During the last sessions of the dollar index (#DX) has been showing a negative trend. On Wednesday, there were aggressive sales of the US currency. The Federal Reserve System, as expected, kept the range of the key interest rate at the same level of 2.25% -2.50%. The central bank said it would not rush to further tightening of monetary policy in the current year. The Fed's Chairman Jerome Powell said that the regulator would focus on future statistical data from the United States, the state of the global economy, as well as growing risks in international trade.
At the moment, participants in financial markets have taken a wait-and-see attitude before publishing a report on the US labor market for January on Friday, February 01. These statistics can have a significant impact on the dynamics and further alignment of forces on majors. Recent reports from the United States were ambiguous. Thus, preliminary data from ADP pointed to an increase in the number of people employed in the non-farm sector in January to 213K, which is above market expectations at a level of 180K. At the same time, the previous figure was revised downward from 271K to 263K. The consumer confidence index fell to 120.2, which is the lowest level since September 2017.
Experts expect the main indicators to deteriorate: the number of people employed in the US non-farm sector will slow to 165,000; growth in average hourly wages will be 0.3% (m/m) compared to the previous value of 0.4% (m/m). We recommend paying attention to the difference between the actual and predicted values of the figures.
Let's consider the current technical pattern on the USD/CAD currency pair
- Support levels: 1.31200, 1.30500, 1.30000
- Resistance levels: 1.32000, 1.32850, 1.33700
- - the price has fixed below 50 MA and 200 MA;
- - the MACD histogram is located in the negative zone and continues to decline.
The USD/CAD currency pair continues to show negative dynamics. At the moment, Loonie is testing the local support of 1.31200. The round level of 1.32000 is already a “mirror” resistance. The trading instrument is tending to decline. The confirming signal is the classical figure of the technical analysis, Flag. Indicators also point to the power of sellers:
Additional support for the Canadian dollar is provided by the bullish sentiment in the oil market. Nevertheless, we recommend opening positions from the key levels.
If the report on the US labor market is weak, the USD/CAD currency pair may continue the downward trend. The target level of movement is 1.30500-1.30000.
An alternative could be the recovery of the USD/CAD quotes to 1.32500-1.33000.
Confirmations and entry points to the market should be looked for on lower timeframes. When tracking positions, we recommend using a trailing stop.
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.Open Account