Current trend

The USD/CAD pair is testing 1.3808, trying to continue its upward trend with the target at 1.3960 against a recovery in the American dollar, supported by a strong economy and high government bond yields.

Thus, the Q3 volume of gross domestic product (GDP) amounted to 4.9%, significantly exceeding the forecast of 4.3% and the previous value of 2.1%, while at the end of September, inflation remained around 3.7% YoY. So, the US Fed's high interest rates restrain its growth without putting pressure on the economy, as experts feared. In confirmation of this, analysts from the financial conglomerate The Goldman Sachs Group Inc. reiterated their assessment of the likelihood of a recession in the country in the next 12 months at 15.0% and noted that the worst for the economy was over.

The October change in employment in Canada was 17.5K, worse atha analysts’ forecast of 22.5K and the previous value of 63.8K, and unemployment rose from 5.5% to 5.7%, above expectations of 5.6%. The September number of building permits adjusted to –6.5%, worse than preliminary estimates of –1.6% but the previous figure was revised from 3.4% to 4.3%. Likely, the Bank of Canada’s high interest rate of 5.00% will negatively impact the economy, putting pressure on the Canadian dollar.

Support and resistance

The long-term trend remains upward: last week, the price reached the resistance level of 1.3830 but could not break it. After its breakout, growth may continue to 1.3960 (2022 high), otherwise, a downward correction with the target at 1.3650 is expected.

The medium-term trend is upward: last week, the quotes developed positive dynamics from the key trend support 1.3689–1.3668 to the November 1 high of 1.3893, after breaking through which the next target will be zone 4 (1.3980–1.3960).

Resistance levels: 1.3830, 1.3960.

Support levels: 1.3650, 1.3510, 1.3385.

Trading tips

Long positions may be opened above 1.3860 with the target at 1.3960 and stop loss around 1.3810. Implementation time: 9–12 days.

Short positions may be opened below 1.3750 with the target at 1.3650 and stop loss around 1.3800.