Current trend

The USD/CAD pair has been growing for the fourth week in a row and is currently trading in the 1.3820 area, preparing to continue strengthening due to the growth of the American currency.

The US Federal Reserve will decide on the interest rate on November 7, two days after the presidential election, and if earlier market participants expected a correction of 50 basis points, now the main scenario seems to be a decrease of only 25 basis points: according to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of this is 92.4%.

On the other hand, the Canadian dollar is weakening after the publication of inflation data: the consumer price index (CPI) for September MoM was ˗0.4%, which was below the forecast of ˗0.2% and the previous value of ˗0.2%, and the base indicator was 0.0%. The sharp decline in the CPI means that the Bank of Canada is likely to cut its interest rate by 50 basis points at once, from 4.25% to 3.75%, which is causing the Canadian currency to fall.

The long-term trend is upward. After updating the September maximum around 1.3645, the USD/CAD pair reached the resistance level of 1.3775 last week and continued to grow. The next purchase target seems to be the 1.3885 mark, upon breaking through which the upward dynamics may intensify to the maximum of October 2022 in the area of 1.3960. If the resistance level of 1.3885 is held by sellers, the instrument will move to a decline with targets at the support levels of 1.3750 and 1.3615.

he RSI indicator (14) is growing, approaching the overbought zone, but currently allows to consider purchases.

The medium-term trend is upward. Last week, target zone 2 (1.3848–1.3827) was reached. If buyers manage to break through it, the next growth target will be target zone 3 (1.4094–1.4071). If target zone 2 is held by sellers, the USD/CAD pair will move to a correction, in the event of which the price may reach the key trend support around 1.3603–1.3581. After reaching this zone, one may consider new purchases of the instrument with a target at the last week’s maximum of 1.3835.

Support and resistance

Resistance levels: 1.3885, 1.3960, 1.4100.

Support levels: 1.3735, 1.3615, 1.3438.

Trading tips

Long positions can be opened from the 1.3735 mark with a target of 1.3885 and a stop-loss around 1.3685. Implementation period: 9-12 days.

Short positions can be opened below 1.3685 with a target of 1.3440 and a stop-loss around 1.3785.