Canadian dollar continues to buck broader risk trends

DailyFX forex winners and losers

The Canadian dollar is the top performer against the greenback ahead of the European close with an advance of 0.27% despite broader strength in the dollar across the commodity bloc. The USD/CAD has continued to push off key resistance tested on Friday at the 61.8% Fibonacci extension taken from the July 25 and Aug. 2 crests at 9943 with the pair now probing below the 99-handle. Daily support remains with the 100% extension at 9855 and is backed closely buy the August lows at 9841. We remain cautiously bearish the USD/CAD below the 9943 threshold with only a breach above the 23.6% retracement taken from the June decline invalidating our directional bias. Note that daily RSI now looks to break back below former trendline resistance with such a scenario offering further conviction on our near-term outlook.

The 30-minute scalp charts show the USD/CAD breaking below short-term channel support before compromising the 23.6% Fibonacci extension taken from the Aug. 21 and 23 troughs at 9909 in overnight trade. Interim support now rests with at 9884 with a break below this mark invalidating this particular scalp setup. Such a scenario eyes subsequent support targets at 9860, last week’s low at 9841 and 9820. A breach back above the 9909 mark eyes ceilings at the 38.2% extension at 9925, the 61.8% extension at 9950 and 9965. Note that with a daily average true range of just 48 pips, scalps in loonie are not recommended at this time until we see a break-out of the 9850-9940 range with a triangle formation in RSI likely to offer a clear trigger break.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.0083

100-Day SMA

1.0086

50-Day SMA

1.0077

2012 CAD High

9799

The New Zealand dollar is the weakest performer against the greenback with a decline of 0.22% on the session after moving nearly 85% of its daily average true range. The NZD/USD has continued to hold below long-standing trendline resistance dating back to the 2011 highs with our bias remaining weighted to the downside so long as the exchange rate continues to respect the 61.8% extension taken from the June and July lows at 8190. Critical support rests with at the confluence of the 38.2% extension and channel support at 8045 with a break below this mark exposing subsequent support targets at the monthly pivot at the 80-figure, the 100-day moving average at 7940 and the S1 monthly pivot at 7885. A breach above the R1 monthly pivot at the 82-handle invalidates our bias with a break above 8230 putting a bullish tone on the pair. Note that daily RSI is now probing below trendline support dating back to the May lows with a break close below this mark offering further conviction on our directional bias.

The 30-minute scalp chart shows the NZD/USD struggling to break below the 50% Fibonacci extension taken from the Aug. 8 and 22 crests at 8092 with a move below this level eyeing subsequent support targets at the 61.8% extension at 8070, 8055, and the 78.65 extension at 8039. Interim resistance stands with the 38.2% extension at 8115 backed by soft resistance at 8060 and the Aug. 22 high at 8186. Note that the 30-minute RSI has now broken below short-term trendline support with price action holding above the 8080 low, suggesting that the pair is likely to remain range bound in intra-day trade for the time being before resumption of the downtrend.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

7983

100-Day SMA

7939

50-Day SMA

8018

2012 NZD Low

7454

About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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