USD/CAD rallied roughly 31 pips to 1.2543 after the Canadian RBC manufacturing report posted its lowest reading since the survey started in 2010. The February reading came in at 48.7, a modest reduction in production, but halted a 21-month period of continued expansion.
If we continue to see dismal economic readings regarding the Canadian economy, expectations may grow for the Bank of Canada to ease again.
Price action on the 60-minute USD/CAD chart shows that price is tentatively forming a bullish ascending triangle pattern. Today’s bullish move occurs while price has remained comfortably above the 50-day SMA. Last month price consolidated between and 1.2400 and 1.2800 and we could see price finally breakout towards the 1.30 region if we continue to see falling oil prices and strong US economic data.
The trade: Buy USD/CAD 1.2550, with a stop loss at 1.2450 and take profit at 1.2795. The risk/reward ratio is around 1:2.5
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading