General analysis USDCAD for 28.10.2021
Current Dynamics
Yesterday USDCAD significantly lost in value after the meeting of the Bank of Canada on monetary policy. Unexpectedly for market participants, the regulator announced the completion of its quantitative easing program ahead of schedule. Thus, the Bank of Canada became the first major central bank to abandon QE completely. The head of the regulator Tiff Macklem said that the Canadian economy is close to full recovery and there is no need to buy out assets anymore. The key rate will remain at 0.25% until Q2 or Q3 2022 so investors can expect an earlier tightening of monetary policy.
Major currency pairs are trading in a limited range on Thursday ahead of the U.S. GDP release. Earlier, the Federal Reserve Bank of Philadelphia issued a downward forecast, which is consistent with falling retail sales and an overall drop in trade volumes.
The Bureau of Economic Analysis will release third-quarter GDP data today at 15:30 (GMT+2) and the U.S. Pending Home Sales Index is due out at 16:00 (GMT+2).
Support and resistance levels
On the 4-hour chart, the instrument is fixed at the bottom of the Bollinger Bands. The indicator is directed sideways and the price range remains stable, indicating the presence of a downward correction. The MACD histogram is consolidating in the neutral area, confirming the correction. Stochastic does not give a clear signal to open positions.
- Support levels: 1.2250, 1.2290, 1.2330.
- Resistance levels: 1.2380, 1.2420, 1.2465, 1.2500.
Trading scenarios
- It is possible to open short positions at the current price with a target of 1.2300 and a stop-loss at the level of 1.2390. Implementation period: 1 day.
- Long positions should be opened above the level of 1.2385 with a target of 1.2435 and a stop loss at 1.2350. Implementation period: 1 day.