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Highs Now Challenged as Near-Term Volatility Mounts


The USD/CAD is testing at near-term resistance levels as volatility has heightened this week and financial institutions brace for risk events two weeks away.



The USD/CAD has continued to climb upwards over the past few trading days, after touching a low of nearly 1.33000 last Friday.  Last week’s price action in the USD/CAD compared to this week is nearly the polar opposite. Currently, the USD/CAD is traversing around the 1.34750 ratios as it bangs up against the highs produced last Wednesday. The choppy conditions in the USD/CAD are correlating to the broad Forex rather well and traders should probably prepare for more volatility as the price range gets tested.

Last week’s low produced on Friday happened as financial houses interpreted slightly weaker inflation numbers from the U.S as a positive sign that the Federal Reserve would have to begin to take a more dovish interest rate stance. However, towards the end of last week U.S Federal Reserve members made it abundantly clear that they still favor an interest rate hike in early May. And a couple of central bank officials made it obvious that inflation remains enough of a concern that another Federal Funds Rate hike in June is being considered.

The rise in the value of the USD/CAD has certainly been steady this week and there has not been major U.S economic data that can counter the inflation ‘story’ being discussed far and wide. However, day traders should remain skeptical and consider the notion that the ability of the USD/CAD to be bought early this week reflects a cautious approach and one that is not cemented as a long-term consideration. The reason that this notion can be given thought is that while the USD/CAD has certainly gained, it has not broken through resistance levels created last week.

The USD/CAD can certainly go higher, but if a one-month chart is contemplated technically traders have room to interpret the direction of the currency pair moving forward with the potential for contradictory conclusions. If the USD/CAD were to suddenly burst higher and challenge the 1.34900 to 1.35300 levels this would be a significant financial institution are nervous about stronger rhetoric from the U.S Federal Reserve, but this has not happened yet.

  • The U.S. Federal Reserve will announce its interest rate policy on the 6th of May.
  • This opens the potential that the USD/CAD could remain choppy for the next two weeks as financial houses try to find price equilibrium without a clear outlook.
  • Day traders should remain cautious and use stop loss protection if they are trying to take advantage of short-term momentum, or are looking for reversals via perceived support and resistance levels which currently are being displayed technically.

Current Resistance: 1.34850

Current Support: 1.34275

High Target: 1.34530

Low Target: 1.33910


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