CAD Bounces back from monthly lows…
The pair is expected to look bearish in the coming week as the commodity market is heating up with crude flirting around $80/barrel, and having crossed it once already this week. CAD is near its highest level in over a week as investors are eagerly waiting for the employment report to see where the Canadian economy is headed to.
CAD has bounced back from 1-month lows this week and may further strengthen against the USD in the coming week. Support is also coming for the rally as the data on manufacturing and home sales came ‘better than anticipated’. The rally is likely to continue next week as US manufacturing also expanded at a fast rate, the fastest in 3 years. CAD will be pushed northwards because it would create fresh demands for Canada’s export oriented economy, having Crude as the main export item.
The pair has already touched 1.0850 seven times in the last 6 months, as well as this week, but came back from those levels very sharply. This is a very important level to watch out for in the coming week. Unless and until the BOC interferes with the strength gained by CAD, it is a very good buy opportunity for the CAD. Also, since crude prices are moving up it will also give CAD the strength to move upwards.
The technicals are also suggesting a downward bias for the pair with a gradual withdrawal of smart money from the pair as the MFI is headed downwards and the OBV line is also flat, indicating that there is no strength in the pair. The RSI is losing steam as well and is falling continuously. The pair is trading much below its 14 day SMA. The currency pair is trading very near to the lower line of the Bollinger Band so, next week traders can go short with a target of 1.0550 in mind.
| Support | 1.0611 | 1.0584 | 1.0560 |
| Resistance | 1.0655 | 1.0688 | 1.0711 |
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