- The US Dollar tumbled against the Canadian Dollar during the past few weeks and traded below 1.2200.
- There was a break below a monster bullish trend line with support at 1.3200 on the weekly chart of USD/CAD.
- Back to back interest rate hikes by the BoC prompted a sharp selling interest in USD/CAD.
- Canada’s Housing Starts in August 2017 were 223.2K, more than the forecast of 212.0K.
USDCAD Technical Analysis
The US Dollar came under a lot of pressure recently against the Canadian Dollar and traded below 1.2200. The USD/CAD pair might gain bearish momentum since it is below the 100-week simple moving average.
Looking at the weekly chart of USD/CAD, it seems like the pair formed a major top at 1.3800 in April 2017. It started a downside move and traded below a monster bullish trend line with support at 1.3200.
The pair also broke the 50% Fib retracement level of the last wave from the 1.1919 low to 1.4689 high. There was even a close below 1.2100 and the 200-week simple moving average. It is a strong bearish sign and points further declines below 1.2000.
Therefore, there are high chances of USD/CAD testing the last swing low of 1.1919. If sellers remain in control, the pair might even test the 1.1236 extension of the last wave from the 1.1919 low to 1.4689 high during the coming weeks.
Canada’s Housing Starts
Recently in Canada, the Housing Starts figure for August 2017 was released by the Canadian Mortgage and Housing Corporation. The market was looking 212.0K, less than the last 222.3K.
However, the actual result was better than the forecast, as the Housing Starts were 223.2K. On the other hand, there was a minor revision for the last reading from 222.3K to 222.0K.
Commenting on the data, CMHC’s chief economist, Bob Dugan, stated:
Canada’s trend in housing starts was above the 200,000 unit mark for the eighth consecutive month. Demand for new homes remains strong, consistent with consumer confidence which reached its highest level in ten years.
Overall, it seems like the USD/CAD pair is likely to remain in a downtrend and could even trade towards 1.1800 in the medium term.