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    IronFX Intraday Comment | USD/CAD | 13/01/2016

    • The dollar traded mixed against its major counterparts during the European morning Wednesday, in a light economic calendar. It was higher against CHF, GBP, EUR and SEK, in that order, while it was lower vs NOK and CAD. The greenback was virtually unchanged against NZD, AUD and JPY.

    • In the absence of any major market moving events, CAD and NOK strengthened against the dollar primarily due to the minor rebound in oil prices. After breaching briefly the USD 30 zone, the US WTI crude rose on Wednesday, to trade just above it again. The rise of these two oil related currencies however is likely to be temporary, because the surrounding structural conditions remain unchanged. The global oil glut shows no signs of declining and OPEC members continue to pump oil, in a hope to bring the prices low enough to push higher-cost North American producers out of the market. China’s economic slowdown suggests the demand side remains weak as well. On top of that, the Iranian oil output should feed the global glut this year with the expected lifting of Western sanctions on the country's exports. As a result, we would expect these oil related currencies to remain under selling pressure.

    • USD/CAD traded lower during the European morning Wednesday after it hit resistance fractionally above the 1.4300 (R1) line. As long as the rate is trading above the short-term uptrend line taken from the low of the 4th of January, the short-term outlook remains positive in my view. A clear break above 1.4300 (R1) would confirm a forthcoming higher high on the 4-hour chart and could open the way for the 1.4400 (R2) area. Taking a look at our near-term momentum indicators though, I see the possibility for further setback before the bulls decide to pull the trigger again. The RSI edged down after it hit resistance near its 70 line, while the MACD has topped and fallen below its trigger line. What is more, there is negative divergence between both these indicators and the price action. A decisive dip below 1.4175 (S1) could confirm further setback and could aim for the next support at 1.4060 (S2). On the daily chart, I see that the rate is trading well above the uptrend line taken from the low of the 14th of May. Therefore, I would consider the longer-term path of USD/CAD to be positive as well and I would treat any further near-term declines as providing renewed buying opportunities.

    • Support: 1.4175 (S1), 1.4060 (S2), 1.4000 (S3)

    • Resistance: 1.4300 (R1), 1.4400 (R2), 1.4500 (R3)

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