Good morning Forex Kings,
Our 50 PIP stop loss was hit last night but the USDCAD appears to be capped in a triangular formation. Listening to Bloomberg this morning Trump has said the US stimulus bill worth roughly $2 trillion USD is close to being agreed upon.
When this bill does come out we could see a weaker USD as more money comes into circulation.
The US stock market had one of its strongest rallies in DECADES last night on hopes of the stimulus package. (This does not mean buy into indices!).
USDCAD – Updated analysis and trade set up
Trade Setup: SELL Market Price (1.4469), Stop loss set at 1.4529 and take profit let to run but targeting the 1.4200 handle.
Stop loss: 60 PIPS
Take profit: 269 PIPS
24th March Analysis
Last night the Senate in the US failed to agree on an economic stimulus bill to help battle the economic impacts of the corona virus, the Democrats blocked the bill, again.
Both sides failed to agree on how to spend roughly $2 Trillion USD. However they do appear to be coming closer to a much needed agreement.
What does that mean for the market?
When the Senate/Congress agree to a bill of $2 trillion USD there will be more USD in circulation, therefore it should devalue the USD. The USD is extremely strong at the moment with the DXY (USD index) at 4 year highs.
Last night the USD weakened sharply as news emerged of a potential deal between the Republicans and Democrats, however the USD then regained strength surging higher as the news was false. Both parties are in disagreement on how to spend the $2 trillion USD. However, they will need to come to an agreement soon to avoid further damage to the financial system.
The $2 trillion bill will not only weaken the USD, but it may also provide some support for USD indices (for the time being). We ARE in a bear market, so we are expecting a bounce on US indices soon followed by further downside.
USDCAD – Technical Analysis
USDCAD – Daily Charts
USDCAD – 1 Hour Charts
On the 1 hour time frame there is a potential BEAR flag. This also aligns with the current fundamentals with the new bill being passed by congress over the coming days, suggesting we will see a weaker USD.
Trade SETUP: SELL USDCAD (Market price 1.4430) – Stop loss set at 1.4480, take profit left open to run. If our stop loss is hit we will re-enter at 1.4660.
Stop loss: 1.4480 = 50 PIPS
Take profit left open but targeting at least the 1.4200 level.