USD/CAD Rate Continues To Trade In Defined Range Ahead Of FOMC Minutes

  • Keep in mind, the USD/CAD correction from the 2020 high (1.4667) managed to fill the price gap from March, with the decline in the exchange rate pushing the Relative Strength Index (RSI) into oversold territory for the first time since the start of the year.
  • USD/CAD managed to track the June range throughout July as the RSI broke out of a downward trend, but the failed attempt to push back above the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region led to a break of the March/June low (1.3315) even though the momentum indicator failed to push into oversold territory.
  • The decline from the August high (1.3451) briefly pushed the RSI below 30, but lacked the momentum to produce a test of the January low (1.2957) as the indicator failed to reflect the extreme reading in June.
  • In turn, the advance from the September low (1.2994) pushed USD/CAD above the 50-Day SMA (1.3195) for the first time since May, but the exchange rate reversed coursed following the failed attempt to test the August high (1.3451), which largely lines up with the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region.
  • A similar scenario took shape in October as USD/CAD tracked the September range, but the exchange rate cleared the January low (1.2957) following the US election to trade to a fresh 2020 low (1.2928).
  • However, the failed attempt to close below the 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement) has pushed USD/CAD up against the 1.3170 (38.2% expansion), with the exchange rate trading a defined range going into the end of November as it continues to bounce back from the Fibonacci overlap around 1.3030 (50% expansion) to 1.3040 (61.8% expansion).
  • Need a break/close below the Fibonacci overlap around 1.3030 (50% expansion) to 1.3040 (61.8% expansion) to bring the 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement) region back on the radar, with the next area of interest coming in around 1.2830 (38.2% retracement).
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