quiet period in both the US and the Canadian markets. Besides the US Fed Chair Jerome Powell’s speech and testimony this week, nothing much was able to rattle the markets. 

On Wednesday, the US House Price Index for July beat the (MoM) expectation of 0.5% with a change of 1%. The US preliminary Markit Manufacturing PMI for September also outperformed 53.2 with 53.5 while the Services PMI missed 54.7 with 54.6. On the other hand, the preliminary Markit Composite PMI edged lower to 54.4 down from 54.6. 

Looking forward, traders will look to Thursday’s initial and continuing jobless claims for direction in the coming days. Earlier in the week, the US Chicago Fed National Activity Index for August missed the expectation of 1.95 with 0.79.

USD/CAD Technical Analysis (the 60-min Chart)

Technically, the USD/CAD currency pair appears to be trading within a rising channel in the 60-min chart. This indicates a significant short-term bullish bias in the market sentiment. The new pattern formation comes off a descending channel, which indicates a deliberate attempt by the bulls to trigger a trend reversal.

They will be targeting short-term profits at around 1.3433 or higher at 1.3485. On the other hand, the bears will look to pounce for profits at around 1.3332 or lower at 1.3277. 

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair appears to have recently made a bullish breakout off sharply descending channel. The pair near;y erased all the gains made in the preceding rally after falling closer to the 100% fib level before the rebound.

The bulls will target long-term, profits at around 61.80% and 50% Fib levels at 1.3608 and 1.3811, respectively. On the other hand, the bears will look to pounce for profits at around 1.3200 or lower at 100% Fib level at 1.2962.

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