Current trend

Yesterday, USD strengthened against CAD. The focus of investors' attention is again on the trade war between the US and China. The US administration announced plans to introduce a new 10% duty on Chinese goods totaling USD 200B, which may enter into force on August 30. Thus, President Trump's threats to bring the total amount of Chinese goods levied by the export duty to 500B dollars are becoming more real. The Chinese authorities called this step of the US totally unacceptable and threatened with retaliatory measures and proceedings within the WTO. An increase in the June Producer Price index by 3.4%, which was 0.2% higher than the forecast, supported USD, too.

The Bank of Canada interest rate decision has met the forecast – the rate was increased to 1.5%, which supported CAD in the short term, after which the pair grew again.

On Thursday, investors are waiting for the publication of June inflation data in the US. It is expected that the Consumer Price Index (YoY) may reach 2.9%, and Consumer Price Index Ex Food & Energy (YoY) will reach 2.3%. Thus, the basic indicator of inflation may remain above the target level (2.0%) for the fourth consecutive month. However, despite good economic results, FOMC members can reduce the number of rate increases this year, primarily due to the deepening trade US-China crisis.

Support and resistance

On the 4-hour chart, the instrument is trading near the upper border of Bollinger bands, the price range is widened. MACD histogram is in the positive area, gradually increasing its volumes, the signal line crosses the zero one and the histogram body upwards, giving a buy signal.

Resistance levels: 1.3200, 1.3223, 1.3250, 1.3300.

Support levels: 1.3160, 1.3130, 1.3100, 1.3080, 1.3050.

Trading tips

Long positions can be opened from the level of 1.3230 with the target at 1.3400. Stop the loss is 1.3200.

Short positions can be opened from the level of 1.3130 with the target at 1.3080 and stop loss 1.3160.

Implementation period: 1–3 days.

US Dollar vs Canadian

BuySellSpread
1.330821.3303448

Scenario

TimeframeDay's Range
RecommendationsBUY STOP
Entry Point1.3230
Take Profit1.3400
Stop Loss1.3200
Support levels1.3050, 1.3080, 1.3100, 1.3130, 1.3160, 1.3200, 1.3223, 1.3250, 1.3300

Alternative scenario

RecommendationsSELL STOP
Entry Point1.3130
Take Profit1.3080
Stop Loss1.3160
Support levels1.3050, 1.3080, 1.3100, 1.3130, 1.3160, 1.3200, 1.3223, 1.3250, 1.3300
USD/CAD: general analysis

The material published on this page is produced by the Claws&Horns Company and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

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