Last week was beneficial for the Canadian dollar, as it has grown versus its American counterpart. After reaching new local lows at the level of 1.2275, the pair USD/CAD started to decline. Canadian GDP growth, as well as weak data on the US labor market put pressure on the pair, after which price has declined to the level of 1.2460 but failed to go further down. This support coincides with Fibonacci level of 23.6%, and prevents further decline in the pair.
This week the pair USD/CAD is traded in the range of 1.2440-1.2525, however, downward sentiment prevails. Today, final minutes of the US FOMC meeting will be made public. Canadian labor market information, which will become known at the end of this week, can increase pressure on the pair.
Support and resistance
On the hourly chart Stochastic demonstrated that the pair is oversold giving a buy signal. MACD continues to show the decline. Moving average lines are moving downwards. If moving average line with the period 20 crosses MA 50, we will get a sell signal.
Resistance levels: 1.2490, 1.2525, 1.2575. The “bulls” are targeted at consolidation above the level of 1.2525. Support levels:1.2460, 1.2440, 1.2420 and 1.2390.
It makes sense to open short positions below the level of 1.2440 with the target of 1.2300. Buy positions are recommended after consolidation of the price above the levels of 1.2525 and 1.2595. It is likely that the price will trade within narrow range for some time and after that will change direction.