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Home ANALYSIS

USDCAD stuck between 100 hour MA below and 200 hour MA above

A.R Chowdhury by A.R Chowdhury
March 31, 2022
Reading Time: 4 mins read
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USDCAD

USDCAD trades between its 100 and 200 hour moving averages

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The  USDCAD 
USD/CAD

The USD/CAD is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Canadian dollar of Canada (symbol $ code CAD). The pair’s exchange rate indicates how many Canadian dollars are needed in order to purchase one US dollar. For example, when the USD/CAD is trading at 1.3500, it means 1 US dollar is equivalent to 1.35 Canadian dollars. The US dollar (USD) is the world’s most traded currency, whilst the Canadian dollar (CAD) is the world’s seventh most traded currency. The United States and Canada are geographical neighbors, and as a result there is a lot of trade between the two countries. Thus, there is often decent volatility and low spreads for the USD/CAD, typically between 1 and 3 pips on most foreign exchange brokers. Factors Influencing the USD/CADThere are a number of important economic or news releases that can affect the USD/CAD. This includes among others, Non-Farm Payroll data for the US that are released on the first Friday of each month. Such metrics tell us whether employment is rising or falling, while the Gross Domestic Product (GDP) for Canada or the US, measure the total value of all goods and services produced by the country. In addition, the USD/CAD is known as a “Commodity Pair”, as Canada possesses large amounts of natural resources, specifically oil, which is its most traded commodity. As a result, it’s important for long term speculators of USD/CAD to keep a close eye on crude oil developments due to the strong negative correlation.

The USD/CAD is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Canadian dollar of Canada (symbol $ code CAD). The pair’s exchange rate indicates how many Canadian dollars are needed in order to purchase one US dollar. For example, when the USD/CAD is trading at 1.3500, it means 1 US dollar is equivalent to 1.35 Canadian dollars. The US dollar (USD) is the world’s most traded currency, whilst the Canadian dollar (CAD) is the world’s seventh most traded currency. The United States and Canada are geographical neighbors, and as a result there is a lot of trade between the two countries. Thus, there is often decent volatility and low spreads for the USD/CAD, typically between 1 and 3 pips on most foreign exchange brokers. Factors Influencing the USD/CADThere are a number of important economic or news releases that can affect the USD/CAD. This includes among others, Non-Farm Payroll data for the US that are released on the first Friday of each month. Such metrics tell us whether employment is rising or falling, while the Gross Domestic Product (GDP) for Canada or the US, measure the total value of all goods and services produced by the country. In addition, the USD/CAD is known as a “Commodity Pair”, as Canada possesses large amounts of natural resources, specifically oil, which is its most traded commodity. As a result, it’s important for long term speculators of USD/CAD to keep a close eye on crude oil developments due to the strong negative correlation.
Read this Term
moved higher in the Asian session today and in the process moved above its 100 hour moving average currently at 1.2500 (a nice round number). There was a brief dip below that moving average level in the early European session, but the buyers returned and pushed the price toward the 200 hour moving average above (green line) currently at 1.25361. The high price stalled at 1.25326, four pips from that moving average level.

The subsequent move back to the downside has once again found support against its 100 hour moving average. The current price trades between the two moving averages at 1.2523.

The price of the USDCAD has been trending to the downside. There was a corrective move on Monday which saw the price extend above the 100 hour MA and test the 200 hour MA. However, that momentum move to the upside failed and the price started to trade back below the 100 hour moving average – until today that is.

Now the battle is on as traders decide whether the move to the downside is over and there will be more upside probing (on a break of the 200 hour MA above), OR it the move lower is not and the downside momentum continues (on a break back below the 100 hour MA).

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A.R Chowdhury

A.R Chowdhury

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