A Head and Shoulders Top (bearish reversal pattern) appears to be forming on the USD/CAD daily chart, pictured above. The pattern appears after an uptrend and is defined by three successive peaks, with the middle peak (head) being above the other two (shoulders).
The successive lows after the peaks of the left shoulder and head form the neckline, which represents support. The Head and Shoulders Top pattern is completed if price breaks below neckline support.
The Canadian dollar has been boosted by an uptrend in crude oil dating back to June of 2017. Crude oil is among Canada’s largest exports to the US.
Meanwhile, the US dollar has weakened amid fears of a trade war between the United States and China. Later this week the Trump administration will announce the list of Chinese imports targeted for US tariffs in response to alleged intellectual property infringement.
Key data impacting USD/CAD to be released later this week includes Canada’s Trade Balance on Thursday and the employment reports of both the US and Canada on Friday. Analysts expect that the US employment rate fell to 4.0% in March and that 190K new jobs were created.
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