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The British pound continues to trade to the upside against the US dollar despite much weaker than expected PMI Services data from the UK economy during the month of October. Positive Brexit news is driving the intraday sentiment surrounding the GBPUSD pair, with traders using pullbacks as buying opportunities. The MACD indicator on the lower time frames is also starting to stabilize after correcting from overbought conditions.

The GBPUSD pair is bullish while trading above the 1.3000 level, key resistance is now found at the 1.3040 and 1.3100 levels.

If the GBPUSD pair moves below the 1.2952 level, sellers may test towards the 1.2900 and 1.2866 support levels.

EUR/USD

Current level - 1.1388

The reversal at 1.1455 signals a completion of the upmove since 1.1300 low and a consolidation pattern is underway, before next leg upwards, to 1.1530. Intraday allow a brief upswing to 1.1420 followed by a dip to 1.1350.

USD/JPY

Current level - 113.28

My outlook is rather counter-trend below 113.37, for another dip to 112.60 and even 112.20.

GBP/USD

Current level - 1.3005

The several tests of 1.3040 failed and obviously there is a need of a more significant corrective pattern before continuation towards 1.3250. Allow a slide towards 1.2940 with a risk of extending to 1.2870.

Notes/Observations

• Eurogroup meets today with Italy budget high on the agenda
• Preparations for a final Brexit deal said to be more advanced than previously disclosed; Irish officials downplay euphoria
• UK Oct Services PMI misses expectations but remained in expansion for the 27th straight month
• EU Nov Investor Confidence data slips (8.8 v 9.8e)
• US sanctions on Iranian oil ?ows go back into e?ect.
• Large focus on US midterm elections (Tuesday) and FOMC policy decision (Thursday).

Asia:

• BOJ released its Minutes from its Sept 18-19 meeting (2 meetings ago) and reiterated that was appropriate to continue easing persistently
• China Oct Caixin PMI Services registers its lowest reading since Sept 2017 (50.8 v 52.8e)
• China PBoC announced first medium-term lending facility (MLF) operation use since Sept

Europe:

• PM May said to have secured private concessions from Brussels that would keep the whole of Britain in a customs union, avoiding a hard border in Northern Ireland. Also also on track for a "future economic partnership" (FEP) agreement with EU
• UK Brexit Min Raab said to have privately demanded the right to pull UK from EU's Ireland backstop after 3 months. Raab said to press PM May to take Brexit hard line over Irish border; urging her to support the plan to pull the UK out of ‘backstop' plan with just 3 months' notice
• ECB sources noted that no decision on new TLTRO action expected at the Dec policy meeting

Energy:

• US re-imposed sanctions on Iran oil transactions (as expected)

Macro

• (IT) Italy: Eurozone finance ministers are likely to put further pressure on Italy this week over the planned budget overshoots. Latest growth data highlighted that the government's budget projections, which are focusing on reducing debt and deficit levels through higher growth are far too optimistic. European Commission VP Dombrovskis repeated that the budget needs "substantial adjustments".
• (US) United States: Tuesday's Congressional election is obviously the main focus of the week. The base case is that the Democrats take back control of the House and Republicans maintain a Senate majority. Such a result would severely impact President Trump's agenda. The potential for gridlock might be taken relatively bullishly by the bond market as it may hinder increased fiscal stimulus, the broader market may not like the headwinds to the potential for further economic growth.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.2% at 364.2, FTSE 0% at 7097, DAX +0.2% at 11541, CAC-40 +0.1% at 5108, IBEX-35 +0.5% at 9035, FTSE MIB -0.3% at 19324, SMI +0.1% at 9003, S&P 500 Futures -0.1%]
• Market Focal Points/Key Themes: European Indices trade mixed this morning in a flat trading day so far following weaker Asian markets and mixed US index futures. Spanish IBEX outperforms while UK Indices trade flat after Services PMI missed consensus. On the corporate front shares Hiscox, Dufry, among decliners after earnings, while Vopak in the Netherlands trades higher after a rise in profits. Onxeo rises ~20% after positive results from its phase 1 study of AsiDNA; Ingenico also rises after the departure of its CEO. Looking ahead notable earners include Ferrari, PG&E, Loews and Seaworld Entertainment among others.

