USD/CAD Surges after Carney’s Dovish Statements

Forex Technical Update

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USD/CAD 4H Chart 8:50AM 10/16/2012

Dovish Statement weakens CAD: BoC Governor Mark Carney spoke yesterday, with an apparent dovish tone regarding monetary policy, saying the BoC will be highly accomodative, and hinting that the benchmark interest rate will stay at 1.0% on the Oct. 23 meeting. The USD/CAD which has been trading in a bit of consolidation/congestion, broke out to the upside after Carney’s statements. As the 10/16 US session gets underway, it is about to the October high at 0.9883.

Sideways market? A throwback should probably hold above the 0.9833 pivot to show bullish take-over. The 4H RSI should stay above 40, preferably above 50 after a subsequent throwback. That would reflect maintenance of bullish momentum. Otherwise, we are just in a sideways market in the 4H chart. In fact, the moving  averages suggest we are in a sideways market, so expect some resistance at the 0.9883 pivot.

Targets; trendline: If the USD/CAD has additional bullish strength to extend beyond 0.9885, it will first have the 0.9940resistance and 38.2% retracement as the first resistance. A swing projection pushes toward 0.9970, near a key fallingtrendline that goes back to May, and this year’s high of 1.0441. If the market does indeed make this swing projection, we should monitor the 0.9970-1.00 area for resistance as a completion of an ABC correction and as respect to a fallingtrendline.

USD/CAD Daily Chart 8:55AM 10/16/2012

Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider ofForex News, Analysis, Education, Videos, Charts, and other trading resources.

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