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Dollar Looks Higher after a Head & Shoulders Forms


Looking at the benchmark USD/CAD Forex market, the almighty dollar has seen some small gains against the Canadian currency. This currency exchange rate is above 1.2660 during the early Asian trade session on Friday.

Forex traders should note that the USD/CAD currency exchange rate’s recovery off 1.2575 yesterday is a signal of strength ahead for the U.S. dollar as there is a bullish inverse head and shoulder chart pattern also in play on the above four hour MT 4 price chart.

Canada is publishing their monthly Ivy purchasing managers’ index (PMI), but all eyes will be on the labor data out of the United States. The United States Labor Department of Labor will release their monthly -farm payroll (NFP) report, February’s unemployment rate, monthly hourly average earnings and the February labor participation rate.

Germany, the euro area’s largest economy, will publish monthly factory orders.  Italy is will release monthly retail sales and France is publishing their monthly trade balance. The United Kingdom will release their monthly Halifax housing price index (HPI).

Daily U.S. Dollar Technical Analysis (USD/CAD)

Right now, the U.S. dollar is challenging the two hundred (200) hour simple moving average (SMA) in play at 1.27. The next upside barrier lines up at 1.2717.

The relative strength index (RSI) is looking positive as the USD/CAD Forex market looks to challenge above the 200 hour SMA to 1.2717. The next layer of technical resistance lines up at 1.2845. Above that, 1.2880 comes into play. The late December high price point at 1.2960 then comes into focus.

On the downside, the USD/CAD needs a daily close below 1.26 in order to bring the key layer of technical support at 1.2575 into play. A sustained close below 1.2575 opens the door to challenge the February multi-low price point lining up at 1.2515 into focus. The next downside barrier to watch lines up at 1.25.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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