The US Dollar traded higher against the Canadian dollar during the end of this past week. We were shorting this pair, but now I think that part of the correction is over and we might see one more bounce sooner or later. The pair ended on a high this past Friday after the US jobs data release. There is a chance that the USDCAD pair might correct lower from the current levels, which can be seen as a buying opportunity.
There is an important support area around the 1.1180-60 levels, as can be seen in the chart below. So, if the pair corrects lower from the current levels, makes a stop and forms a bullish divergence, then we can enter into a buy trade. One thing we need to remember is that we will not chase this pair if it falls below the mentioned support area.
Initial target should be around the 1.1280 level, and final target could be around the 1.1350 level. Stop should be placed below the 1.1150 level.
Major events scheduled in the upcoming week
There was no stopping the US dollar, as it continued to trade higher against almost all other major currencies. One of the key releases during this past week was the US nonfarm payroll and unemployment data. The outcome was way above the expectation, and the highlight was the unemployment rate. The US unemployment rate fell from 6.1% to 5.9%, and there were about 248K jobs added in September 2014. This boosted the US dollar investor’s confidence and lifted the US dollar, especially against the Euro. The EURUSD pair traded below the 1.2550 support area after the US release.
Let us look at all major events lined up in the upcoming week.
Sunday – No economic release.
Monday – German factory orders, Canadian Ivey PMI, and RBA interest rate decision.
Tuesday – German industrial production, Swiss retail sales, UK manufacturing production and US building permits data.
Wednesday –Swiss unemployment rate, FOMC meeting minutes and Australia’s employment data.
Thursday – German Trade balance, BOE interest rate decision, US initial jobless claims and Australia’ home loans data.
Friday –UK trade balance data, Canadian employment data and federal budget balance.
This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: GBPCHF, EURGBP, USDJPY, EURJPY, GBPJPY, AUDUSD, NZDUSD, AUDNZD, EURAUD, USDCAD and AUDCAD.
Happy trading friends!