USD/CAD weakens farther below 1.30 mark on NAFTA optimism, lowest since mid-June
Positive NAFTA headlines prompt some aggressive selling on Monday.
• Weaker USD/technical selling below 1.30 mark adds to the bearish pressure.
• Weaker USD/technical selling below 1.30 mark adds to the bearish pressure.
The USD/CAD pair faded a bullish spike to an intraday high level of 1.3067 and slipped below the key 1.30 psychological mark in the last hour.
Against the backdrop of some renewed US Dollar selling, the pair met with some aggressive selling pressure since the mid-European session and the latest leg of downfall could also be attributed to some positive NAFTA news.
According to the latest reports, the US and Mexico have reached understanding on key issues on the North American Free Trade Agreement. Although talks with Canada were awaited, the spillover effect benefitted the Canadian Dollar and was seen as one of the key factors behind the pair's sharp intraday retracement.
Meanwhile, possibilities of some short-term trading stops being triggered below the 1.30 handle seems to have further aggravated the selling pressure over the past hour or so, dragging the pair back closer to monthly lows support near the 1.2965-60 region.
From a technical perspective, the pair has now broken below 100-day SMA for the first time since April 20 and hence, a follow-through weakness, led by some fresh technical selling, now looks a distinct possibility.
Technical levels to watch
The bearish trajectory now seems to get extended towards 1.2925-20 intermediate support en-route the 1.2900 handle. On the flip side, any recovery attempt might now confront fresh supply near the 1.30 round figure mark and is followed by a strong resistance near the 1.3050-55 region.
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