USDCAD runs higher to test the 38.2%, but backs off. What next?

The hot ADP employment data sent the USDCAD to the upside and in the process, the price broke above its 38.2% retracement of the move down from the May 25 high at 1.33213. The high reached 1.33287, but the price has since rotated back to the downside and currently trades at 1.3306.

That creates a dilemma for traders as the fundamentals were certainly stronger. Yields are certainly higher, but the technical rejection of the 38.2% is a negative for the pair.

For buyers of the pair, the technical story would start to wilt on a break below the 1.3271 to 1.3285 area. That area was home to swing levels on the hourly chart below (see red numbered circles on the chart below). Today’s low prices stalled within that area. It would take a move below that level to give sellers more control.

For sellers, traders should lean against the 38.2% retracement at 1.33213. If the price goes back above that level, I would expect the buyers to be more confident.

This article was written by Greg Michalowski at Source