The coast is clear in terms of top-tier economic reports in the New York session, so I’m looking at this simple trend pullback setup on USD/CAD.
Will buyers defend this area of interest?
Before moving on, ICYMI, today’s Asia-London session watchlist looked at a pullback setup on AUD/CHF ahead of the RBA minutes. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- New Zealand credit card spending sank by 6.3% in August
- Swiss trade surplus narrowed from 5.30B CHF to 5.06B CHF
- Evergrande woes spill over to Asian shares
- Canadian PM Trudeau wins elections but short of majority
Upcoming Potential Catalysts on the Economic Calendar:
- U.S. building permits and housing starts at 12:30 pm GMT
- New Zealand GDT price index coming up
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: USD/CAD
The Canadian dollar seems to be in a good mood now that the federal elections are over, and PM Trudeau was able to stay in power.
But how long will this Loonie rally last?Risk-off flows have been in play over the past few hours, as Evergrande woes are spilling over to stocks and commodities. If this keeps up, the safe-haven dollar might regain its footing.
USD/CAD is inching towards the area of interest around the 61.8% Fib, rising trend line and former resistance at the 1.2700 major psychological mark.
If buyers step up to defend this level, the pair could recover to the swing high near 1.2900 and beyond.
Technical indicators support a continuation of the climb, as the 100 SMA is above the 200 SMA while Stochastic is showing a bullish divergence.
Don’t forget to review the average USD/CAD volatility if you’re planning on buying the dip!