Equities

• Consumer discretionary: Ingenico [ING.FR] +3.5% (CEO departure), Dufry AG [DUFN.CH] -3.5% (earnings),
• Real Estate: Vopak [VPK.NL] +5% (earnings)
• Energy: Serica Energy [SQZ.UK] +12.5% (acquisition, OFAC license conditions positive), Naturgy Energy Corp (prior Gas Natural SDG) [NTGY.ES] +0.5% (earnings), SMA Solar Technology [S92.DE] +2% (recent strength in solar energy companies being attributed to press speculation that China may lift solar installation targets for 2020)
• Financials: Hiscox [HSX.UK] -7.5% (trading update), Gam Holding [GAM.CH] +3% (reportedly rebuffs Schroders approach for hedge fund unit)
• Healthcare: Roche [ROG.CH] -0.5% (CEO weekend interview comments), Onxeo [ONXEO.FR] +20% (positive interim results of study)
• Industrials: PostNL [PNL.NL] -0.5% (earnings)
• Technology: STMicroelectronics NV [STM.FR] -0.5% (buyback program), U-Blox [UBXN.CH] -9.5% (analyst action)

Speakers

• Ireland Foreign Min Coveney: Would never agree on a time-limited backstop; would not agree on UK unilateral end to backstop
• Brexit negotiators said to reach consensus on financial services. Worked up a short draft text that would go into declaration on future ties that outlines parameters for post-Brexit trade talks
• EU's Dombrovskis reiterated stance that Italy budget plan needed substantial adjustment; in discussions with Italian authorities
• France Fin Min Me Maire stated that expected an accord with Germany on digital tax by December. France to present energy plans in coming weeks
• Turkey Fin Min Albayrak: Inflation trend is positive; to meet year end goals on inflation
• Sweden Speaker Norlen presented next step in Governement Formation Process: To give Kristensson (Moderate) a new attempt to form govt
• BOJ to hold its 8th round of meetings with bond group between Dec 5-7th

Currencies/Fixed Income

• US Mid-term elections has polls and betting markets indicating that the Democrats would likely to take control of the House, while the Republicans were likely to retain Senate control. Key issues on the outcome would be whether to expect further fiscal stimulus, and what the implications there were for trade policy. A unified Republican control would be viewed as more bullish, while on the latter, a divided government could de-escalate the current trade conflict.
• GBP/USD was hovering around below the 1.30 level but off last week's highs. Reports circulated that PM May had secured private concessions from Brussels that would keep the whole of Britain in a customs union, avoiding a hard border in Northern Ireland. Preparations for a final Brexit deal were for more advanced than previously disclosed. However, Irish officials played down any euphoria of a breakthrough on the Irish border issue.
• EUR/USD was little changed and remaining below the 1.14 level in the session.

Economic data

• (IN) Oct India PMI Services: 52.2 v 50.9 prior (5th month of expansion); PMI Composite: No est v 51.6 prior
• (IE) Ireland Oct Services PMI: 57.2 v 58.7 prior ; Composite PMI: 56.1 v 58.4 prior
• (TR) Turkey Oct CPI M/M: 2.7% v 2.5%e; Y/Y: 25.2% v 25.0%e; CPI Core Index Y/Y: 24.3% v 25.1%e
• (TR) Turkey Oct PPI M/M: 0.9% v 10.9% prior; Y/Y: 45.1% v 46.2% prior
• (BR) Brazil Oct FIPE CPI: 0.5% v 0.5%e
• (SE) Sweden Oct PMI Services: 56.3 v 56.6 prior
• (ES) Spain Oct Net Unemployment M/M: +52.2K v +20.4K prior
• (CZ) Czech Sept Retail Sales Y/Y: -2.2% v +0.9%e; Retail Sales (ex Auto) Y/Y: 1.4% v 3.0%e
• (HU) Hungary Aug Final Trade Balance: €0.0B v €0.0B prior
• (HU) Hungary Oct Manufacturing PMI: 57.3 v 54.2 prior
• (ZA) South Africa Oct PMI: 46.9 v 48.0 prior
• (TW) Taiwan Oct Foreign Reserves: $460.2B v $460.4B prior
• (NG) Nigeria Oct PMI: 54.4 v 56.3 prior
• (UK) Oct New Car Registrations Y/Y: -2.9% v -20.5% prior
• (CH) Swiss weekly Total Sight Deposits (CHF): 577.5B v 578.0B prior; Domestic Sight Deposits: 469.9B v 470.1B prior
• (CN) China Q3 Preliminary Current Account: $16.0B v $5.8B prior
• (UK) Oct PMI Services: 52.2 v 53.3e (27th month of expansion); Composite PMI: 52.1 v 53.4e
• (EU) Euro Zone Nov Sentix Investor Confidence: 8.8 v 9.8e
• (ID) Indonesia Oct Consumer Confidence: 119.2 v 122.4 prior

