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In the trial of 1.4047, who blinked first, the US dollar or the Canadian dollar?
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Review]: The trial of 1.4047, who blinked first, the US dollar or the Canadian dollar?". Hope this helps you! The original content is as follows:
On Monday (October 13), the US dollar against the Canadian dollar traded around 1.4000 during the European session. The exchange rate continued the upward trend since September, approaching the previous high of 1.4033 and the Bollinger Band upper track of 1.4047, forming continuous pressure on the upper integers and historical prices. At the fundamental level, news from both sides of the United States and Canada are intertwined: Canadian employment in September greatly exceeded expectations, U.S. consumer confidence in Michigan in October was slightly better than market expectations, and the U.S. dollar responded positively to this, www.xmmen.combined with the U.S. September CPI to be released on October 24, causing short-term volatility and direction games to heat up simultaneously.
Fundamentals
Canada’s labor market data in September was “surprising”: more than 60,000 new jobs were created, higher than the 5,000 expected by the market; the new additions mainly came from full-time positions; while the participation rate increased, the unemployment rate was still declining, indicating an improvement in endogenous momentum. www.xmmen.commerzbank analysis emphasized that this report is overall "very positive", which significantly reduces the probability of the Bank of Canada cutting interest rates again at the end of the month. However, it is worth warning that Canadian employment data in the past four months have been very volatile - strong in June, weak in the following two months, and strong again in September - so it is premature to declare a trend reversal. For the Canadian dollar, this www.xmmen.combination of "good news + high volatility" means: short-term support is strengthened, but the medium-term direction is still subject to verification.
On the U.S. side, the Michigan Consumer Confidence Index released last Friday recorded 55.0, slightly lower than September’s 55.1, but better than market expectations for a further deterioration to 54.2. The U.S. dollar gave positive feedback on this. In terms of macro narrative, the www.xmmen.combination of "hard landing concerns not overweighted + consumption resilience remaining" is still providing bottom support for the US dollar. with thisAt the same time, the U.S. September CPI on October 24 is the most critical inflation calibration point this month. If the sticky www.xmmen.component is still high, the U.S. dollar's interest rate expectations and the dual pillars of "risk aversion + income" may be strengthened again.
Technical aspect:
The daily K-line chart shows that the middle track of the Bollinger Bands is 1.3885, the upper track is 1.4047, and the lower track is 1.3724. The exchange rate is now running close to the upper track. The nearest resistance above is first to look at the previous high of 1.4033, followed by the Bollinger upper track of 1.4047; if it breaks through strongly and www.xmmen.completes the backtest, it is expected to trigger the structural amplification of "resistance to support". The lower support focuses on 1.3967 (previous high point area, with price magnetism), the Bollinger mid-rail 1.3885, and the lower rail 1.3724, the "trend lifeline".
In terms of momentum indicators, the DIFF of MACD(26,12,9) is 0.0049, DEA is 0.0041, and the histogram is about 0.0014, all of which are above the zero axis and the column is positive, showing The trend momentum is in the diffusion stage; the relative strength index RSI is 65.9947, approaching the "70" watershed - not extremely overbought, but has entered the "hot zone", and the corresponding trading logic is "the trend dominates and the retracement is shallow." In terms of structure, the past two months can be regarded as advancing along the upward channel: the medium and long-term moving average rises, then continues to rise after retracing, which is in line with the momentum interpretation of trend trading.
Outlook
Bull path: If the CPI shows inflation resilience on October 24, www.xmmen.combined with stable U.S. consumption expectations, and the US dollar's income and safe-haven attributes resonate, the exchange rate is expected to break through 1.4033 and test 1.4047; once it stands firm above 1.4047 and www.xmmen.completes backtest confirmation, it will technically trigger the secondary momentum of "volume energy breakthrough" and "resistance to support", and the target will shift to a higher integer mark. Under this scenario, MACD may further expand red, and RSI may briefly enter the overheating zone of "70+", and then enter the rhythm of "high sideways - technical digestion - and then rise again".
Short path: If CPI is moderate or core inflation shows a marginal decline, and Canada's follow-up data continues to be positive, solidifying the narrative that "the possibility of an interest rate cut at the end of the month is reduced", sentiment will tilt towards the Canadian dollar. If it fails to overcome the double resistance of 1.4033/1.4047 above, it is easy to trigger a retracement chain of "false breakthrough - long settlement - momentum reflexive". If the price breaks below 1.3967, it will open a backtest window pointing to 1.3885; if the middle rail falls, the trend strength will be re-evaluated, and 1.3724 below will become the "long-short watershed". In this scenario, the MACD cylinder narrows and may fall back to near the zero axis, the RSI falls simultaneously to the "neutral zone", and the market changes from an "ascending channel" to a "high box or diagonal consolidation" in the short term.
The above content is all about "[XM Foreign Exchange Market www.xmmen.commentary]: The trial of 1.4047, who blinked first, the U.S. dollar or the Canadian dollar?" It was carefully www.xmmen.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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