After last week’s strong selloff, USD/CAD is currently stalling around the 1.0075 resistance turned support level. This is in line with the 50% Fibonacci retracement on the 4-hour time frame.
During the previous release, the Ivey PMI came in much stronger than expected at 61.6. For the month of April, the Ivey PMI is projected to dip to 58.3, reflecting a slight slowdown in the manufacturing industry.
A weaker than expected reading could trigger a bounce from USD/CAD’s current levels back above 1.0100 while another strong reading might push USD/CAD to the next support level near 1.0020. Take not that this is in line with a former resistance area and is the 38.2% Fibonacci level.
Stochastic is pointing down, indicating a potential move south, but the oscillator could turn as USD/CAD finds support at any of the Fib levels. A stop below parity with a target around 1.0100 to 1.0150 would yield a decent reward-to-risk ratio.
By Kate Curtis from Trader’s Way