The US dollar against the Canadian dollar is tangled in the day and may fall further in the future

On Monday (September 13), the US dollar to Canadian dollar was still on the defensive before the European market, and the trading was dominated by shocks in the day, which is currently hovering around 1.2675.


The combination of different factors failed to help the US dollar against the Canadian dollar to profit from the strong rebound of more than 110 points last Friday, resulting in restrained or narrow fluctuations in price movements on the first day of the new week. West Texas Intermediate (WTI) prices rebounded above US$70 per barrel, supporting the commodity-related Canadian dollar. However, the overall strength of the U.S. dollar provided some support for the U.S. dollar against the Canadian dollar and helped limit any meaningful decline.

Crude oil prices continued the good trend of the previous trading day, rising from the $67.50 area, and gained some follow-up traction on Monday, as demand is expected to rise. In addition, concerns about the slow recovery of supplies in the Gulf of Mexico after Hurricane Ida caused supply disruptions have provided additional support for crude oil. However, concerns about the rapidly spreading delta variant may limit its gains.

On the other hand, the U.S. dollar is supported by market expectations that the Fed will begin to reduce its stimulus measures during the massive epidemic soon rather than later. The U.S. Producer Price Index (PPI) released on Friday further exacerbated this speculation. The index set the largest increase since November 2010, indicating that inflation may continue for some time. In turn, this may continue to drive the U.S. dollar.

From a technical point of view, the US dollar against the Canadian dollar could not break through the 1.2700 mark, which allowed the shorts to re-enter the market, but the strong rebound last Friday made the shorts afraid to increase their positions.

Based on the recent decline in the kinetic energy line and the correction in the exchange rate, it is expected that the US dollar against the Canadian dollar may continue the recent decline towards the 1.2600 mark.

However, the 200SMA moving average and the above-mentioned channel support line coincide at around 1.2590, which constitutes a strong support for the bears. If it breaks, the exchange rate will quickly refresh a new monthly low near 1.2490.

On the other hand, the horizontal area since August 27 constitutes a short-term resistance near 1.2710. If it breaks, it will push the price to the channel resistance near 1.2765.

Once the bulls continue to rise above 1.2765, the July high near 1.2810 and the annual peak near 1.2950 will be watched.

Overall, the US dollar against the Canadian dollar will fall further, but the shorts must break through 1.2590 to further downside.