Fixed Income Issuance

• (NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 3-month bills; Avg Yield: 0.78% v 0.68% prior; Bid-to-cover: 2.94x v 2.68x prior

Looking Ahead

• (UR) Ukraine Central Bank Oct Minutes
• (UR) Ukraine Oct Official Reserve Assets: No est v $16.6B prior
• 05:25 (BR) Brazil Central Bank Weekly Economists Survey
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell 6-month bills
• 06:00 (RO) Romania to sell Bonds
• 06:00 (IL) Israel to sell Bonds
• 06:30 (CL) Chile Sept Economic Activity Index (Monthly GDP) M/M: -0.2%e v -0.1% prior; Y/Y: 2.0%e v 3.2% prior; Economic Activity Index (Ex-Mining) Y/Y: No est v 4.0% prior
• 06:45 (US) Daily Libor Fixing
• 07:00 (CL) Chile Sept Retail Sales Y/Y: 3.0%e v 4.8% prior; Commercial Activity Y/Y: No est v 6.0% prior
• 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 07:45 (EU) ECB De Guindos (Spain) in Brussels
• 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
• 08:10 (UK) Baltic Dry Bulk Index
• 08:25 (CA) Bank of Canada (BOC) Gov Poloz speech in London, UK
• 08:50 (FR) France Debt Agency (AFT) to sell combined €3.9-5.1B in 3-month, 6-month and 12-month BTF Bills
• 09:00 (MX) Mexico Sept Leading Indicators M/M: No est v 0.1 prior
• 09:00 (MX) Mexico Oct Vehicle Domestic Sales: No est v 114.7K prior
• 09:00 (EU) Euro Group Finance Ministers meet in Brussels
• 09:30 (NO) Norway Central Bank (Norges) Dep Gov Nicolaisen s in London
• 09:30 (EU) ECB announces Covered-Bond Purchases
• 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
• 09:45 (US) Markit Oct Final Services PMI: 54.7e v 54.7 prelim; Composite PMI: No est v 54.8 prelim
• 10:00 (US) Oct ISM Non-Manufacturing Index: 59.4e v 61.6 prior
• 11:30 (US) Treasury to sell 3-Month and 6-month Bills
• 13:00 (US) Treasury to sell $37B in 3-Year Notes
• 13:00 (DE) German Chancellor Merkel receives Prize From German Newspaper Publishers
• 16:00 (US) Weekly Crop Report

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.14058
Open: 1.13861
% chg. over the last day: -0.19
Day's range: 1.13774 – 1.13996
52 wk range: 1.1299 – 1.2557

On Friday, November 2, trading on currency majors was very active. The US have published a rather optimistic report on the labor market for October. The dollar index (#DX) closed in the positive zone (+0.27%). Demand for the US currency is still high. At the moment, the EUR/USD quotes are consolidating in the range of 1.13750-1.14000. We recommend opening positions from these marks.

The news feed on 05.11.2018:

At 17:00 (GMT+2:00) the ISM non-manufacturing PMI will be published.

Indicators do not send accurate signals: the price has crossed 50 MA and 200 MA.

The MACD histogram is close to the 0 mark.

Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates the bullish sentiment.

Trading recommendations

Support levels: 1.13750, 1.13400, 1.13100
Resistance levels: 1.14000, 1.14250, 1.14500

If the price fixes above the round level of 1.14000, the EUR/USD quotes are expected to grow. The movement is tending to 1.14250-1.14500.

