USD/CAD: Key support at 1.2815 - Rabobank

Analysts from Rabobank, expect no more rate hikes from the Bank of Canada and they see a close below 1.2815 in the USD/CAD pair triggering a potential decline to 1.2500.

Key Quotes: 

“We no longer expect any further rate hikes this year.”

“The focus on USD/CAD this week is firmly centered on two main factors – NAFTA and labor data. The former will likely be more important in light of Bloomberg reporting that “The Trump administration is pushing for a preliminary NAFTA deal to announce at a summit in Peru next week, and will host cabinet ministers in Washington to try to achieve a breakthrough, according to three people familiar with the talks.”

“USD/CAD momentum indicators are firmly in neutral territory and there is ‘nothing to see here’ from that perspective.”

“Current range covers 1.2815 to 1.2950. 1.2815 represents the confluence of support from recent lows and the neckline of a head and shoulders reversal formation. A confirmed close (a close followed by a subsequent lower close) below 1.2815 could see a significant move lower with the H&S pattern providing a purely technical target just north of 1.25. That said, we would argue that it would need a preliminary agreement on NAFTA for that to occur. On the upside a break above 1.2950 would open up a run to the 1.30 handle. Before the recent high of 1.3125 would come into play.”