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Summary
- USD/CAD is down for the sixth successive week, and for the eighth week in ten.
- The pair printed a new YTD low this week, where it currently trades.
- USD/CAD is approaching its 200-day moving average (DMA), very near 1.4000.
Market Implications
- We think the 200-DMA should robustly support USD/CAD and with an RSI approaching oversold, should see the pair bounce back to the middle (~1.4350) of its YTD range on a closing basis (1.4068/1.4541).
USD/CAD on Downtrend Since End of February
Since hitting its recent peak in late January, and after a volatile February (with lots of two-way price action), USD/CAD has trended lower, with the pair falling for the sixth consecutive week, and for the eighth week in ten (Chart 1).
We Think USD/CAD May Bottom Soon
Despite this strong downtrend, we think USD/CAD may soon bottom.
This is because the pair is approaching its 200-DMA, and the RSI readings are nearing oversold (Chart 2).
The 200-DMA, which is an important technical indicator, sits near 1.4000.
We think this will be a durable support for USD/CAD.
Moreover, the RSI is now at 37 (approaching the 30 level, the threshold that flags the pair as oversold).
Taken together, we think these technical indicators signal USD/CAD downside reversing course.
We think the pair can bounce back to the middle (~1.4300/1.4350) of its YTD range (1.4068/1.4541).
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