Alternative option. If the price fixes below 1.13750, it is necessary to look for entry points to the market to open short positions. The movement is tending to 1.13400-1.13100.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.29981
Open: 1.30215
% chg. over the last day: -0.29
Day's range: 1.29835 – 1.30247
52 wk range: 1.2662 – 1.4378

The GBP/USD currency pair is in a sideways trend after a sharp rise last week. At the moment, quotes are testing local support and resistance levels: 1.29800 and 1.30300, respectively. The trading instrument has the potential for further growth. We recommend following the current information regarding the Brexit process.

At 11:30 (GMT+2:00) the index of economic activity in the UK services sector will be published.

Indicators do not send accurate signals: the price is testing 50 MA.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy GBP/USD.

Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which indicates the bullish sentiment.

Trading recommendations

Support levels: 1.29800, 1.29500, 1.29100
Resistance levels: 1.30300, 1.30750

If the price fixes above the resistance level of 1.30300, a further increase in the GBP/USD currency pair is expected. The movement is tending to 1.30600-1.30800.

An alternative may be a drop in the GBP/USD quotes to 1.29500-1.29200.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.30847
Open: 1.30879
% chg. over the last day: +0.17
Day's range: 1.30778 – 1.31127
52 wk range: 1.2248 – 1.3387

The technical pattern on the USD/CAD currency pair is ambiguous. At the moment, USD/CAD quotes are consolidating. Investors expect additional drivers. Local support and resistance levels are 1.30850 and 1.31200, respectively. Positions should be opened from these marks.

Today, the publication of important economic reports from Canada is not planned. We recommend paying attention to the speech by the Bank of Canada governor.

Indicators do not send accurate signals: 50 MA has crossed 200 MA.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy USD/CAD.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.

Trading recommendations

Support levels: 1.30850, 1.30500, 1.30200
Resistance levels: 1.31200, 1.31450, 1.31700

If the price fixes below the support of 1.30850, the USD/CAD quotes are expected to fall. The movement is tending to 1.30500-1.30300.

An alternative may be the growth of the USD/CAD currency pair to the level of 1.31450-1.31700.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 112.648
Open: 113.148
% chg. over the last day: +0.43
Day's range: 113.108 – 113.337
52 wk range: 104.56 – 114.74

The USD/JPY currency pair is still in a sideways trend. The unidirectional trend is not observed. At the moment, the USD/JPY quotes are consolidating near the key resistance of 113.350. The round level of 113.000 is already a "mirror" support. We recommend paying attention to the US government bonds yield. Positions should be opened from the key levels.

The news feed on the economy of Japan is quite calm.

The price has fixed above 50 MA and 200 MA, which indicates the power of buyers.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy USD/JPY.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which indicates the bearish sentiment.

Trading recommendations

Support levels: 113.000, 112.650, 112.350
Resistance levels: 113.350, 113.700

If the price fixes above the resistance level of 113.350, the USD/JPY quotes growth is expected. The movement is tending to 113.700-114.000.

An alternative may be a decrease in the USD/JPY currency pair to 112.700-112.500.

Cable opened with a positive gap on Monday morning as hopes for an orderly Brexit continued to grow. Sunday Times, reported that an all-UK customs deal is in the works between the UK and the EU. The report stated that UK PM Theresa May secured concessions from the EU to keep all of UK territories in a customs union, hence avoiding a hard border in Northern Ireland. Analysts point out that what we are seeing could be only a taste of what is to come should there be a deal between the EU and the UK about Brexit. Volatility is expected to continue for the pound as Brexit headlines could continue to reel in.

Cable opened with a positive gap of around 20 pips, on Monday surpassing briefly the 1.3015 (R1) resistance line, only to correct lower later on. The pair shows signs of stabilisation for now, however today’s financial releases as well as any Brexit headlines could move the pair. If the pair finds fresh buying orders along its path we could see it breaking the 1.3015 (R1) resistance line and aim for the 1.3075 (R2) resistance level. Should the pair come under the market’s selling interest, we could see it breaking the 1.2920 (S1) support line and aim for lower grounds.

