Last week’s news and movement
USD/CAD opened last week just at 1.3081, peaked at 1.3124, and then the CAD strengthened on the reports that the US had relaxed some of it’s demands in the NAFTA-negotiations, and then yet more when the Fed didn’t raise its dot-plot. USDCAD then fell to a low of 1.2824 and closed the week at 1.2889, with below average volume traded.
The first two days of this week has been calm, trading in a narrow range just below the strong level (currently resistance) at 1.2920.
Events in the coming week
US Core Personal Expenditure on Thursday is the biggest release in the remainder of this week, shortened by Easter.
Technical outlook
Last week USDCAD fell 200 points, at below-average volume, on the Fed-statement and NAFTA-news.
There was a strong resistance at 1.2820 and the USDCAD bears appeared to run out of steam.
The daily chart shows a golden cross, a bullish 50-day SMA crossing over 200-day SMA.
The USDCAD is trading well above its 50, 100 and 200-period simple moving averages and has found a lot of support in the 1.28-1.29 range.
A strong push above 1.2920 could indicate a new turn up towards 1.33, although a drop below 1.2820 could revive bearish bias.
Technical levels:
Resistance
1.3460
1.3320
1.3180
1.3000
Pivot
1.2920
Support
1.2820
1.2790
1.2665
Fundamental outlook
It is an understatement to say that currently there is a great deal of uncertainty regarding both the USD and the CAD.
The political situation in the US is hard to read. President Trump is under pressure from Stormy Daniels, Robert Mueller, difficulty hiring lawyers and disappointed GOP lawmakers that choose to not defend their seats this November.
The big issue is the NAFTA-negotiations, and last week there were reports that there was a break-through and the market responded positively.
There are however many question marks, only 6 of approximately 30 chapters have been closed, and no one would be surprised if president Trump throws in a last-minute curveball in the negotiations, if not for any other reason than that he needs a distraction from his mounting legal issues.
Possible scenario:
The technical indicators are leaning towards the upside, and if we get new negative news about NAFTA we could very quickly move towards 1.33.
