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.
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.
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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