USDCAD seems to be tired from its climb, as a double top pattern formed on its 1-hour time frame. Price is still testing the neckline at the 1.3400 major psychological level before conrfirming this reversal signal.
A break below the 1.3400 neckline could push the pair down by at least 150 pips or the same height as the chart formation. On the other hand, if support holds, another move towards the 1.3550 area could take place.
The 100 SMA just crossed below the longer-term 200 SMA so the path of least resistance is to the downside. However, stochastic seems to be turning up so a return in buying pressure could be seen.
The Canadian dollar is relying on crude oil price rallies for now, as optimistic expectations for an OPEC output deal are currently shoring up prices. In the technical talks this week, sources are saying that there has been some progress even though some concerns about Iran remain. They also noted that several members are willing to give Iran some flexibility with its production levels to make up for lost output when sanctions were still in place.
As for the dollar, Fed Chairperson Yellen strengthened hopes for a December rate hike in last week’s testimony. She explained that the central bank would need to tighten monetary policy to give room for increased fiscal stimulus without running the risk of an overheating economy.
FOMC minutes are up for release this week and this could further boost hopes for a Fed hike next month. However, this may have been long priced in so traders might have a larger reaction to OPEC-related updates ahead of the November 30 meeting.