USD/CAD 'green mood' back above 200-DMA; Walls of Troy built near 1.3280 handle

Currently, USD/CAD is trading at 1.3162, up +0.62% or 82-pips on the day, having posted a daily high at 1.3212 and low at 1.3073.

The American dollar vs. Canadian dollar kept fighting at 'Do or Die' battle around the critical 1.3000 handle for almost 5-trading sessions. However, mild-bearish crude prices haven't added further reasons to extend long-loonie positions Also, BoC's Poloz has not ruled out rate cuts 'if' needed. Therefore, there is some difficulty in building a constructive case to favor the commodity-linked currency. 

As the US Dollar Index (DXY) survives the out-of-the-blue deeper correction, traders and investors keep a close eye on every single word or Tweet coming out of Trump's administration. 

Historical data available for traders and investors indicates during the last 6-weeks that USD/CAD pair, a commodity-linked currency, had the best trading day at +1.71% (Jan.18) or 227-pips, and the worst at -1.02% (Jan.17) or (133)-pips. 

Goldman Sachs still sees 3 Fed rate hikes in 2017

Canada needs Plan B; ASAP
Bloomberg reports, "Canada needs to promote its advantages in industries such as food production and navigate the world where new technology threatens to displace workers from the jobs they hold today, said the panel chaired by Dominic Barton of consulting firm McKinsey & Company. Seeking trade ties with fast-growing countries such as China, Japan and India would also help Canada, said the panel, adding its benchmark goal is lifting the median household income by C$15,000 ($11,000) by 2030. That means Canada may also need an “alternative approach” in any follow-up agreement to the stalled Trans-Pacific Partnership."

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.3211 (high Feb.7), then at 1.3280 (100-DMA) which seems to build a "Walls of Troy" multi-year resistance region since July 2015 and finally above that at 1.3386 (high Jan.20). While supports are aligned at 1.2968 (low Jan.31), later at 1.2818 (low Sept.7) and below that at 1.2650 (low June 8, 2016). On the other hand, Stochastic Oscillator (5,3,3) seems to head north half way from the overbought territory. Therefore, there is evidence to expect further US dollar gains in the near term.

On the long term view, if the 'double Doji' candlestick formation from 1.3587 (high Nov.) and 1.3597 (high Dec.) is in fact, a relevant top, then any upside potential seems limited for this currency pair. Then, to the downside, supports are aligned at 1.2986 (short-term 23.60% Fib), later at 1.2626 (long-term 50.0% Fib) and finally below that at 1.2460 (low May.2016). As of writing, USD/CAD trades around 1.3156, therefore upside barriers are aligned at 1.3311 (short-term 38.2% Fib), then at 1.3468 (long-term 61.8% Fib) and finally above that at 1.3574 (short-term 50.0% Fib).

Political market moves more interesting than boring old data