One Night Jump Over 200 Pips! What's Happening To USD/CAD?


 The price chart of the USD/CAD currency pair on Tuesday yesterday was among the ones that stole the spotlight because of the drastic daily price movements.

The price is seen to have jumped up to more than 200 pips due to the strengthening of the US dollar driven by risk sentiment influenced by adverse developments in China.

However, there are stories about the Canadian dollar as well that investors need to know.

Sensitive to the global oil market, the Canadian dollar traded weak following concerns that uncertainty affecting the Chinese economy as one of the world's largest oil consumers will affect demand.

But, a slight easing of risks in China will restore the situation.

Canada's economic growth data for last September registered a slight decline that was in line with the forecast in readings published in the New York session yesterday.

Additionally, there are reports that Royal Bank of Canada (RBC) has reached an agreement to buy HSBC Bank Canada for $13.5 billion, influencing positive sentiment in Canada.

Investors will also monitor the Canadian jobs data report which will be published along with the US NFP jobs report later on Friday.

The USD/CAD price chart this week shows a bullish movement with the surge on Tuesday yesterday having managed to break through the 1.35000 resistance and reach a recent 4-week high at the 1.36400 zone.

The price that previously fell tested the support level of the Moving Average 50 (MA50) on the 1-hour time frame on the USD/CAD chart before bouncing over 200 pips, which has given a clearer signal that the bullish movement continues.

Flattening throughout the Asian session today (Wednesday) around 1.35700, the price is expected to continue rising higher beyond the 1.36400 zone reached yesterday.

The next rise has the potential to target up to the height of 1.38000 which would require more than 200 pips of price hike.

On the other hand, if there is a drop again when trading towards the end of this week, the RBS (resistance becomes support) zone of 1.35000 will be the initial focus to be tested.

A further decline beyond the zone will lead back to previous focus levels around 1.34000 and 1.33000.