Source: PaxForex Premium Analytics Portal, Fundamental Insight
The US Trade Balance for February is predicted at -$88.50B. Forex traders can compare this to the US Trade Balance for January, reported at -$89.70B.
Economists predict the US Final Markit Services PMI for March at 58.9 and the US Final Markit Composite PMI at 58.5. Forex traders can compare this to the US Markit Services PMI for February, reported at 56.5, and the US Markit Composite PMI reported at 55.9.
The US ISM Non-Manufacturing PMI for March is predicted at 58.4. Forex traders can compare this to the US ISM Non-Manufacturing PMI for February, reported at 56.5.
The Canadian Trade Balance for February is predicted at C$2.90B. Forex traders can compare this to the Canadian Trade Balance for January, reported at C$2.62B. Economists predict March Exports at C$58.05 and Imports at C$54.68. Forex traders can compare it to February Exports, reported at C$56.62, and Imports at C$54.00B.
Yesterday’s US economic data showed a drop in March car and truck sales, while factory orders for February decreased 0.5% monthly, matching expectations. Last Friday’s yield curve inversion flashed signs of a potential recession, and global inflation data remains elevated as economies cool down. Chances for a 50 basis point interest rate increase by the US Federal Reserve increased, and traders cannot ignore the likelihood of stagflation, where GDP slows and inflation rises.
The forecast for the USD/CAD turned moderately bullish in the short term as this currency pair stabilized at its horizontal support area. Volatility is likely to increase as bulls and bears wrestle for control, with the Tenkan-sen moving lower and the Kijun-sen flat. The Ichimoku Kinko Hyo Cloud entered a sideways trend with a bearish bias driven by its descending Senkou Span A. Traders should monitor the CCI after forming a positive divergence in extreme oversold territory followed by a breakout above -100. A push above 0 can pressure price action into a minor advance, but the longer-term bearish outlook remains. Can bulls pause the sell-off and force the USD/CAD into a counter-trend rally? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the USD/CAD remain inside the or breakout above the 1.2430 to 1.2510 zone, PaxForex recommends the following trade set-up:
- Time frame: D1
- Recommendation: Long position
- Entry Level: Long Position @ 1.2480
- Take Profit Zone: 1.2625 – 1.2575
- Stop Loss Level: 1.2390
Alternative scenario:
Should price action for the USD/CAD breakdown below 1.2430, PaxForex recommends the following trade set-up:
- Time frame: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.2390
- Take Profit Zone: 1.2245 – 1.2285
- Stop Loss Level: 1.2430
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