USDCAD Overnight Range 1.4345-1.4545  

USDCAD exploded higher overnight due to the toxic combination of falling oil prices and Canadian rate cut fears. The twin oil benchmarks, Brent and WTI, smashed through support at $30.00/barrel and this time stayed well below. Brent is currently $29.47/b and WTI $29.58. USDCAD ripped through 1.4500 (76.4% Fibonacci of 2002-2007 range) triggering a series of stop loss orders. The gains proved to be unsustainable with early New York and Toronto traders selling USDCAD as they walked in. Later on, US Retail Sales data that was released missed forecasts and previous reports were revised downwards. That took a bit of steam out of the US dollar as it diminishes the prospect of a March rate hike.

FX markets were a tad nervous in Asia in part due to the China SHCOMP dropping 3.5% and USDCNY being fixed at 6.5637, 21 bps higher than yesterday. USDJPY sank on BoJ Kuroda’s comments about no plans for more stimulus but they weren’t new. The nervousness continued in Europe with GBPUSD dropping further while EURUSD continued to churn within its recent range.

USDCAD may continue to drift lower throughout the rest of the day on profit taking ahead of the weekend.

USDCAD technical outlook

The USDCAD technicals are bullish while trading above 1.4400 and are now targeting resistance at 1.4600-20 which represents a series of daily lows and highs from April 2003. A break of this level opens the door for further gains to 1.5000.

However, the intraday charts warn of a retracement back to 1.4400 or even 1.4340 on a move below 1.4440 which even if it occurs, will keep the short term uptrend intact. USDCAD may be needing a breather after rallying for 10 consecutive days.

For today, USDCAD support is 1.4440, 1.4410 and 1.4360.  Resistance is at 1.4510, 1.4545 (overnight high) and 1.4580

Forecasted Range 1.4410-1.4510

Chart USDCAD 30 minute with Fibonacci retracements levels shown