The Canadian Dollar (USD/CAD) is stuck in a short-term range, with retail sentiment indicating that traders are still bullish on the currency. The Bank of Canada (BoC) recently maintained its policy rate and forward guidance while reducing the number of government bonds it will buy from CAD 3 billion to CAD 2 billion per week. This adjustment “reflects ongoing progress toward recovery and the Bank’s enhanced confidence in the robustness of the Canadian economic outlook,” according to the Bank of Canada. While the ‘factors pushing up inflation are transitory,’ the central bank believes they need to be closely monitored in the months ahead. The multi-week rally in USD/CAD is likely set for a period of consolidation, with a band of resistance between 1.2630 and 1.2650 unlikely to be troubled in the near term. A few mixed technical indications can be seen on the daily chart, clouding the outlook for the following days. A sequence of higher lows dating back to late May have held, bolstering positive sentiment, while the cup and handle pattern we’ve been watching for the past several weeks has held, implying more upside. On the other hand, USD/CAD is struggling to break through the 200-day simple moving average (black line), while the hanging man candlestick from yesterday suggests a possible short-term pullback. In the short term, a range between 1.2423 and 1.2593 appears to be holding.USD/CAD Daily Price Chart (October 2020 – July 15, 2021)IG Retail trader data show 60.91 percent of traders are net-long, with a ratio of traders long to short of 1.56 to 1.The number of traders net-long is 8.30 percent lower than yesterday and 0.85 percent higher than last month. Despite the fact that traders remain net-long, recent changes in mood suggest that the present USD/CAD price trend may soon reverse higher.What is your view on USD/CAD – bullish or bearish?? You can contact the author on Twitter @nickcawley1 or by the form at the bottom of this article./n
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