USD/CAD Runs into Multi-Year Trend-Line Ahead of Bank of Canada

Talking Points:

– Today brings a Bank of Canada rate preference with a unequivocally legitimate possibility of another travel after a BoC’s pierce in July, that was their initial rate travel in 7 years. Our possess David Song previewed a eventuality progressing this morning.

– CAD-strength has been distracted given May, with USD/CAD down by some-more than -10%. A unequivocally clever CAD and a unequivocally diseased U.S. Dollar has brought in an older, longer-term trend-line into USD/CAD cost action.

– Want to see how USD and CAD have reason adult to a DailyFX Q3 Forecasts? Click here for full access.

To accept James Stanley’s Analysis directly around email, greatfully sign adult here.

Today brings a widely-watched Bank of Canada rate decision, in that there is a legitimate possibility of removing another rate travel after a BoC’s pierce in July. That rate travel in Jul was a initial in 7 years, and already markets have built-in a complicated expectancy for another. If a BoC doesn’t travel today, Oct looks probabilistic for that subsequent rate move; and this expectancy for tighter process out of Canada has kept a Canadian Dollar rather clever over a past 4 months. After topping-out around a 1.3800 hoop to start May, a span broke-below 1.2400 to start September, tallying a run of larger than 1,400 pips, or -10.5% in 4 months.

USD/CAD Daily: Dramatic Drop as CAD Prices-In Higher Rates

USD/CAD Runs into Multi-Year Trend-Line Ahead of Bank of Canada

Chart prepared by James Stanley

The USD dump around final week’s Non-Farm Payrolls report gathering a span down to find support during a trend-line that reason a lows in a span from 2012-2014. After initial using into this trend-line projection on Friday, a re-test on Monday reason again highlighting a awaiting of continued support around this level.

USD/CAD Weekly: Support Showing during Trend-Line Projection that Held Support 2012-2014

USD/CAD Runs into Multi-Year Trend-Line Ahead of Bank of Canada

Chart prepared by James Stanley

If a BoC does not travel today, logically we will see some component of CAD-weakness as short-term rate travel bets leave a market. The large doubt is how most debility we competence see, or how prolonged that competence last, since if a BoC doesn’t travel today, we’re substantially looking for that pierce in a month, that would substantially be distant progressing than any intensity moves from a Fed.

The trend-line common above can be a good barometer of this theme. If support can reason in a span for some-more than a integrate of days, traders can afterwards start to expel their gawk aloft on a pair, towards a array of insurgency levels that could make a downside trend appealing for delay purposes. The feeder section that rests between 1.2622-1.2660 is firm on possibly side by longer-term Fibonacci levels, and a revisit of this section could open a doorway for short-side delay in a pair. But before we get there, we have a array of levels to trade through: 1.2461 is a 2016 swing-low in a pair, 1.2500 is a vital psychological level, and 1.2550 gave a integrate of swings during a Aug gyrations that could keep seductiveness around that price.

USD/CAD Four-Hour: Resistance Levels Applied For Short-Side Continuation Approaches

USD/CAD Runs into Multi-Year Trend-Line Ahead of Bank of Canada

Chart prepared by James Stanley

If we do see CAD-strength around today’s BoC rate decision, we have a awaiting of perplexing to find support as a span trades during uninformed two-year lows. If a above trend-line finally gives way, there is a Fibonacci turn around 1.2180 that could be engaging for support plays, and next that we have a vital psychological turn of 1.2000; that if it doesn’t reason support, it should delayed down a selling, during a unequivocally slightest as this is a cost that’s had a bent to bleed seductiveness in USD/CAD. Below that, we have what could be an engaging ‘blow off’ turn that runs from 1.1750-1.1780.

USD/CAD Weekly: Support Levels Applied

USD/CAD Runs into Multi-Year Trend-Line Ahead of Bank of Canada

Chart prepared by James Stanley

— Written by James Stanley, Strategist for DailyFX.com

To accept James Stanley’s research directly around email, greatfully SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

About author