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The USDCAD has extended higher, helped by a stronger US dollar and a sharp rise in US yields following Fed Chair Warsh’s hawkish comments. The US two-year yield is up 11.5 basis points at 4.347%, reflecting reduced expectations for near-term Fed easing and providing a fundamental catalyst for the USD’s move higher.
Technically, the low today stalled between the rising 200-hour moving average at 1.38370 and the 100-hour moving average at 1.38599. Holding that support cluster gave buyers the go-ahead to push higher, with the price subsequently breaking above this week’s previous high at 1.38970 – helped of course by the speech from Fed’s Warsh.
The pair is now extending to new highs for the day and testing the August 18 and August 19 high at 1.39079. Just above that level is the more important 100-day moving average at 1.39140.
That moving average represents a key barometer for both buyers and sellers. Getting above the 100-day moving average—and staying above it—would strengthen the bullish bias and open the door for additional upside momentum. The next targets would come near the 50% retracement at 1.39268, followed by the swing area between 1.39480 and 1.39663.
Conversely, if sellers lean against the 100-day moving average, the weekly high at 1.38970 becomes the first support level. A move back below that level would take some of the momentum away from buyers and shift the focus toward the 100-hour moving average at 1.38599 and the 200-hour moving average at 1.38370.
For now, buyers are making a play. The 100-day moving average at 1.39140 is the next—and most important—test.
This article was written by Greg Michalowski at investinglive.com.
