With the Crude Oil prices trading near six year lows, the Canadian Dollar weakened against its European and UK counterparts on Monday; however, it registered gains against US and Japanese currencies as softer economics hurt the USD while dovish tone of the BoJ continued weakening the JPY. The Loonie, as it is nicknamed, has been gaining across board during early hours of Tuesday ahead of Canadian Manufacturing Sales, scheduled for release during the later hours of the day. However, market participants await FOMC meeting, scheduled on Wednesday, in order to determine near-term Forex market movement.
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Given the backdrop, the following is a brief technical overview of the USDCAD, EURCAD, GBPCAD and CADJPY.
USDCAD seems forming rising wedge, a bearish technical pattern, on the H4 chart and is currently testing the support line of the formation, near 1.2740, breaking which the pattern gets confirmed and the pair could extend its decline to 1.2660, 1.2630 and the 1.2540 support levels. Further, a break of 1.2540 negates the chances of pair’s up-move and signals additional decline of the pair towards testing 1.2360-50 horizontal support-zone. On the upside, 1.2825 could provide immediate resistance to the pair before it tests the resistance-line of the formation, near 1.2875. On the break of 1.2875, the pair rejects the bearish technical formation and can rally towards 1.3000 mark.
Reversal from descending trend-line support, connecting the multiple lows marked in 2014, fueled the EURCAD towards breaking descending trend-line resistance on H4, signaling additional up-move towards testing 1.3650, 23.6% Fibonacci Retracement of its late January – till date decline. Further, a break of 1.3650 is followed by the 1.3720 and 1.3800 mark, breaking which the pair could rally towards breaking 1.3900 levels and testing the 50% Fibo, near 1.3930. On the downside, 1.3490 – 1.3485 could become immediate support for the pair before it re-tests its recent lows, also encompassing the broader descending trend-line, near 1.3380. On the sustained break of 1.3380, the pair can become vulnerable to test 1.3180 and 1.3050 in a quick decline.
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GBPCAD reversed from its Falling Wedge, bullish technical pattern breakout, near 1.8990 – 1.9000 zone, and is now targeting 1.8790 on the downside. Given the pair’s sustained break of 1.8790, it could further drift lower towards 1.8750 and 1.8670 support levels. However, additional decline below 1.8670 could fuel pair’s downturn towards testing 1.8520 horizontal support. Alternatively, a break of 1.9000 mark, confirms the bullish pattern and the pair could rally towards 1.9140 and 1.9350 in a quick up-move. Further, a break of 1.9350 could fuel the pair towards testing 1.9550.
50-day SMA continue compressing CADJPY up-move and the pair is likely re-testing the 94.10 - 94.00 support-zone, breaking which 93.50 and the 93.00 mark could become intermediate supports for the pair before it tests the yearly low near 91.70. On the break of 91.70, the 90.50 and the 90.00 psychological magnet is likely restricting the pair’s decline. Should the pair reverses from the current level, 95.20, 23.6% Fibonacci Retracement of its December – January decline, and the 50-day SMA, 96.00, could become immediate resistance levels for the pair. On the sustained close above 96.00, the pair could witness 96.80 and the 98.00 resistance levels.
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