The Loonie has been edging lower against the U.S. dollar gradually, as the pair has formed a shallow rising channel on its 1-hour time frame. The pair is currently testing the top of the channel, with stochastic pointing down and suggesting that a slight selloff could be in the works.
If that’s the case, USD/CAD could fall back to the bottom of the channel around the 1.0500 major psychological support before resuming its climb to the 1.0600 area. A tight stop above the previous highs could yield a good reward to risk ratio for a day trade.
There are no major reports due from the US today but Canada will be printing its building permits data and BOC business outlook survey. Upbeat results could allow the Loonie to bounce back against the dollar, at least for the day.
By Kate Curtis from Trader’s Way