USD/CAD finds support after a dip from reported progress in NAFTA talks

USD/CAD finds support after a dip from reported progress in NAFTA talks

The loonie is still the best performing major currency on the day

It’s thin liquidity in Asia today, as Japanese traders are off on holiday – so really, what a time for the news to break out.

The move so far is generally contained, so we’ll have to wait to see if European traders will have more to say on the matter later when the time comes.

Anyway, USD/CAD reached a top at the end of last week as the high for the year stalls at the 61.8 retracement level – but the fall today will be the more significant one as it very well gives momentum to sellers to take back control (also falls below the 100-hour MA).

With a key roadblock to NAFTA talks being
reported out of the way, it gives reason and conviction for the loonie to gain further. There is still some degree of uncertainty, but you can’t deny optimism when it presents itself to you.

The low for USD/CAD today is at 1.3011, and the pair finds support at the former resistance level at the highs from last July. That resistance level previously put a cap on the earlier upside move in March.

Should that level give way later, the next one to watch for is the 50.0 retracement level at 1.2928 or around that region towards 1.2917 – where we saw a triple top formed from October to November last year.

The key risk event on the day for the pair will be the Fed meeting, but if there are official reports out on the NAFTA deal, I reckon that will provide legs for a rally in the loonie in the short-term.

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