USD/Canadian dollar to trend 26 January 2011
USD/Canadian dollar to consolidate with risks skewed higher as markets await U.S. FOMC announcement. Pair underpinned by weaker commodity & oil prices (Nymex crude settled down $1.68 yesterday at $86.19/bbl); contagion from weak GBP; weaker-than-expected Canada December core inflation of +1.5% on year (vs +1.6% forecast), reinforcing expectations BOC will move cautiously on raising interest rates. But USD/CAD gains tempered by receding eurozone debt concerns. USD/CAD daily chart positive-biased as MACD bullish, while stochastics revert to bullish mode; 5-day moving average above 15-day MA and rising. Resistance at 1.0004 (yesterday''''s high), then at 1.0030-1.0033 band (Thursday''''s high-Jan. 4 reaction high); breach would target 1.0051 (55-day moving average), then 1.0115 (Dec. 24 high, matching 100-day moving average) and 1.0165 (Dec. 23 high). Support at 0.9905 (yesterday''''s low, roughly matching Friday''''s low); breach would temper near-term positive outlook, targeting 0.9884 (Jan. 19 low), then 0.9827 (Jan. 18 low), 0.9816 (May 21, 2008 reaction low) and 0.9708 (Feb. 28, 2008 reaction low).