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Home ANALYSIS

USDCAD trades to a new 2022 low. What now?

A.R Chowdhury by A.R Chowdhury
April 6, 2022
Reading Time: 4 mins read
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USDCAD

USDCAD trades to a new 2022 low

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
is trading to a new day and in the process 2022 low. The move took the price below the low from last week at one point at 1.24286 and that takes price the lowest level since November 10. The next target of the daily chart comes above and below the 61.8% retracement of the move up from the June 2021 low at 1.23717. There is a swing area between 1.23644 and 1.23835 around that retracement level.

Looking at the hourly chart below, the USDCAD price tried to move above its 200 hour moving average (green line) on Friday and again yesterday only to fail (first trades above the 200 hour moving average since March 15).The price closed below its 100 hour moving average yesterday (blue line currently at 1.24928).

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In the Asian session today, the high price stayed comfortably below the 100 hour moving average and sellers started to enter toward the end of the Asian session into the European session. The price fell below a swing area between 1.2463 and 1.24724 (that level is now a risk level for sellers – see red numbered circles). A retest of that area held resistance four hourly bars ago, and the price resumed its move to the downside over the last three hourly bars.

Risk levels now come against the prior low from last week at 1.24286. More conservative risk would be at the swing area between 1.2463 and 1.24724. Stay below each keeps the sellers in control and the push to the downside can continue toward the daily downside targets.

USDCAD

USDCAD trades to a new 2022 low
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A.R Chowdhury

A.R Chowdhury

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