With the hawkish tone of Powell's testimony yesterday, USD/CAD has the potential to resume its rally around the 1.3730 - 1.3700 area.

Good evening to all fellow traders! USD/CAD traded higher on Tuesday (March 7th). The greenback surged rapidly after Jerome Powell hinted at further interest rate hikes. This time, market participants are waiting for Powell's second testimony. With the hawkish tone of yesterday's testimony, USD/CAD has the potential to continue its bullish rally if Powell delivers a similar message in tonight's testimony.



Analysis and Recommendation

Let's take a look at the following USD/CAD H1 chart below: 

usdcad 2

From the H1 chart above, it has been pointed out that USD/CAD is currently undergoing a correction from its bullish trend. The corrective movement is expected to reach the demand zone around 1.3730-1.3700. Therefore, wait for buying opportunities when the price rises from the demand zone.

Be aware if USD/CAD weakens and breaks through the psychological level of 1.3700. The pair is expected to test a deeper demand zone if that level is successfully breached. Especially if the second Powell testimony tends to be dovish, the Greenback will likely wear out.

Here are two trading scenarios that can be prepared:

  • Therefore, set a long position at 1.3730 when the price manages to enter the demand zone and a bullish signal confirms it. Stop loss may be positioned at 1.3700, while the profit target is at 1.3784.
  • Alternatively, set a short position at 1.3700 when a significant breakout signal confirms it. Stop loss may be positioned at 1.3730, while the profit target on 1.3650.

Keep in mind to always use risk and money management before trading! In addition, to make use of trailing stops, don't forget to exit the market as soon as you find a reversal signal!

USD/CAD key levels

  • Resistance: 1.3814, 1.3784
  • Support: 1.3730, 1.3700 (psychological levels), 1.3650, 1.3620