USD/CAD survives above 200-DMA; Is Trump's protectionism good for Canada?

Currently, USD/CAD is trading at 1.3136, up +0.05% on the day or 6-pips, having posted a daily high at 1.3168 and low at 1.3117.

The American dollar vs. Canadian dollar has struggled over the last 3-weeks to find new horizons and a decisive direction as the pair traded extremely close to the 1.3000 psychological mark. Furthermore, today's mixed US data lacked the necessary fireworks to boost its uptrend move as it trades 34-pips off highs. 

Historical data available for traders and investors indicates during January that USD/CAD pair had the best trading day at +1.71% (Jan.18) or 227-pips, and the worst at -1.02% (Jan.17) or (133)-pips.

Trump's wild agenda, valuable for the CAD

Jim Warren,  Columnists at Toronto Sun, notes, "as counter-intuitive as it may seem, here are two reasons why Trump’s protectionist policies could be a good thing for the Canadian economy: Trump’s “wall with Mexico” and “ban on Muslims”: U.S. anti-immigration policies will push more high-quality immigrants to Canada and Canada has always benefitted from immigration -- especially as our demographics skew to an older population. The federal task force set up by Prime Minister Justin Trudeau recommended increasing annual immigration from 300,000 to 450,000, but not just in gross numbers. To succeed it will require highly motivated immigrants who are likely to succeed in Canada, which Trump’s policies could send here."

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He further writes, "Protectionist taxes and levies: Protectionism hurts trade and will not be good for the U.S. in the medium and longer term. However, it may lead to a higher U.S. dollar in the short term, making Canadian exports even more affordable. Cheaper exports may lead to greater investments in the Canadian production of high-value goods for export to the United States. The final product might be assembled in the U.S. to keep Trump happy, but more of the components would be from Canada."

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.3180 (horizontal resistance), then at 1.3283 (100-DMA) and above that at 1.3310 (50-DMA). While supports are aligned at 1.3112 (200-DMA), later at 1.3060 (horizontal support) and below that at 1.3017 (low Jan.17). On the other hand, Stochastic Oscillator (5,3,3) seems to retrace from the oversold territory and head north, therefore, there is evidence to expect further dollar gains in the near term. 

On the long term view, if the 'double Doji' candlestick formation from November and December 2016 (1.3500-80 region) is in fact, a critical resistance-top, the upside potential seems limited for this currency pair. Then, to the downside, supports are aligned at 1.2967 (short-term 61.8% Fib), later at 1.2651 (long-term 50.0% Fib) and finally below that at 1.2435 (short-term 50.0% Fib). If prices close and open above 1.3270-90 region (horizontal resistance, August 2015), only then, the previous long-dollar narrative would have a new opportunity to attempt a new run against 1.3490 (long-term 61.8% Fib) and finally above that level the next logical challenge would be at 1.3800-20 (horizontal resistance).

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