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USD/Canada may "quietly" squeeze short?
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Hello everyone, today XM Forex will bring you "[XM Forex Official Website]: US dollar/Canadian dollar or "quiet" short squeeze?". Hope it will be helpful to you! The original content is as follows:
On Friday (September 26), the US dollar against the Canadian dollar (USD/CAD) was sorted out in a narrow range of 1.3940 during the North American period. Previously, the exchange rate once reached a stage high near 1.3958 and then ran horizontally. On the macro side, Canadian economic data in July rebounded slightly, while the US PCE inflation reading in August was consistent with expectations, and the US dollar index (DXY) hovered around 98.30 without a directional breakthrough.
Basics:
In Canada, the Bureau of Statistics showed that real GDP in July increased by 0.2% month-on-month, better than the previous initial value of 0.1% and reversed the slight decline of -0.1% last month. Structurally, the "commodity production sector" rebounded to +0.6% after three consecutive months of contraction, and generally rebounded in sub-items; the "service production sector" rose slightly by 0.1%, wholesale trade, real estate and leasing strengthened, and retail was under pressure; 11 of the 20 industries expanded in the overall 20 industries.
The meaning of the foreign exchange market is: Canadian growth momentum is recovering marginally, but the differentiation between industries has not disappeared, and the "soft landing" signal at the economic level still needs to be confirmed later data. In terms of forward-looking perspective, the initial monthly GDP value in August was "basically flat", and the growth of wholesale and retail was hedged by the decline in mining, manufacturing and transportation and warehousing. At the same time, the initial value of wholesale sales that month was expected to drop by 1.3%, which tends to "noise" that drags down the momentum in the third quarter. On the interest rate side, Canada's 10-year Treasury bond yield fell to about 3.2%, a moderate decline in the long term with the US bonds. Cross-border interest rate spreads narrowed in stages, and the short-term weakened the support of the Canadian dollar interest rate spread.
In the United States, the PCE price index in August was 2.7% year-on-year, and the core PCE was 2.9% year-on-year; on the previous month, Toutiao PCE +0.3% and the core +0.2%. In addition, personal income +0.4% and personal expenditure +0.6%. numberAccording to the overall agreement with market expectations, the narrative that inflation has fallen back to the "moderate" range but is still sticky. Under this framework, the market still generally bets on the October policy interest rate to be reduced by 25 basis points, but due to the trade-off between inflation stickiness and the previous rate cut rhythm, the Federal Reserve tends to manage the rhythm of "more cautious". Although the US dollar's interest rate spread advantage has weakened marginally, it has not been substantially eroded.
xn--xm-6d1dw86k.comprehensive judgment: Canadian growth has rebounded marginally but its resilience is limited. US inflation meets expectations and the US dollar index has not shown a directional revaluation. The net effect of basically facing USD/CAD is more like "weaker down rather than strengthening headwind" - the trend may still occur, but it depends more on the resonance of technical positions and emotional momentum.
Technical:
The four-hour K-line shows that the exchange rate has risen from the low point of 1.3725 and is currently operating near the upper track of the Bollinger Band. Bollinger parameters show: middle rail 1.3875, upper rail 1.3972, lower rail 1.3779, the bandwidth has recently expanded moderately, indicating that the trend is better than the oscillation. The price is currently close to the upper track and is "high horizontal" in the range of 1.3930-1.3960, which belongs to a typical "upper track walking" pattern; if the upward movement along the track is not pulled back quickly, the medium and short-term trend will still tend to "resume within the channel".
In terms of kinetic energy, DIFF≈0.0032 and DEA≈0.0030 in MACD, the double line is located above the zero axis and remains passivated upward. Although the bar chart has a fall, it does not form a clear top divergence signal, which is more reflected in the rhythm of "high turnover - kinetic energy consumption". The relative strength index RSI (14) is about 71, and it has been in an "overbought belt". The xn--xm-6d1dw86k.common deduction is the horizontal consolidation of time and space, or the release of index pressure through a short downward exploration and back-testing of the middle track.
At the horizontal level, short resistance focuses on 1.3958 and Bollinger's upper rail 1.3972, and superimposed on the integer 1.4000 to form a "dense resistance band"; the lower support is 1.3930 (intra-dense trading area), 1.3875 in the middle rail, and the upward trend line dynamic support near 1.3820, with strong support at 1.3779 (bottom rail). If the subsequent price shows secondary bandwidth amplification of "upper track expansion + convergence and reopening", it will be a quantitative signal for the trend to continue; on the contrary, if the large volume falls below the middle track and closes for two consecutive four-hour K-lines below it, it means that the rhythm switches from "upward channel" to "box/retracement", and you need to be wary of the deepening of backtesting after a false breakthrough.
Prevention of market sentiment:
From the pricing behavior, the US dollar index did not rise unilaterally after the PCE "boot landed", which shows that most of the information on the previous "inflation-interest rate cut path" has been counted, and the market has entered the stage of "verification rather than imagination". The recent upward trend of the exchange rate xn--xm-6d1dw86k.comes more from the overlapping of technical buying and passive short rebound: on the one hand, the "trend following" market along the Bollinger's upper track is dominating the rhythm; on the other hand, the "reverse position" that expected the interest rate hike cycle to pass and the US dollar to reach a temporary peak was forced to stop losses at a high level, forming momentum amplification.
Emotional indicator angle, high RSIThe bit indicates that "greed is heating up", but MACD does not form a significant deviation from the price, indicating that the trend has not yet reached the "emotional exhaustion" area. It should be wary that if subsequent macrocatalysis is absent, technical overbought and position settlement before the weekend can easily induce a short-term "upward-down-reorganization" three-stage structure. Overall, sentiment transitions from "chasing the rise" to "cautious optimism", and market consensus tends to observe first near key resistance and wait for new directional catalysis.
The above content is all about "[XM Forex Official Website]: USD/Canada or "quiet" short squeeze?". It was carefully xn--xm-6d1dw86k.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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