USD strengthens on US employment report

US Employment data for October released on Friday, supported the strengthening of the USD as it showed a tight labour market. Analysts consider that the dollar strength is to return as investors could be shifting attention to a tighter US monetary policy. Analysts also point out the risk factor of the Fed being more hawkish than expected. On the other hand, the USD’s role as a safe haven could be undermined by a softening in the US-Sino confrontation.

EUR/USD dropped on Friday testing the 1.1385 (S1) support line. The pair also showed some signs of stabilisation in the Asian session today. The pair may prove sensitive to the financial releases today, as well as any further headlines regarding the US-Sino trade war and the Eurogroup meeting today. Should the bulls dictate the pair’s direction we could see it breaking the 1.1430 (R1) resistance line. Should on the other hand, the bears take over the pair’s direction we could see it breaking the 1.1385 (S1) support line and aim, if not break the 1.1345 (S2) support barrier.

In today’s other economic highlights:

In the European session today, we get from Turkey the CPI rate for October and UK’s Services PMI for October. In the American session we get the US ISM Non-Manufacturing PMI for October. Please note that today, a Eurogroup meeting will take place and BoC governor Poloz speaks.

As for the rest of the week:

On Tuesday, we get RBA’s interest rate decision, Germany’s industrial orders for September, New Zealand’s employment data for Q3 and in the US the midterm elections will take place. On Wednesday, we get Germany’s industrial output for September, Eurozone’s retail sales for September, Canada’s Ivey PMI for October and RBNZ’s interest rate decision. On Thursday, we get China’s trade balance figure for October, Germany’s trade balance figure for September and FOMC’s interest rate decision. On Thursday, we get China’s trade balance figure for October, Germany’s trade balance figure for September and FOMC’s interest rate decision.

GBP/USD H4

Support: 1.2920(S1), 1.2850 (S2), 1.2780 (S3)

Resistance: 1.3015 (R1), 1.3075 (R2), 1.3160 (R3)

EUR/USD 4H

Support: 1.1385 (S1), 1.1345 (S2), 1.1300 (S3)

Resistance: 1.1430 (R1), 1.1480 (R2), 1.1520 (R3)

EUR/USD has started the new trading week with a yawn. In the Monday session, the pair is trading at 1.1379, down 0.08% on the day. On the release front, eurozone investor confidence slumped in November, dropping to 8.8 points. Later in the day, the U.S releases ISM Non-Manufacturing PMI, which is expected to drop to 59.3 points. On Tuesday, Germany and the eurozone release services PMIs. As well, Germany releases factory orders and the eurozone will publish PPI. The U.S will release JOLTS Job Openings and all eyes will be on the U.S midterm congressional elections.

The eurozone economy ran into some headwinds in the third quarter, and there are concerns that the slowdown could continue in Q4 as well. The well-respected Sentix investor confidence report fell from 11.3 to 8.8 points, its lowest level since October 2016. The index has dropped sharply in 2018 – the heady days of January, when the index came in at 32.9, appear long gone.

Is the German manufacturing sector in trouble? Manufacturing slowed for a third straight month in October, as the slowdown has now entered the fourth quarter. The October Manufacturing PMI dipped to 52.2, down from 53.7 points in September. The reading, which points to limited expansion, is the lowest since May 2016. The weak data can be directly attributed to global trade tensions, which have dampened the German export sector. China is Germany’s third largest export market, and a slowdown in China due to U.S trade tariffs could have a chilling effect on the German economy. The German central bank is forecasting zero growth in the third quarter, and growth in the eurozone also softened in the third quarter.

The U.S economy continues to perform well, a fact that will be hammered home by President Trump and the Republicans in the few hours left until Election Day on Tuesday. The labor market is at or beyond capacity, and nonfarm payrolls surged to 250 thousand, crushing the estimate of 194 thousand. Wage growth has also strengthened, with strong gains of 3.1% in the past year. Despite these strong numbers, the dollar failed to make headway on Friday, as reports that President Trump will present his Chinese counterpart with a trade deal proposal increased risk appetite and weighed on the greenback.

Will the Fed hike again?

The US economy is in gear: wages rose 3.1% and non-farm-payrolls climbed by 250,000 in Friday’s report, increasing speculation the Fed will hike more than previously thought. 10-year Treasuries are back above 3.25%.

