Current trend

The USD/CAD pair is showing a slight decline, developing corrective dynamics after a fairly active growth the day before, as a result of which the instrument was able to briefly update its local highs of August 5. Quotes are testing 1.3820 for a breakdown, while traders are awaiting today's publication of macroeconomic statistics on business activity in the US.

Analysts expect the Services PMI to slow from 55.2 points to 55.0 points, while the Manufacturing PMI is likely to adjust from 47.3 points to 47.5 points, but will still remain below the psychological level of 50.0 points, which separates growth from stagnation. At 14:30 (GMT 2), jobless claims data will be released: according to forecasts, Initial Jobless Claims for the week ending October 18 will increase from 241.0 thousand to 242.0 thousand, while Continuing Jobless Claims for the week ending October 11 may change little from the previous value of 1.867 million.

Meanwhile, investors are discussing the results of the Bank of Canada meeting, which ended the day before: as expected, the regulator reduced the interest rate by 50 basis points to 3.75%, which was the fourth reduction in the indicator in a row (previously, officials adjusted the value by –25 basis points). The Bank of Canada explained the decision taken by the sharp drop in inflationary pressure in the country below the target of 2.0% for the first time in three years. In September, the Consumer Price Index fell to 1.6% year-on-year, while three months ago the figure exceeded 2.7%. The regulator also noted that the easing of monetary parameters will continue if the economic situation remains favorable. The next meeting of the Bank of Canada is scheduled for December 11.

Support and resistance

Bollinger Bands on the daily chart show a steady increase. The price range is narrowing actively, reflecting the emergence of ambiguous dynamics of trading in the ultra-short term. MACD indicator tries to reverse downwards and is forming a new sell signal (the histogram is about to consolidate below the signal line). Stochastic is showing similar dynamics, trying to reverse downwards, located near the level of "80", indicating the risks of overbought US currency in the ultra-short term.

Resistance levels: 1.3838, 1.3862, 1.3900, 1.3950.

Support levels: 1.3800, 1.3765, 1.3730, 1.3700.

Trading tips

Short positions may be opened after a breakdown of 1.3800 with the target at 1.3730. Stop-loss — 1.3838. Implementation time: 2-3 days.

A rebound from 1.3800 as from support followed by a breakout of 1.3838 may become a signal for opening new long positions with the target at 1.3900. Stop-loss — 1.3800.