Weekly Chart Analysis
The USDCAD has charted a higher trough (HT). This is a show of strength and lays the platform for a potential higher peak for the currency pair. Last week's candle has a higher low than the previous week and closed above the previous week's high (green horizontal line).
The weekly RSI is also above 50 (green rectangle). This is is the bullish side of the indicator. The longer the RSI maintains on this side, the greater the chance of positive momentum supporting higher USDCAD prices.
One of the reasons that the CAD is showing relative weakness is that the Canadian economy is tracking below the Bank of Canada's expectations. This suggests that the BoC may keep rates on hold despite sticky inflation.
GDP for the month of July was flat, showing 0% growth, against a forecast for 0.1% m/m growth. This was after a 0.2% decline for June.
Daily Chart Analysis
The USDCAD daily chart has developed bullish signs. Its green 5-day EMA has crossed bullishly above its 10-day EMA (black ellipse). The EMAs also look to be developing angle and separation to the upside. The daily RSI has pushed above 50 (green rectangle), into the indicator's bullish territory. The longer it maintains on this side of 50, the greater the chances that the daily chart appreciates further.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.