Forex Market: USD/CAD daily trading outlook

Friday’s trade saw USD/CAD within the range of 1.4111-1.4302. The pair closed at 1.4117, plummeting 1.02% on a daily basis, while marking its third consecutive drop. The daily low has been the lowest level since January 11th, when a low of 1.4062 was registered. In weekly terms, USD/CAD lost 2.91% of its value last week, which has been the sharpest weekly decline in more than 2 years. The pair has appreciated 2.58% so far during the current month, following two consecutive months of gains.

At 10:16 GMT today USD/CAD was gaining 0.36% for the day to trade at 1.4195. The pair touched a daily high at 1.4220 at 8:20 GMT, undershooting the upper range breakout level (R4), and a daily low at 1.4126 during mid-Asian trading session. Support may be received within the 1.4115-1.4130 area. A break and close below it may target the low from January 11th (1.4062). Resistance, on the other hand, may be seen at the hourly 55-period EMA (1.4251) and then – at the high from January 22nd (1.4302).

The Canadian dollar has recently been strongly pressured by a continuous decline in prices of crude oil. The commodity has fallen in 14 out of the past 26 trading days. Oil futures for March delivery were down 2.80% on the day to trade at $31.46 per barrel as of 10:24 GMT, after going down as low as $30.88 earlier. On January 20th the commodity touched a low of $26.19 per barrel, or a level unseen since early May 2003. Oil has slumped 15.16% so far during the current month.

No relevant macroeconomic reports and other events, which may influence USD/CAD trading, are scheduled on Monday.

Correlation with other Majors

Taking into account the week ended on January 22nd and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

USD/CAD to EUR/USD (0.9097, or very strong)
USD/CAD to GBP/USD (-0.6478, or strong)
USD/CAD to USD/JPY (-0.8084, or very strong)
USD/CAD to NZD/USD (-0.8212, or very strong)
USD/CAD to USD/CHF (-0.9113, or very strong)
USD/CAD to AUD/USD (-0.9393, or very strong)

1. During the examined period USD/CAD moved strongly in the opposite direction compared to GBP/USD.

2. USD/CAD moved almost equally in one and the same direction with EUR/USD during the past week.

3. USD/CAD moved almost equally in the opposite direction compared to USD/JPY, NZD/USD, USD/CHF and AUD/USD. This relationship has been the most pronounced between USD/CAD and AUD/USD.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for USD/CAD are presented as follows:

R1 – 1.4135
R2 – 1.4152
R3 (range resistance) – 1.4170
R4 (range breakout) – 1.4222

S1 – 1.4099
S2 – 1.4082
S3 (range support) – 1.4064
S4 (range breakout) – 1.4012

By using the traditional method of calculation, the weekly pivot levels for USD/CAD are presented as follows:

Central Pivot Point – 1.4306
R1 – 1.4502
R2 – 1.4886
R3 – 1.5082

S1 – 1.3922
S2 – 1.3726
S3 – 1.3342