Otherwise, nail-biting has ensued ahead of tomorrow’s mid-term congressional elections in the US. Headlines saying Democrats have a slight lead on Republicans mean nothing, because the configuration of voting (as with the 2016 presidential elections) varies for each individual election. The elections’ impact on markets is extremely uncertain. Should Congress split (Democrats regain House, Republicans retain Senate), expect more volatility and an intensified risk premium. Unsettling investors are images of Iranians burning US flags and chanting “Death to America” on the near-anniversary of the 1979 Islamic Revolution, in the prelude to impending US sanctions. Oil prices were slightly lower, as waivers allow buyers to import Iranian crude for awhile. Medium term, sanctions will tighten oil markets and push crude prices higher. What to do? Short equities, long USD, but avoid safe haven in gold or JPY.

Asian shares lower amid multiple risk events

Benefitting from Chinese regulator support via policy measures, Asian shares have been benefitting from a positive trend, stimulated by the bounce in Wall Street. But uncertainties seem to take the ascendant, as trade talks between US and China taking place from 30. November 1. December 2018 is not expected to have the desired effect.

Indeed, uncertainties relating to Fed interest rate hike, Sino-US trade tensions along with US sanctions against Iran oil exports effective since today have favoured a risk-off sentiment among investors. The Hong Kong Hang Seng index was the largest hit, facing a sharp drop of -2.08% followed by Japanese Nikkei 225 (-1.55%), Blue chip Shenzhen CSI 300 (-0.83%) and the Shanghai Composite (-0.41%). Chinese shares remain the largest losers with drops along the -20% year-to-date.

Accordingly, investors’ attention will now be turning to US mid-term elections, where speculations count on the Democratic Party to win control of the House of Representatives. For now, G20 talks between Xi and Trump have a subdued, as analysts bearish outlook continue to weigh on Asian shares.

USD/CNY is expected to bounce back, as fears over trade tensions are taking the upper hand. Currently trading at 6.9284, USD/CNY is heading along 6.94 short-term.

WTI oil remains in red at the beginning of the week and hit new marginally lower seven-month low at $62.51 on Monday, in extension of last week’s nearly 7% fall.

Oil prices maintain negative tone on pullback from recovery peak at $76.88 (03 Oct) and holding in red for four straight weeks, which resulted in 11.5% monthly loss in October.

Concerns about supply shortage on US sanctions to Iran faded as top oil producers increased output which covered all expected gaps and threatening on oversupply, as the US allowed major oil buyers to continue importing from Iran for some time.

In addition, comments from Tehran that it will continue to sell despite sanctions, further pressured oil prices.

Bearish signal was generated on Friday’s close below strong support at $63.57 (Fibo 38.2% of $42.04/$76.88 / 18 June low), suggesting that oil price could dip towards psychological $60 and Fibo support at $59.46 (50%).

Strong negative sentiment and bearish daily techs support scenario.

Corrective actions are expected to offer better selling opportunities and extended upticks should be capped under falling 10SMA ($65.41).

Res: 63.10, 63.93, 64.43, 65.41
Sup: 62.51, 61.80, 60.00, 59.46

The New Zealand Dollar depreciated about 55 base points against the US Dollar on Friday. The currency pair tested the 50-hour simple moving average at 0.6646 during the first part of today's session.

Currently, the exchange rate is trading near the bottom border of an ascending trendline at 0.6654 and could be set for a breakout. If the breakout occurs, the NZD/USD currency pair could aim at the 100-hour SMA at 0.6597 within this session.

On the other hand, if the support level holds, the currency exchange rate could target Friday's swing high of 0.6690 during the coming hours.

Upside risks prevailed in the market on Friday, thus allowing the USD/CAD currency pair to gained about 71 base points. The pair breached the 200-hour simple moving average at 1.3096 during the end of Friday's session.

The exchange rate was stranded between SMAs during the first part of Monday's session. The 100-hour SMA at 1.3114 was providing resistance for the rate, while a support cluster formed by the 50– and 200-hour SMAs was providing support for the pair at 1.3100.

A breakout from the SMAs is likely to occur within this session. Meanwhile, technical indicators suggest a southern breakout.