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USDCAD is Trading in a Downtrend

11/18/2022 11:49 AM

After an unsuccessful attempt to return to 1.3390, the USD/CAD pair fell to 1.3320 and is likely to continue the downward trend after the publication of strong macroeconomic statistics from Canada.

Thus, the volume of wholesale sales in September not only did not decrease by 0.2%, as analysts expected but added 0.1%, while the same indicator for the manufacturing sector remained unchanged in monthly terms, which was better than analysts' forecast of a reduction by 0.5%, while the core consumer price index corrected by –0.2% to 5.8% YoY and rose by 0.4% MoM, repeating the previous value. Against rising inflation, investors expect decisive steps from the Bank of Canada in changing monetary policy parameters: if, at the next meeting on December 7, the regulator raises the interest rate by 0.50–0.75%, then the national currency is likely to continue strengthening.

The long-term trend is downwards. Last week, the traders broke through the support level of 1.3390, which now acts as resistance, and now the market participants unsuccessfully tested 1.3390 upwards, as a result of which the price of the trading instrument fell to the 1.3320 area, and further downward movement is likely to continue with the target at 1.3200.

The medium-term trend is downwards. At the beginning of the current week, the quotes tried to consolidate below the target zone 3 (1.3307–1.3286), but on Wednesday, they managed to recover, and now the sellers are trying to overcome it again. If they succeed, the negative dynamics will continue with the target around ​​zone 4 (1.3067–1.3045), and the key trend resistance is shifting to 1.3495–1.3471, from where it is worth considering new short positions with the target at the low of the current week 1.3230.

Resistance levels: 1.3390, 1.3530. | Support levels: 1.3200, 1.2970.

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