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The U.S. dollar may rally against its Canadian counterpart this week if it fails to break a trend line at 97.40 cents, according to FX360.com, a foreign-exchange research and analysis website.
“That’s going to be the key thing to watch for the next eight to 24 hours -- whether we can hold that trend line or not,” Matthew Weller, technical analyst at FX360.com, said in a phone interview. “If we do start to see some signs of a bottom, start to see maybe the dollar-CAD get back above 98 soon, the thesis for a bounce would still be intact.”
The U.S. currency is consolidating just below the 97.80 level, he said. Investors should buy the greenback if it rises above 98.15, Weller said, with a target of 98.60. A slide to 97.35 is likely if 97.70 is broken, he said.
The U.S. dollar traded below its 50-day moving average on Oct. 16 and yesterday while trading above its 100- and 200-day moving averages.
The U.S. currency declined 0.9 percent to 97.79 Canadian cents yesterday, the biggest decrease on a closing basis in more than a month. It rose 0.6 percent on Oct. 16, the most in almost three months. One Canadian dollar buys $1.0224.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
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