USD/CAD extends downside movement after Yellen remarks

Share news

USD/CAD extended downside movement yesterday and closed around 1.1011 after Yellen remarks about tapering in asset purchase program.

The pair is being traded around 1.0987 at the time of writing; immediate hurdle can be seen near channel resistance which is currently at 1.1072. A break and daily close above channel resistance will accelerate the bullish momentum, hence exposing 1.1223 that is swing high of previous wave.

USD/CAD extends downside movement after Yellen remarks

On downside, the pair is expected to find huge support near 1.0861 i.e. a confluence of 55 Daily Moving Average (DMA) and 38.2% fib level. A break and close below 1.0861 support area shall target channel support that is currently near 1.0770, and then 1.0750 which is 50% fib level.

It is pertinent that Commodity Channel Index (CCI) is dipping below oversold zone with -134 reading on daily chart, a read below -100 signals oversold sentiment. Relative Strength Index (RSI) is however in neutral zone that means more downside movement is still possible. Negative divergence can also be noted with MACD on four-hour time frame which is always considered a very strong indication of downside risk.

Janet Yellen on Tuesday said that she would carry on her predecessor’s policy of gradual tapering in monthly asset purchase program. However, she looked concerned about labor market performance. “Although growth in the US picked up over a last few months, but recovery in employment sector is still very far from completion,” Yellen said. About recent non-farm payrolls report, new fed chairwoman said we have to assess the non-farm payrolls report patiently before jumping onto conclusions; policymakers will require concrete evidence to slow the pace of tapering in stimulus, she added. FOMC policymakers will gather on March 17-18, thus they will analyze both January and February job data before any decision about further tapering in asset purchase program worth $65 billion. 

Trade global forex with the Innovative Broker of 2022*. Choose from 50+ forex markets 24/5. Open your FXOpen account now or learn more about making your money go further with FXOpen.

* FXOpen International, Innovative Broker of 2022, according to the IAFT

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. FXOpen UK: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
FXOpen EU: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.