On the 5th of August, the USD/CAD traded near the 1.24750 level as it came off a high of about 1.25750 seen only two days before. If you didn’t look at charts and viewed the current price of the USD/CAD at nearly 1.25780, you may be tempted to say nothing has really happened since then of circumstance. However, that would be wrong, since the 6th of August until now the Forex pair has traversed a range of nearly 1.250000 to 1.25850 with reversals part of the trading landscape.
While the USD has been stronger in many major Forex pairs the past couple of days, the USD/CAD has not crashed through important mid-term resistance. High water marks demonstrated last night around 1.25880 were not able to seriously test late July highs when the USD/CAD traded above the 1.26000 level for brief moments on a few occasions. Yet, there is no doubt technically that the USD/CAD is maintaining the higher realms of its short-term range, and if the Forex pair is able to puncture the 1.26000 level higher, it may set off alarm bells in the halls of financial houses.
The broad Forex market has become choppy the past couple of days as fundamentals surrounding data from U.S employment numbers, inflation concerns and worries about the rising numbers of coronavirus from the Delta variant globally get plenty of media coverage. Technically, traders of the USD/CAD may find the current price juncture uncomfortable unless they feel they have a clear perspective on direction. Stop loss ratios may prove to be a solid insurance policy in the short term to guard against sudden moves.
Just last week the USD/CAD looked like it might be able to reestablish a bearish trend, but the results from the past two days have proven difficult for speculators who have pursued selling positions. The current trading vicinity of the USD/CAD has the pair within sight of important short-term resistance and, if the 1.25850 juncture proves vulnerable and prices are sustained near the 1.25900 level, traders cannot be faulted for believing another push higher will test late July highs.
Traders may want to wait for momentum to accumulate above the 1.25800 to 1.25900 junctures before buying the USD/CAD. But aggressive traders may see small pushes backwards near the 1.25700 to 1.25650 levels as buying opportunities if support levels prove durable. The short term is likely to produce plenty of reversals for the Forex pair, but momentum may prove stronger on the bullish side of the coin for traders willing to wager.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.25850
Current Support: 1.25400
High Target: 1.26120
Low Target: 1.24720
