Trade of the Week: USDCAD Approaching Key Pivot
Trade of the Week: The Canadian Dollar was driven sharply lower last week as Oil was weighed upon by a fresh round of selling as concerns for the oversupply in global Oil markets once again took center stage. Adding to CAD weakness was news last week that Canada’s trade deficit in March unexpectedly widened to a record C$3.41 billion ($2.66 billion) as exports dropped for a second month on widespread weakness. The US Dollar, despite a weak headline NFP print, was actually well bid following the release as comments by Fed’s Dudley came in support of the Fed hiking rates twice this year.
Trade Idea: The rally in USDCAD has brought price within striking distance of key structural resistance formed at the two low closes in March and the mid April high at the 1.2964 level. I will be monitoring price as we retest this key level. If last week’s moves were merely short-covering on fresh Oil weakness, this location should serve as the exhaustion point for the correction and so bearish price action could be a good entry point. Alternatively, if this rally is to continue, a close and hold above that level will offer the opportunity to set longs playing for a continuation higher. I will update as price action unfolds.
Stopped out – 100