USD/CAD: the consolidation near the level of 1.2635 _26/04/2016

Trading recommendations

Buy Stop 1.2765. Stop-Loss 1.2720. Take-Profit 1.2900, 1.2955, 1.3100, 1.3185

Sell ​​Stop 1.2610. Stop-Loss 1.2660. Take-Profit 1.2600, 1.2525, 1.2500, 1.2200


Technical analysis

This year, the Canadian dollar has appreciated by 9.2%. The last week of the pair USD / CAD traded mostly between the levels of 1.2700, 1.2600, consolidating near the level of 1.2635 (Fibonacci level 50%).

Price for the pair USD / CAD returned to the level a year ago, while the Canadian dollar regained

50% of the losses incurred from the non-stop growth of the pair in July, 2014.

The pair continues to trade in a descending channel on the daily chart, and the pressure on it is stored.

Despite the fact that indicators OsMA and Stochastic on the daily chart are deployed on long positions, on the weekly chart indicators continue to recommend selling.

In case of breaking the support level of 1.2635 USD / CAD pair will go to support level 1.2170 (EMA144 on the weekly chart and Fibonacci level of 61.8%).

On reversal of the downtrend in the pair USD / CAD can only say after the price consolidates above 1.3100 (38.2% Fibonacci level), 1.3185 (EMA200 on the daily chart).

Support levels: 1.2635, 1.2600, 1.2525

Resistance levels: 1.2755, 1.2955, 1.3100, 1.3185, 1.3200


Overview and Dynamics

Last Friday, the Canadian dollar rose against the backdrop of more positive than expected, data on inflation and retail sales in Canada, as well as due to higher oil prices. Thus, the annual core inflation in Canada was 2.1% in March, while analysts predicted its growth at 1.9%. The data triggered buying Canadian currency, as eased fears about the possibility of further easing of monetary policy of the Bank of Canada, as the central bank has repeatedly stated earlier.

Support for the Canadian dollar also had an increase in oil prices, which rose by about 1.3% on Friday.

Oil prices have a strong correlation with the Canadian dollar quotations. Long-term trend in oil prices will determine the main direction of movement of the Canadian dollar. While rising oil prices, will be strengthened and the loonie.

The second most important factor for the dynamics of the pair USD / CAD is the monetary policy of the central banks of Canada and the United States.

Earlier in April, the Bank of Canada kept its benchmark interest rate unchanged, at 0.5%, and raised its forecast for economic growth in Canada for 2016. The growth of the country's GDP this year will be 1.7% versus January's forecast of growth of 1.4%.

And now investors expect the Fed decision and comments on the US monetary policy plans before taking further action on the pair USD / CAD.

At 12:40 (GMT) today scheduled speech of the Bank of Canada Stephen Poloz. In his speech before the parliamentary committee on S.Poloz last week noted that the adaptation of the Canadian economy to lower commodity prices will restrain its growth in the next few years. In addition, according to S.Poloz, there is a risk of further deterioration in the global economy, which is also a negative impact on commodity prices, including oil.

Also pay attention to the data from the American Petroleum Institute (API) with respect to oil storage tanks in the United States last week that he will present today at 20:30 (GMT). Crude oil is an important source of export revenue in Canada, and the correlation pair USD / CAD and oil prices close to 92%.