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Dollar Struggles for Direction around 1.25

Dollar

The almighty U.S. dollar has broken above a crucial falling trend line and looking to challenge 1.25 against the Canadian Loonie. The benchmark USD/CAD currency exchange rate is trading around 1.2480 to 1.25 entering Thursday.

The next barrier to challenge, looking at the above daily MT 4 price action chart is a rising trend line in play since May.

Today, Canada had no economic data scheduled to be released. The United States Labor Department will publish weekly initial and continuing jobless claims.

The U.S. is also publishing monthly consumer credit numbers. Across the Pond, the United Kingdom is releasing monthly housing data. RICS will release their June housing price balance numbers.

The headline event on the economic calendar is the European Central Bank (ECB). They will publish their minutes of their last monetary policy and interest rate decision.

Forex traders will be looking for clues on where the ECB Governing Council stands on inflation as well as the future of their monthly asset purchases and direction of their key overnight lending rate. As far as data is concerned, Germany is publishing their monthly trade balance.

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

Looking at price action on the above USD/CAD chart, the U.S. dollar is struggling a bit at the current price level. This comes as it trades between two key trend lines.

The 14 day relative strength index (RSI) is also looking neutral which could lead to a correction lower towards the two month old rising trend line at 1.2535.

A break below 1.2535 will open the door to challenge the key downside barrier in play at 1.2430. The next layer of technical support lines up at 1.24. The one hundred (100) day simple moving average lines up at 1.2378.

If 1.2535 manages to hold, the two hundred (200) day simple moving average is the next upside barrier. The April high price point at 1.2650 then comes into play. The next layer of technical resistance lines up a 1.2655.

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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