CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Canadian dollar analysis: USD/CAD knocking on key 1.3605 support

Article By: ,  Head of Market Research
March 23, 2023 7:33 PM

USD/CAD takeaways

  • USD/CAD is forming a potential descending triangle pattern into 1.3650 support.
  • A break lower could expose support at 1.3560 or 1.3500 next.
  • Canadian retail sales and US PMIs on Friday will play a big role in whether the pair can hold above support.

It’s been a whirlwind week already between a handful of major central bank meetings and top-tier economic data, but US dollar weakness has been a key theme. Markets have speculated that the Fed is either done or nearly done raising interest rates in the wake of yesterday’s “dovish hike,” and as a result, the US dollar index is working on its sixth consecutive bearish day.

Source: StoneX, TradingView. Note this product may not be available to trade in every region.

Meanwhile, North of the 49th parallel, the Canadian dollar has seen more mixed price action after a mixed CPI report early in the week, with the loonie sitting roughly in the middle of the week-to-date performance of major currencies.

USD/CAD technical analysis: All eyes on 1.3650

Looking at the USD/CAD chart, the North American pair has put in a series of lower highs over the past two weeks, though rates have thus far found a floor near 1.3650. beyond approximating the 38.2% Fibonacci retracement of the February-March rally, that level represents previous-resistance-turned-support from the early March highs.

Within the next couple of trading days, we should have a breakout from the current consolidation pattern, with a break lower targeting the next Fibonacci retracements near 1.3560 or 1.3500. Meanwhile, an upside breakout would target the year-to-date highs above 1.3800 next.

Source: StoneX, TradingView

USD/CAD fundamental data to watch

Ahead of the weekend, Canada will release its monthly retail sales report for January. Though dated, the report will still provide insight into the health of the Canadian consumer, with economists expecting a 0.7% m/m gain after 0.5% growth the previous month.

After that, the “flash” US PMI report will give a timely estimate of manufacturing and service sector activity in the world’s largest economy. Readings below 50 could hint that banking fears and Fed rate hikes are finally taking their toll after a strong start to the year.

See our economic calendar for a full list of key events to watch this week and beyond!

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter @MWellerFX

How to trade with City Index

You can trade with City Index by following these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the market you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024