The USDCAD long-term bulls have enjoyed a very smooth move to the upside since the break of the 1.0650 resistance back in the first month of 2014. Since then the pair has moved a hefty 2500 pips to the upside with current prices trading around the 1.315x regions. As of now everything is bullish technically, fundamentally and economically. If this momentum holds and all the attributes fuelling the USDCAD bulls remain unchanged, then this pair may trade to the 1.4000 level which was resistance back in mid-2014.

Given the events that have been happening globally, the USDCAD is a perfect example of a strong weak currency combination. The constant USD strength combined with the CAD weakness have seen trend traders enjoy one of the smoothest moving trends since 2014. The global issues which have caused commodity prices to drop dragging down the Canadian economy, combined with the ever increasing strength of the USD have given numerous opportunities to long this pair.

Further possibilities of an interest rate hike in September have given most if not all trend traders every reason to peruse the USDCAD. Speaking of an interest rate hike, the Canadian economy has gone through a period of interest rate cuts. An annualised fall in GBP of 0.6% combined with statistical figures showing that the economy has contracted by 0.2% in Q2 does suggest another pending cut in the latter future. The slowdown in China and oversupply of global Oil stocks are adding more pressure to the Canadian economy. This pressure can be translated on most CAD pair currencies with the movement looking one sided.

The main focus though will be on the NFP results which will be released tomorrow for both the USD and CAD. Whilst sentiment remains bullish on the USD with positive NFP releases expected, the CAD harbours a bearish sentiment and most market participants are expecting unimpressive NFP figures from Canada. If this does truly materialise, the perfect scenario will be created which will assist the USDCAD bulls to the long term 1.4000 level discussed earlier.

Focusing back on the technicals, USDCAD is strong bullish

  • Prices are trading above the daily 20 SMA
  • Prices trade above the weekly and monthly pivot
  • The MACD trades to the upside.

There are higher highs and higher lows, attributes of an uptrend. Some resistance has been found at the 1.3190. The double NFP tomorrow will present a lot of volatility on this pair but if figures are good for the States and bad for Canada, then prices may shoot aggressively to the upside. The best action may be to simply wait post NFP to trade this pair.

Intraday - The USDCAD is currently looking intraday bearish. Prices may decline to the 1.3100 pre –NFP. I personally will be observing this pair until the NFP results are released tomorrow.

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