USDCAD Forecast: Loonie slumps below 1.32500

Fundamentals:

Loonie broke down 1.32500 physiological level. We have published our USDCAD setup on Friday and we have reached our target.

Dollar sell-off was seen on Friday. Although there were no clear catalysts that could have a triggered a new wave of USD-selling,  dovish Fed expectations could be the reason.

The Wall Street Journal reports that Fed officials are weighing an early end to the balance sheet reduction scheme. The Federal Reserve is reducing its balance sheet in a move that was announced by then-Chair Janet Yellen in September 2017.

Fed Chair Jerome Powell said that the program to reduce the balance sheet, also known as Quantitative Tightening, is on “autopilot”, spooking financial markets. In later comments, Powell opened the door to changing the policy if necessary..

The report by the WSJ suggests that officials at the central bank could make a decision soon. The scheme will be central in the FOMC decision due on Wednesday. Any decision or mention could boost markets and weigh on the US Dollar.

Crude Oil: On the other hand, rising crude oil prices help CAD to gain weight.

On the US side, FOMC statement and NFP data will be the key event of the economic calendar.

On Canada side, GDP and Crude Oil prices will be on focus.

Technically:

The pair ended the week 1.32200 below EMA 50 on Daily Chart. MA 100 and MM 4/8 Major support resides at 1.31890. Daily closing below 1.31980 could open the gate towards 1.30615. The main trend is still bullish and trend reversal level is 1.29390.

On the H4 chart, RSI reached the oversold region. A firm breakout of 1.31890 could send the pair towards 1.3153 and 1.3122.

Loonie needs to make H4 closings above 1.3305 to regain its bullish bias.

Intraday Levels:

Upside: 1.3244 1.3275 1.3305

Downside: 1.3189 1.3153 1.3122

Our Intraday Trade Setup based on harmonic patterns: USDCAD Bullish Shark

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USDCAD: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. Chartreaderpro does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility