The Loonie pair showcased a continuation of the last day’s downtrend in the early hours. The tumble rally had begun on June 21 from 1.3226 level which has now reached 1.3188 level. However, the picture appears a bit different over a longer timescale. The pair remains currently under the recovery phase after touching the three-month bottom on June 20.
Meanwhile, the upsurging Crude prices kept the downward pressure intact over the pair. The Oil prices were trading near $58.10 bbl, top monthly levels in the Asian session.
The demand for the commodity strengthened as the US-Iran tensions appeared to get worse. Iran had downed a US drone last week over straying into the Iranian airspace. During the weekend, the US had attempted a few Cyber attacks on Iran aiming to disable the country’s rocket launch system.
Somehow, the US attacks remained quite unsuccessful says Iran’s telecom minister. “They try hard, but have not carried out a successful attack,” Minister said on social network Twitter.
US Secretary of State Mike Pompeo said “significant” sanctions would be imposed on Iran today. This move would aim to deteriorate the funds that empower such nuclear activities in the region.
Key Economic Events
Ahead of the day, the Canadian economic docket remains quite silent amid lack of events. However, there is the US May Chicago Fed National Activity Index about to come at around 14:30 GMT. The market expects the Index to report -037 points this time over previous -0.45 points.
The USD/CAD pair appeared to maintain a consolidation mode in the lower vicinity of the chart. The pair had remained sustained within the range of 1.3152 and 1.3229 levels since Monday opening. The overall pattern recalls slightly of a “Bear flag” where a consolidation follows a substantial downfall. Hence, the traders can keep a closer watch over the pair. Any movement breaching the 1.3229 resistance covering would be a strong sell signal. Traders can exit in such a case as that preludes of downtrend continuation.
Let’s confirm the stance with the application of some technical indicators. The 50-days SMA that reveals short-term trend was moving along with the pair, showing a neutral stance. Despite that, the significant 200-days SMA remained well above the pair warning a sharp pullback. The 100-days SMA was also heading south towards the pair showing consolidation to stay for some time. Also, the RSI (Relative Strength Index) indicated 40 levels showing a lack of buyer interest. Chances of any trend reversal in the near-term stay low as the RSI moves, replicating the pair’s movements.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Oil Price Fundamental Daily Forecast – Late Session API Report Could Trigger Volatile Reaction
- Technical Analysis MACD – How Professional Trader Use it
- Gold Goes Boom as High Trend Resistance is Bulldozed by Bulls
- USD just Gave Up
- Natural Gas Price Fundamental Daily Forecast – Heat in Forecast, but Will It Last?
- EUR/USD Daily Forecast: Euro Eases Back From 3-Month High