The recent USD/CAD decline from a 1.2949 peak aligns well with the recent oil price recovery from a 61.74 low. USD/CAD slump eyes the 200-day moving average (DMA) at 1.2549, where a break opens up support panes resting in the 1.2478-1.2367 region, Benjamin Wong, Strategist at DBS Bank, reports.
Canadian general election should not impact the loonie
“The weekly charts still portend a bullish moving average convergence divergence (MACD) outlook, and USD still has scope to test the pivotal convergence zone stacked higher at 1.3065, unless key support zones crater. The decline from 1.2949 is ostensibly triggered by a recovery in crude oil prices from a recent 61.74 low.”
“Canada is headed for a federal election on 20 September. Historically, political developments hardly impact CAD which is more inclined to react to global macro metrics in the likes of commodity prices and terms of trade.”
“USD’s retreat from 1.2949 is approaching the proximity of the 200-DMA at 1.2549, where a break of trendline support would open up a sharper retracement. The key support zone rests into the 61.8% Fibonacci retracement at 1.2367 that gels with 1.2365, the mid-March lows. Such a drop likely ends the corrective decline, pulling USD back higher, offering an opportunity to place tactical USD longs.”