Current trend

The USD/CAD pair has been declining since the beginning of November and is currently testing the 1.3549 mark (Murrey level [7/8]).

The US currency is pressured by investors' confidence that the US Federal Reserve will soon begin discussing the possible timing of the interest rate cuts. However, Christopher Waller, a member of the Board of Governors of the regulator, allowed the beginning of a reduction in the cost of borrowing if inflation continues to decline over the next three to five months. October data on the Personal Consumption Expenditures Price Index is expected to be published on Thursday: according to the forecast, the indicator will decrease from 3.7% to 3.5% YoY. Its implementation will strengthen the position of supporters of monetary policy easing within the regulator, which may negatively affect the positions of USD.

At the same time, the Bank of Canada has been keeping the rate at 5.00% since June, and inflation in the country has been steadily declining: in October it was 3.1%, approaching the target level of 2.0%.

Support and resistance

The instrument is testing the 1.3549 mark (Murrey level [7/8]), consolidating below which may cause a further decline to 1.3450 (23.6% Fibonacci retracement) and 1.3305 (Murrey level [5/8]). The key for the "bulls" is the resistance zone of 1.3671–1.3705 (Murrey level [8/8], the central line of Bollinger Bands), the breakout of which will allow the quotes to resume growth to 1.3793 (Murrey level [ 1/8]) and 1.3916 (Murrey level [ 2/8]), but this scenario seems less likely.

Technical indicators confirm the continuation of the downtrend: Bollinger Bands and Stochastic are pointing downwards, while MACD is increasing in the negative zone.

Resistance levels: 1.3705, 1.3793, 1.3916.

Support levels: 1.3549, 1.3450, 1.3305.

Trading tips

Short positions should be opened below the level of 1.3549 with targets at 1.3450, 1.3305 and stop-loss around 1.3630. Implementation period: 5–7 days.

Long positions can be opened above 1.3705 with targets at 1.3793, 1.3916 and stop-loss at 1.3640.