USD/CAD touches a low of 1.3001
It was a topsy turvy trading session overnight for the loonie as news from Saudi Arabia sent USD/CAD up to highs of 1.3120 but the spike was short-lived and retraced rather quickly. Then, we had NAFTA news in the mix with hopes that Canada possibly joining discussions as soon as next week helping to give the loonie a lift.
That helped to drive USD/CAD lower on the day as the greenback also retraced gains against major currencies but the key thing in USD/CAD is that the move saw sellers drive price below the two key hourly moving averages and that meant that near-term bias turned more bearish.
Buyers attempted to get above the 100-hour (red line) and 200-hour (blue line) moving averages again but failed on several attempts thereafter. And now, we're seeing price move lower as a result.
The 1.3000 handle is the next line of defense for buyers before further support is then seen from the 31 July to 1 August lows between 1.2975-80 levels. Thereafter, the 100-day MA comes into play as the next line of defense for buyers. That currently sits at 1.2963.
Despite all the Saudi Arabia talks that have been making the headlines this week, the most important factor affecting the loonie remains NAFTA. Although trading around headline surprises is generally a very bad idea, you can still use key technical levels to define and limit risk in any case.
Sometimes things don't work out and the headline surprises spark a greater-than-expected jolt in price action only for it to retrace thereafter. In events like that, you just gotta shrug it off and accept that things like that do happen in trading - especially involving currencies with such possible headlines.
In any case, in anticipation of possible surprises it is also best not to be greedy. This is where I like to advocate on scaling out profits. But to each his/her own.
Anyway back to USD/CAD, as long as price remains below the two key hourly moving averages then the near-term bias remains lower. But a break of 1.3000 would be key to re-test the 100-day MA once again.
For a further extension to the downside, a break of the 100-day MA @ 1.2963 must be observed.