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USD/CAD Gains Momentum, US GDP Grew 2.1%

Key Highlights

  • USD/CAD started a major increase above the 1.2600 level.
  • A key rising channel is forming with support near 1.2640 on the 4-hours chart.
  • EUR/USD declined below 1.1220, and GBP/USD traded to a new monthly low.
  • The US GDP grew 2.1% in Q3 2021 (Preliminary), up from 2%.

USD/CAD Technical Analysis

The US Dollar formed a base above the 1.2450 level against the Canadian Dollar. As a result, USD/CAD started a major increase above the 1.2500 and 1.2550 resistance levels.

Looking at the 4-hours chart, the pair even broke the 1.2600 barrier. There was a close above 1.2600, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The pair even broke 1.2700 and a high was formed near 1.2744. It is now consolidating gains and recently traded below 1.2700. There was a break below the 23.6% Fib retracement level of the upward move from the 1.2492 swing low to 1.2744 high.

On the downside, an initial support is near the 1.2640 level. There is also a key rising channel forming with support near 1.2640 on the same chart.

A downside break below the channel support may perhaps open the doors for more losses. The next major support sits at 1.2620. It is near the 50% Fib retracement level of the upward move from the 1.2492 swing low to 1.2744 high, below which the pair could test 1.2550.

On the upside, the pair is facing hurdles near 1.2750. The main resistance is forming near the 1.2800 level. A daily close above 1.2800 may perhaps open the doors for a decent increase. The next key stop for the bulls could be 1.2880.

Fundamentally, the US Gross Domestic Product Annualized reading for Q3 2021 was released yesterday by the US Bureau of Economic Analysis. The market was looking for a growth of 2.2% in Q3 2021.

The actual result was near the forecast, as the US GDP grew 2.1%. The increase was revised up 0.1% from the “advance” estimate released in October.

Besides, EUR/USD remained in a bearish zone and there was a break below the 1.1220 support. Similarly, GBP/USD extended decline below the 1.3350 level.

Economic Releases

  • German Gross Domestic Product for Q3 2021 (YoY) – Forecast 2.5%, versus 2.5% previous.
  • German Gross Domestic Product for Q3 2021 (QoQ) – Forecast 1.8%, versus 1.8% previous.
  • Germany’s GfK Consumer Confidence for Dec 2021 – Forecast -0.5, versus 0.9 previous.

 

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