USDCAD recovery potential ahead


Background

With the US intending to impose a 20% duty on Canadian softwood lumber imports, the Canadian dollar was under pressure yesterday. This week, Friday is the “big numbers” day, with the scheduled release of US durable goods orders, as well as the ECB interest-rate decision and monetary policy statement.

Management and risk description

USDCAD’s Elliott Wave and classical charting structures are both bullish, with the potential for advance towards the low 1.4000s over coming weeks.

Firstly, there is a completed four-month Inverse Head and Shoulders target of 1.4090, and from an Elliott Wave perspective, there is a mathematical upside projection towards the 1.4110 level (see daily charts below). Support now lies at 1.3530/1.3480.

Parameters

Entry: Today USDCAD is seen as a buy on any reaction to 1.3525/1.3510.

Stop: Just under 1.3470 initially.

Target: 50% at 1.3767 and 50% at 1.4074.

Time horizon: Allow several weeks for both targets to be met.

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USDCAD recovery potential ahead

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