Canadian Dollar exchange rate surged higher against the US Dollar. Can the current bearish trend in USD/CAD continue?The US Dollar suffered heavy losses recently against a basket of currencies, including the Euro, British Pound, Malaysian Ringgit, Australian Dollar, Canadian Dollar and the Swiss Franc.
The USD/CAD pair after completing a short-term correction at 1.3300 found sellers and started to move down once again. There was a nice downside ride after the failure, and it may continue if the US Dollar bears remain in control.
Canadian Dollar exchange rate positioning for gains
The Canadian dollar was also benefited recently due to the increase in crude oil prices. However, the most important reason for a downside move in the USD/CAD pair was the recent speech by Janet Yellen. She stated concerns related to slow growth, and reiterated a cautious approach towards the interest rate hikes.The USD/CAD pair was down and out, as it broke a major bullish trend line on the 4-hours chart. The pair is also below the 100 simple moving average on the 4-hours timeframe chart.
There are two scenarios likely moving ahead. First, the pair may continue trading down and test the last swing low of 1.2922. Second, the pair may correct a few pips higher and then resume its downtrend.
In both cases, the possibility of more declines in the USD/CAD is very high.
This week on Friday in Canada, the RBC Manufacturing PMI, which is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies will be released by RBC.
The last RBC Manufacturing PMI posted a contraction, so it would be interesting to see how the result shapes up for March 2016. If the RBC Manufacturing PMI registers an expansion, then it might boost the Canadian dollar moving ahead.
However, the most important event will be in the U.S. on Friday, as the nonfarm payrolls figure will be released by the US Department of Labor. A reading below 180K may ignite swing moves in the US dollar.
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