Daily U.S. Session Watchlist: CAD/CHF

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I’m looking at another potential short Loonie play since crude oil continues to take hits.

Will this area of interest on CAD/CHF hold?

Before moving on, ICYMI, today’s Asia-London session watchlist looked at this correction setup on AUD/JPY while risk-off flows are in play. Be sure to check that out if it’s still a valid play!

And don’t forget to check our newly released real-time Currency Strength Meter and Currency Volatility Meter!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

• Australian retail sales sank 1.8% vs. projected 0.7% drop
• New Zealand credit card spending up 6.3% after earlier 27.2% jump
• Sydney COVID-19 new case count up 40% in past 24 hours
• BOJ official Amamiya still hopeful for economic recovery on vaccinations
• Bitcoin finds some support at $30,000

Upcoming Potential Catalysts on the Economic Calendar:

• U.S. EIA crude oil inventories at 2:30 pm GMT

What to Watch: CAD/CHF

CAD/CHF 1-hour Forex Chart

This pair may be pulling up from its earlier drop as crude oil prices found support at an area of interest, but the downtrend looks very much intact!

CAD/CHF is pulling up to the 50% Fibonacci retracement level that lines up with the 100 SMA dynamic inflection point.

Will sellers return right here?

A larger correction could reach the 61.8% Fib that’s right smack in line with a descending trend line, the 200 SMA dynamic resistance, and the .7300 major psychological mark.

Stochastic is already heading south, so the price could follow suit now that bearish pressure is picking up. The 100 SMA is below the 200 SMA to confirm that sellers have the upper hand.

Risk-off flows are working against the higher-yielding Loonie these days, as concerns about another wave of COVID-19 cases and more lockdown measures are keeping investors wary.

To top it off, weaker oil prices on account of the OPEC+ agreement to increase output could also keep the correlated Loonie’s gains in check.

The upcoming EIA inventory report might provide additional volatility for CAD/CHF in the next trading session, and analysts are expecting a smaller draw in stockpiles this time.

Just be on the lookout for a larger than expected reduction in inventories or a return in risk appetite since these could push CAD/CHF past the trend line resistance!

Reprinted from Babypips, the copyright all reserved by the original author.