The USDCAD experienced a wave of stronger-than-expected Canadian economic data earlier today, which is shaping trader sentiment. October building permits surged by 14.9%, significantly outperforming the forecasted 0.9% decline. Meanwhile, third-quarter capacity utilisation rose to 78.5%, up from a revised 77.6% in the previous quarter. October wholesale trade also improved, increasing by 0.1% against an expected 0.1% decrease.

Bank of Canada Policy and Market Reaction

The Bank of Canada held interest rates steady at 2.25% this week. Initially, USDCAD rose as the statement was seen as less hawkish than anticipated. However, the rally quickly faded as sellers emerged near the 100-hour moving average, pushing the price back down.

This reaction underscores a consistent technical theme: sellers tend to appear at the 100-hour moving average. Since USDCAD dropped below this moving average on 26 November, corrective rallies to this level have been met with selling pressure, driving the price lower from near 1.4100 to a low of 1.3754 today. This downtrend has lasted 13 trading days, indicating a strong bearish bias.

Technical Analysis: The Role of the 100-Hour Moving Average

Traders have been using the declining 100-hour moving average as a key level for managing risk and biasing trades. Each corrective move testing this level—in early December and most recently on 10 December—has resulted in renewed selling. For buyers to gain control, USDCAD would need to break and sustain trading above the current 100-hour moving average, which stands at 1.38177.

On the downside, important support lies between 1.3721 and 1.3726, an area that has been tested as swing lows several times this year—in August and September—before the last upward rally peaked near 1.4140 on 5 November.

Key Levels for Traders

To plan trades effectively, the following technical levels are critical in the current bearish environment:

– 1.38177 (Resistance): The current level of the 100-hour moving average. A sustained break above here could disrupt the bearish momentum and signal a potential correction or shift in trend.

– 1.3800 (Short-Term Risk): This reflects Monday’s low and serves as a near-term risk level for traders.

– 1.3759 (Current Price): The market is trading near recent lows, maintaining downward pressure.

– 1.3721 to 1.3726 (Support Target): This zone represents key swing lows where price previously found support multiple times.

Traders should monitor these levels closely to make informed decisions and adjust their risk management accordingly.

For a detailed technical breakdown and insights into the next likely price moves of USDCAD, watch the video analysis by Greg Michalowski, author of Attacking Currency Trends, available on investinglive.com.

Be prepared and trade wisely.

Original Source: Greg Michalowski of investinglive.com