The USDCAD spent yesterday grinding lower, breaking through one support level after another until finally reaching a familiar ceiling-turned-floor from early October (red circles on the chart). In my late-day video, I noted that the pair appeared to have reached its final support zone between 1.3968 and 1.3975, and that a reclaim of the 61.8% retracement at 1.39837 would be the first sign that buyers were trying to stabilize the fall. That is exactly what played out as price rebounded and began correcting higher toward the 1.4000–1.4007 swing area. Early today, sellers leaned against that region, but as North America gets underway, the pair has pushed through it.
The next key upside markers are the 50% midpoint of the post-October range at 1.40135, followed by the near-converged 100- and 200-hour MAs between 1.4022 and 1.4024. Earlier this week, price lows repeatedly held near the 50% level and the 100-hour MA, so I would expect initial resistance on the first test of those moving averages, with stops likely triggered on a clean break above. Conversely, if the pair finds willing sellers against those MAs and moves back below the 50% and stays below, the 1.4000 level is back in play with the battle reigniting at the area.
Fundamentally, lower oil prices are adding to CAD weakness. Reports of a secret U.S.–Russia plan to end the war in Ukraine pushed crude sharply lower, with WTI down $1.65 (-2.72%) at $59.02. The move briefly tested the $58.12 low from November 13 — the weakest level since October 22.
Sellers were in control yesterday but that fall is now at risk as the price moves back into the heart of the recent trading range. Will the sellers return or will the short term shift back to the upside, continue in the trading today? Watch the 100/200 hour MA for the clues to the buyers desire.
This article was written by Greg Michalowski at investinglive.com.