Yesterday, the USD / CAD pair reached highs since April 2021 at 1.2588, 7/8 murray zone. The pair is now making a slight correction. We expect a correction below 1.2873 towards the 200 EMA in a 1-hour chart.
The current rally in the USD / CAD, from the psychological level of 1.20 to 1.2588, has reached overbought levels. The weakness of the Canadian dollar is due in large part to the strength of the US dollar and the encouraging data from the FED in the in recent weeks, however, there could be a correction in the short term.
The strength of the Canadian dollar below 1.26 could be optimistic because Canada's unemployment rate is expected to drop sharply to 7.7% in June from 8.2% in May.
In addition, it is the country with 41% of the population that is fully vaccinated. Among the Group of Seven nations, Canada ranks second after the United Kingdom with the highest number of doses administered per 100 people.
Our outlook will remain bullish for the pair as long as it is above the 200 EMA (1.2410). Therefore, any significant drop could be seen as a buying opportunity, only as USD / CAD consolidates above this zone.
The break and consolidation below the 200 EMA could trigger a fall to the 4/8 of murray at 1.2207. Therefore, the key point will be to wait for a rebound at the 200 EMA (1.2410) to buy or a daily close below of this level to sell.
According to the 1-hour chart above, our recommendation is to sell below 7/8 of a murray with targets at 1.2450 and 1.2410.
The technical reading of the eagle indicator, which measures market strength and volume, is showing a bearish signal, suggesting that there is still room for a drop to the 10-point zone or until it reaches oversold levels.
Support and Resistance Levels for July 09 - 12, 2021
Resistance (3) 1.2702
Resistance (2) 1.2645
Resistance (1) 1.2576
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Support (1) 1.2512
Support (2) 1.2474
Support (3) 1.2414
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Trading tip for USD/CAD for July 09 - 12, 2021
Sell below 1.2542 (SMA 21), with take profit at 1.2451 (6/8), and 1.2410 (EMA 200) stop loss above 1.2588.