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Chart of the Day: USDCAD (four-hour chart)

USDCAD has traded and held a 1.3350-to-1.3250 range since mid-August, and we find price now testing the lower percentile of this range. Stochastic momentum has become stretched, but there’s no clear buy signal at this stage.

USDCAD, four-hour chart

Should we see price rally from here, resulting in a bullish stochastic crossover, then it could give confidence this range will be respected and is due for mean reversion in price, with the 20-period average sitting midrange at 1.3295.

Of course, should we see a four-hour period close through the range low, then this could give confidence of a new bearish trend in the pair. But with the market going into tonight’s US consumer confidence print (at 00:00 AEST) expecting a weak number, then a print above consensus of 129 would likely promote a wave of USD buying, with the market pricing out any chance of a 50bp cut from the Federal Reserve in its September meeting. Will the range hold?

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