USD/CAD: bulls lack conviction above short-term 50 SMA; What’s next for the Loonie?

After last week’s low 1.3170 figure, the USD/CAD experienced a decent comeback to print a new short-term high at 1.3270. However, without further positive dollar news to burn, the next leg up might need to wait a few more weeks.

Moving off-highs, at the moment of writing, losing -50 pips the greenback lack followers to break above the short-term 50 SMA.

Two views, one direction

Kenny Polcari, veteran equities trader and CNBC exclusive market analyst noted, "The Wage report leaves the FED in a good position to continue on the path of higher rates later this year.  Current bets have a Feb 1st rate increase at 10%, a March increase at 35% and a June increase at 78%."

Nenad Kerkez, Admiral Markets Senior Lecturer/Market analyst shared his view on the CAD, "Despite the excellent data for CAD currency, the USD economy also showed good numbers on Friday. While unemployment is still at 4.7% and wages are going up, we might assume that the economy is very strong and that may lead to another rate hike. I personally believe the US Fed will continue to gradually raise rates in the US leading to gradual USD strength in the medium term.”

USD/CAD Technical Levels

To the upside, the pair requires a massive run to break above the obvious resistance at 1.3270/90, then it may find enough buyers to target 1.3400 (round figure) and above.

On the long-term view, there are 2 scenarios to play with: 1)The critical support around the 50 SMA, from that range 1.3150/00 bulls can lift the pair targeting the upper band in the ascendant channel. 2)If this pullback runs lower, a close and open below 1.3100 (round figure) raises the short-sellers bearish flag and the immediate support to take out clocks around 1.2920/00.

USD/CAD Leaned Inverted Head and Shoulders for Bullish Continuation