On Tuesday, USD/CAD is developing a corrective decline, testing the downside support of 1.3100. The negative dynamics is due to technical factors, as the fundamental background has not changed much these days.
The US dollar is strengthening on the background of the expected Fed rate hike on September 21. The meeting of the Bank of Canada will take place tomorrow, September 7, and most experts think that the Canadian regulator will also raise the rate by 75 basis points up to 3.25%. Wednesday will also see the release of Canada's July exports/imports report and August business activity index. Friday is the release of the Canadian labor market report. It is expected to create 15,000 jobs for the month and the unemployment rate will rise from 4.9% to 5.0%.
Today investors are waiting for the U.S. services business activity index.
USD/CAD Technical Analysis
Having analyzed the three Elder's screens we can say that the uptrend remains on the higher timeframes, though indicators are beginning to give contradictory readings. On the daily Bollinger indicator remains confidently directed upward. MACD indicator is in the positive range, but has formed a weak sell signal. The oscillator stochastic is out of the overbought area and is going down.
Upon breakdown of the support at 1.3100, it is acceptable to enter the market in small lots, with the nearest target at 1.3000. Stop-loss is set at 1.3150.
In case of a rebound from 1.3100, we wait for the price to consolidate above 1.3150 and continue to work on long positions towards the next target of 1.3241. We will place a protective stop at 1.3100.