USD/CAD Closing in on Long-Term Targets
Trade idea: Although the USD/CAD has yet to reach its target zone, I am much more cautious to the short side continuing to extend lower. As long as the pair holds the 1.2374 level that zone is still well within reach, writes Mike Golembesky of ElliottWaveTrader.net.
The US dollar (USD/CAD) fell close to 1400 pips from the May 2017 highs into the July lows. In August the currency pair retraced over 350 pips topping out at 1.2777. Since the high that was struck on August 15, the USD/CAD has once again moved back under the July lows and is now trading more than 500 pips below that August 15 high.
On Wednesday, September 6, the Bank of Canada increased its benchmark interest rate to 1%. Following the announcement of this news, the USD/CAD moved lower, breaking down under a key support level at 1.2330, signaling that further follow through to the downside was likely.
Now along with the move lower in the USD/CAD, the U.S. Dollar Index (DXY) has also continued to move lower. The U.S. Dollar Index is already deep into its support zone for its potential wave 4.