Canadian Dollar Price (USD/CAD), News, and Analysis:
- Long-term downtrend stalls ahead of FOMC[1].
- Dragonfly Doji and IGCS suggest a possible move higher.
The multi-month USD/CAD[2] sell-off has come to a halt as market participants wait to hear details of the last FOMC decision later today. Traders will parse the minutes for commentary on the two big market issues, inflation and jobs. Any suggestion, even a hint, that the Fed are concerned that inflation may not be as ‘transitory’ as first thought would push both US Treasury yields and the greenback higher. A further ‘wait and see’ approach would keep downward pressure on the US dollar[3] to a more limited extent. The UST 10-year currently trades with a yield of 1.66%, just above the middle of the recent 1.50% - 1.75% range.
A look at the daily chart shows ongoing weakness in USD[4]/CAD[5] with the pair currently stalling just above the psychological 1.2000 level. A closer look at the chart shows a dragonfly doji printed yesterday, a potential bullish reversal indicator. This set-up needs to be confirmed by a positive candlestick today to give it more credibility. Yesterday’s low at 1.2014 broke below the September 2017 spike low and saw USD/CAD touch levels last seen in May 2015. A bullish tailwind could see the pair touch 1.2200 in the short term.
If you are interested in Candlestick patterns, read our Ultimate Guide to Candlestick Patterns[6]
USD/CAD Daily Price Chart (October 2020 - May 19, 2021)
IG Retail trader data show79.22% of traders are net-long with the ratio of traders long to short at 3.81 to 1.The number of traders net-long is 0.29% higher than yesterday and 0.29% lower from last week, while the number
