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USD/CAD: 5 days of declines

By Mark Jensen

USD/CAD is falling for the fifth day in a row correcting down from the 4-1/2-year high at 1.1278. The pair’s once again approaching the support of the 55-day MA (1.1066) and the daily Ichimoku Cloud (1.1032).

The decline was the result of a strong MACD divergence seen on the daily chart. The pair has been trading in this manner since the beginning of the year with the thrusts up and the following declines. Last week US dollar has risen too fast versus its Canadian counterpart: CAD weakened as the Bank of Canada’s Governor Stephen Poloz gave more dovish than expected comments, while the fed signaled that it may start raising interest rates earlier than expected. This week worries over geopolitical tensions eased after leaders of the Group of Seven major industrialized nations agreed to hold off on sanctions targeting Russia's economy unless President Vladimir Putin takes further action to destabilize Ukraine.

Analysts say that in the near-term there actually are no catalysts that can help bears push USD/CAD much lower, so the decline must be limited by the 1.1025 support (Mar. 18 low). The loss of the trend line support, however, will make the pair vulnerable for a slide to 1.0980 (lower daily Bollinger band).

Chart. Daily USD/CAD

To contact the writer of this story: Mark Jensen, analytics@fxbazooka.com

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