Is the sell-off in USD/CAD overdone? [Video]

Christina Parthenidou XM

USDCAD is set to close the month on a negative note despite the rally to a five-month high of 1.3860 on March 10th.

Having dived back below its 20- and 50-day simple moving averages (SMAs) after the formation of a bearish doji candlestick near the 61.8% Fibonacci retracement of the 2020-2021 downtrend, the pair is currently eyeing the important support trendline that connects all the lows from June at 1.3485.

Meanwhile, the Stochastic oscillator is trying to bounce from multi-year lows, increasing speculation that the latest bearish wave is overdone. That said, the RSI, although near its previous lows, has yet to enter oversold territory, while the MACD has just stepped into the negative zone, both suggesting that the bears may stay on course.

A clear close below the trendline could forcefully press the price towards the 1.3400-1.3385 zone, where the 200-day SMA is converging. Slightly lower, the 50% Fibonacci level of 1.3340 and the broken resistance trendline from October’s highs may next come to the rescue, likely postponing a test at the lower boundary of the six-month-old range seen at 1.3273-1.3225. A break lower would worsen the medium-term outlook.

Alternatively, a bounce back above the 50-day SMA at 1.3560 could reach the 1.3630 barrier, which represents the 38.2% Fibonacci retracement level of the previous upleg. Another successful move higher could challenge the 20-day SMA at 1.3700 before crawling swiftly up to the key 1.3800 resistance.

Summing up, downside risks keep lingering in the USDCAD market, though with the pair flirting with a crucial support region at the moment, a pause or an upside reversal cannot be excluded in the coming sessions.

Author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.