Current trend

After unsuccessful attempts to break through the 1.3615 resistance level, the USD/CAD pair dropped to 1.3550, from which it is trying to continue growing amid poor inflation data. At the same time, investors await the speech of Bank of Canada Governor Tiff Macklem at 14:15 (GMT 2).

Thus, in August, the consumer price index decreased from 0.4% to –0.2% MoM, below the forecast of 0.0%, and the core indicator – from 0.3% to –0.1%. As a result, the Bank of Canada officials may cut the interest rate at the meeting on October 23. The last adjustment of the indicator by –25 basis points occurred on September 3, and the accompanying statement contained hints about the likely continuation of the “dovish” monetary policy. Traders expect that today’s comments from the head of the department will indicate further plans to reduce the cost of borrowing.

After the Bank of Canada cut the interest rate in early September and renewed the low of 1.3438, the USD/CAD pair began a correction, testing the resistance level of 1.3615 this week. The quotes fell to the support level of 1.3550, reversed, and tried to continue growth. After a breakout of 1.3615, in the long term, the asset will be able to reach the 1.3780 area, which acts as the trend border. Then, short positions with the target at 1.3615 are relevant. In case of consolidation below the support level of 1.3550, a correction to the area of ​​1.3493 and 1.3438 may follow.

The medium-term trend is downward. In September, the price tested the key trend resistance area of ​​1.3641–1.3623, after which the negative dynamics began to develop to 1.3540. This mark is still holding, so a repeat growth is possible. If the resistance area is broken, the medium-term trend will reverse upwards, and long positions with the target in zone 2 (1.3830–1.3811) are relevant. If the support level 1.3540 is broken, a decline to 1.3440 may follow.

Support and resistance

Resistance levels: 1.3615, 1.3780.

Support levels: 1.3550, 1.3493, 1.3438.

Trading tips

Long positions may be opened from 1.3550, with the target at 1.3645 and stop loss 1.3520. Implementation period: 9–12 days.

Short positions may be opened below 1.3520, with the target at 1.3440 and stop loss 1.3560.