The trading idea on the USD/CAD currency pair

Since the beginning of the current week, the bullish sentiment has been prevailing on the USD/CAD currency pair. The trading instrument has updated local extremes. Yesterday, the Canadian dollar significantly weakened against the US dollar. The growth of the USD/CAD quotes exceeded 100 points. The currency has approached to the round level of 1.3000.


The demand for Loonie significantly weakened after the speech of the head of the Bank of Canada Poloz. The official said that the country's economy showed stable growth. At the same time, the regulator is concerned about the rate of inflation in the country. In the near future, the Central Bank will not hasten to raise the key interest rate. The Bank of Canada plans to evaluate a number of future statistical data. An uncertain situation with the North American free trade zone puts the additional pressure on the Canadian dollar.


Quite optimistic economic reports from the USA were published today. In February, the core retail sales index accelerated to 0.2% from 0.1% despite a slowdown in the growth of wages and consumer prices in the country. The producer price index was 0.2%, which is higher than market expectations at 0.1%. This statistics support the US currency.


In the near future, I do not exclude the further growth of the USD/CAD quotes.


Let's consider the current technical pattern on the USD/CAD currency pair


Support levels: 1.29350, 1.28850, 1.28300

Resistance levels: 1.29700, 1.30000, 1.30500

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At the moment, the USD/CAD currency pair is consolidating. The trading instrument is testing local support and resistance levels: 1.29350 and 1.29700, respectively. Indicators indicate the bullish sentiment:


- The price has fixed above 50 MA and 200 MA;

- The MACD histogram is located in the positive zone.


I recommend you to open positions in the direction of the current trend. If the price fixes above the local resistance of 1.29700, the USD/CAD currency pair is expected to grow. The immediate goal of profit taking is a round level of 1.30000.


Conservative traders need to wait for a correction to 50.0-61.8% (1.28900-1.28700) zone. If the USD/CAD quotes reach this mark, I also recommend considering purchases. When following the positions, one should use a trailing stop.