Current trend

The USD/CAD pair renewed last year’s high at the resistance level of 1.3886 amid ongoing market uncertainty.

Thus, the American stock index NQ 100 and the Japanese Topix lost more than 10.0% and 6.0%, respectively, while the VIX volatility indicator reached a high of 29.66, the first time since the banking crisis in the United States last year. Shelter assets also remain under pressure: the price of gold fell by more than 2.0%, which may indicate that investors are trying to get cash as soon as possible and fix trading positions, as well as redirect capital to stable currencies such as the American dollar and the Swiss franc. The second factor influencing the growth of the USD/CAD pair is the weakening of the Canadian dollar due to falling energy prices. Thus, WTI Crude Oil has fallen by 7.8% over the past three days, and Brent Crude Oil by 6.7%.

The strengthening of the negative dynamics will act as a driver for the weakening of the Canadian dollar since Canada is an exporting country, and the cost of black gold significantly affects the national budget revenues. Today at 15:45 (GMT 2), and 16:00 (GMT 2), the July business activity indices in the USA are due: in the services sector the indicator may be 56.0 points, and in the services sector from the Institute for Supply Management (ISM) – 51.4 points: indicators above expectations will strengthen the American dollar.

Support and resistance

The long-term trend is upward. Within the growth, the quotes renewed last year’s high of 1.3886. After consolidation above it, the target will be 1.3960. The nearest support level, where long positions are relevant, is ​​1.3780. The RSI (21) indicator is approaching the overbought zone but has not yet entered it, which suggests some price growth, and then a reversal into a correction.

The medium-term trend remains upward. The asset has overcome the target zone of 1.3796–1.3777 and is heading towards zone 2 (1.3989–1.3969). The key support of the trend is shifting to the area of ​​1.3755–1.3736. After reaching it, long positions, with the target at the weekly high of 1.3944, are relevant.

Resistance levels: 1.3886, 1.3960.

Support levels: 1.3780, 1.3625, 1.3595.

Trading tips

Long positions may be opened from 1.3780, with the target at 1.3886 and stop loss 1.3750. Implementation period: 9–12 days.

Short positions may be opened below 1.3750, with the target at 1.3625 and stop loss 1.3802.