Technical analysis: USD/CAD
The Canadian dollar made big gains against the US dollar last week, boosted by the EU summit along with risk currencies and oil prices, with USD/CAD currently testing major support just above parity. With the Canadian economy growing by 0.3% in April, better than the 0.2% predicted, the increase could affect the second quarter growth rate, providing the ground for the Canadian growth rate trend to continue.
As headlines from Europe keep investors focused on sovereign ratings and debt metrics, the CAD could benefit further sending USD/CAD lower. With the MACD signal line poised to cross below the zero line, and a downtrend line capping RSI since the beginning of the month on the daily chart, the technical picture provides further support to the negative outlook in the market.
Once the pair clears the next major support level at 1.0041, we could see the bears dragging the pair all the way down to the 2012 lows at 0.9801. In the alternative scenario, mainly if the Fed rules out the possibility of fresh quantitative easing, the bulls could push the pair higher to April highs at 1.041.
Published: 4 July 2012
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