Downtrend Bounce on USD/CAD
As mentioned above in the intro, USD is on tear higher after the latest FOMC meeting minutes gave us a more downbeat outlook on the economy than expected, and shooting down the possibility of the Fed enacting yield curve control. The markets reacted by moving into risk aversion mode, which benefited the U.S. dollar against the major currencies.
Millions of Americans are facing longer periods of unemployment) and failure of the U.S. government to reach a new stimulus deal, but I guess a lot of traders out there have been focusing on the rising risk assets vs. what’s happening out there.
So, a part of me thinks that traders will get bearish on the Greenback once again after this reaction fades away because even without yield curve control, the Fed has a massive stimulus program already going on.
And I think that we’ll eventually get some sort of stimulus from Congress that could spark a short-term risk-on move in the markets.
With that said, I’d like to express that idea through USD/CAD for a short-term trade and do so after a pullback higher to the falling trend line and previous area of interest (1.3250 – 1.3270) marked on the chart above.
I’m not going to put up orders for now, but I’ve got my alerts set to give me a ring if the market reaches 1.3250. I’d like to see what traders do there before committing to a new short position in USD/CAD.
So, that’s all I’ve got for now, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.