At the European session on Wednesday July futures of crude oil Brent fell below $64.00 per barrel. As the Canadian highly dependent on the oil prices it fell immediately. While the pair USD/CAD has grown for over 60 points from the lows of 1.2385. Recall that at the end of this week OPEC meeting will be held in Vienna, where quotes for oil production are not going to be reduced. Considering the expansion of exports in Saudi Arabia, it can be assumed that the oil prices will continue to fall. This decline can be also supported by strengthening in the USD due to the US fed policy aimed to the increase in interest rates. In the medium-term the pair USD/CAD is likely to grow.
On Friday, the news, which can affect the market in the whole, and the pair USD/CAD, will be released. It will be the Canadian data on the number of employed (the index is expected to grow) and unemployment rate (the index is likely to remain unchanged). The US news will include non-farm payroll for May, which will rise, according to the forecast. If the predictions prove to be correct, the pair will continue to rise sharply. If the forecast is not correct, the pair can rise, but slowly and undergo corrections.
Some important news is scheduled for the release today. ECB will adopt interest rate decision; the US data on new jobs, as per ADP for May will become known; Canadian export/import statistics will be made public.
Support and resistance
On the daily chart in the medium-term the pair continues upward movement toward the highs of this year at the level of 1.2800, after pushing off from support level of 1.1975 (Fibonacci 38.2%) and moving average lines of ЕМА 200 and ЕМА 144. The indicators give mixed signals. On the daily chart OsMA histogram and Stochastic are declining, indicating correction. On the four-hour chart OsMA histogram is rising. In case of intersection with the zero line long positions can be opened. Stochastic is rising, giving a buy signal.
Support levels: 1.1975, 1.2185, 1.2290 and 1.2400.
Resistance levels: 1.2600, 1.2685 and 1.2725.
It makes sense to open long positions from the current price level with the targets of 1.2535, 1.2600, 1.2685, 1.2725 and 1.2800 and stop-loss at 1.2350-1.2280. Pending orders Buy Limit can be placed at the level of 1.2400.
Alternative scenario: breakdown of the level of 1.2290 (23.6% Fibonacci) сwith the targets of 1.2240, 1.2185, 1.2090 and 1.1975.