USDCAD appears to be starting a new trend down, creating a downtrend channel on its 1-hour time frame. Price just bounced off the 1.3400 support area and is making its way back up to the resistance at 1.3500.
The 100 SMA is below the 200 SMA so the path of least resistance is to the downside. Stochastic is indicating overbought conditions and has crossed lower, also suggesting that price could resume its slide.
However, price is above the moving averages at the moment so the bearish pressure isn’t that strong. Also, the gap between the moving averages is pretty narrow so the indicators could merely be oscillating to reflect range-bound action.
The FOMC minutes confirmed that majority of policymakers think it’s appropriate to hike interest rates relatively soon. Many cautioned that the economy runs the risk of overheating if they don’t tighten monetary policy before reaching full employment, citing that a rate hike would also support the Fed’s credibility.
Crude oil still seems to be supported, as Iraq has expressed willingness to cooperate in an OPEC output deal. According to their Prime Minister, they can make up for revenue with higher oil prices even with lower volumes. Also, crude oil inventories indicated a surprise draw of 1.3 million barrels versus the estimated buildup of 0.3 million barrels.
Data from the US economy has been mixed, although durable goods orders posted impressive gains. US banks are closed for the Thanksgiving holiday today so profit-taking could force the dollar to retreat.
By Kate Curtis from Trader’s Way