The Canadian dollar has strengthened, influenced by several factors — the most important of which is arguably the easing of domestic political tensions.
According to media reports, Canada’s draft budget has passed its first round of voting. Although several stages of review remain, the result suggests that there are enough votes for the budget to be approved in the end.
Had the draft budget failed to pass, it would almost certainly have resulted in the resignation of Prime Minister Mark Carney and the calling of new parliamentary elections less than a year after the previous ones.
With the risk of political turmoil receding, the Canadian dollar effectively “breathed a sigh of relief”, appreciating against other currencies.
Technical Analysis of the USD/CAD Chart
This autumn, movements in the USD/CAD pair have shaped a broad ascending channel. Within this structure:
→ the median line acted as resistance at the start of the week;
→ yesterday’s sharp decline pushed the pair into the lower quarter of the channel, and today the QL line is demonstrating resistance.
This indicates that sellers are currently in control, having:
→ broken through local support at 1.40175;
→ kept the pair below the psychological 1.40000 level.
It is possible that they will attempt to extend this momentum and drive USD/CAD towards the lower boundary of the channel — and if that happens, forex traders may look for opportunities to trade a potential upward reversal from this key support.
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