Canadian dollar weakness in mixed market
Canadian Dollar turned weaker across the board after Bank of Canada kept rate unchanged at 4.25% signaled that futures increases may not be needed. Comments from BoC suggest that they
believe the key rate is enough to slow inflation to 2% target rate and economic outlook is largely unchanged. USD/CAD rose sharply to as high as 1.1344, breaking out of range of the past two months. Elsewhere, dollar remains mixed against majors. Sterling was pressured earlier today on unexpectedly widened visible trade balance but was kept in range against dollar after a brief test of yesterday’s low.
GBP/USD
Daily Pivots: (S1) 1.8341; (P) 1.8431; (R1) 1.8496
Even though dipping lower in European session to test yesteday’s low, cable quickly recovered back to establish tight range as consolidation continues. At this point choppy consolidation is still in favor to extend further with bias mildly on the downside. But still, still downside of this consolidation should be contained well above 1.8261 resistance turned support (61.8% retracement of 1.8090 to 1.8530 at 1.8258) and bring further rally.
In a bigger picture, cable’s corrective fall from 1.9024 has likely finished at 1.8090 low, after meeting support of the lower channel line and just missing 161.8% projection of 1.9024 to 1.8530 from 1.8877 at 1.8078 by 12 pts. Cluster resistance of 1.8558 (50% retracement of 1.9024 to 1.8090 at 1.8557) is in focus. A firm break above 1.8558 will add much credence to this case and bring further rally to retest 1.8877 resistance.
However, the depth of the correction from 1.9024 casts some doubts over how far this rise from 1.8090 could go and we’d have some reservation at this moment and pay attention to any reversal signal when cable gets near to 1.9024 cluster resistance (78.6% retracement of 1.9554 to 1.7047 at 1.9018). Sustained trading above this level is needed to convince us that further rally to 1.9554 is following. Otherwise, we’d still mildly favor the current rise could trade in choppy manner below 1.9024 for a while first. The whole view will be seriously reconsidered in case of violation of 1.8261.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui (Shing) is the founder and CEO of www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders, providing insightful contents to individual forex traders. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.