USD/CAD trading plan & analysis.

Since mid-April, USD has been losing against most of other major currencies. Since beginning of May; Fed rate cut expectation; lately released NFP, CPI, PMIs, home sales data, etc. strengthened USD bears. However, CAD couldn't gain even half of how much other major currencies gained against USD because of its softer CPI and other economic data.

So, USD/CAD has been moving in a sluggish downward channel. The pair can touch upper border of this channel.

See the graph below, we entered buy when USD/CAD lately penetrated above the high made during 1st hour of the US session. US PCE was released in the very same hour. Although month over month core US PCE was 0.1% less than forecast, there was no decline in year over year core PCE, moreover month over month Canadian GDP was reported 0.2 less than forecast. So, USD/CAD was obviously more likely to rise after the market prices in the m/m core PCE.

Please note that USD/CAD is highly affected by CAD/JPY moves. Bullish trades of CAD/JPY are similar to bullish carry trades of USD/JPY; which is why when USD/JPY rises, CAD/JPY rises too, but it hinders rise of USD/CAD because the exposure in JPY is the biggest in all of these three currencies. So, SL may be hit temporarily. Therefore, we suggest to wait for a Daily candle closure below the previous lows for exiting in loss instead of placing an SL.