Technically, this is one of the most attractive dollar charts at the moment in my opinion. The pair has largely consolidated around 1.3300 to 1.3900 since the end of last year and we could eventually see a break in this range.
This week’s decline removes key trendline support (white line) and more importantly, the weekly close may now be set to break below the November low of 1.3225. This will be a huge win for sellers if they are unwavering in their convictions.
Based on the chart alone, it should lend itself to a break below 1.3200 and there is very little support standing in the way of further declines in USD/CAD.
The 100 and 200 week moving averages are currently seen at 1.3037-69 and may be what offers buyers some relief before testing the 1.3000 barrier itself. While this does allow sellers some wiggle room in the meantime, I’d say the risk for those staying long in the bullpen is oil price risk.
While stocks are enjoying good form, oil hasn’t found much comfort since the Saudi surprise earlier this month. This could help prevent USD/CAD from falling, but if equities continue to be firm while the greenback falters, the technical picture is sure to cause the pair to fall further.