Key Highlights
- The US Dollar traded higher this week and moved above 1.2400 against the Canadian Dollar.
- There was a break above a major declining channel with resistance at 1.2380 on the 4-hours chart of USD/CAD.
- The Building Permits in Canada in Dec 2017 increased 4.2%, more than the forecast of +2.0%.
- A lot of high risk events are lined up today, including German Trade Balance, BoE interest rate decision, Canadian Housing Starts and US Initial Jobless Claims.
USDCAD Technical Analysis
There were solid gains in the US Dollar from the 1.2250 swing low against the Canadian Dollar. The USD/CAD pair is back in a bullish trend with a close above 1.2400.
Looking at the 4-hours chart of USD/CAD, the pair formed a major support near 1.2250 and started an upside move. It gained a lot of momentum and broke a major declining channel with resistance at 1.2380.
There was also a close above the 1.2400 resistance and the 100 simple moving average (red, 4-hours). The upside move was strong and the pair traded as high as 1.2567. Later, a downside correction was initiated and the pair tested the 23.6% Fib retracement level of the last wave from the 1.2248 low to 1.2567 high.
It seems like the pair is back in a bullish trend and dips towards 1.2460 and 1.2400 remain supported. On the upside, a break above the 1.2560-70 zone could trigger a push above the 1.2600 level.
On the downside, an immediate support sits at 1.2480, followed by 1.2460 and 1.2400.
Canada’s Building Permits
Recently, the Canadian Building Permits report for Dec 2017 was released by Statistics Canada. The forecast was slated for an increase of 2.0% in Dec 2017 compared with the previous month.
The actual result was much better as there was an increase of 4.8%, but there no major downside reaction in USD/CAD. Overall, the greenback is gaining bullish momentum.
EUR/USD broke a major support at 1.2400 and GBP/USD declined below the 1.4000 pivot level. However, the US Dollar is still struggling to move higher versus the Japanese Yen, as USD/JPY is trading below the 110.00 level.
There are many important and high risk events lined up during the European and NY session, including German Trade Balance, BoE interest rate decision, Canadian Housing Starts and US Initial Jobless Claims. Therefore, there could be swing moves in pairs such as EUR/USD, GBP/USD, USD/CAD and EUR/GBP.
