Dollar May Touch 2-Month High Versus Loonie: Technical Analysis

The U.S. dollar may climb toward a two-month high versus its Canadian counterpart after it failed to breach a key support level, Royal Bank of Canada said, citing trading patterns.

The greenback avoided piercing 98.26 Canadian cents, according to George Davis, the bank’s Toronto-based chief technical analyst for fixed income and currency strategy. A close above 99.37 may “expose a pocket of resistance defined by” C$1.0040 and the highs seen in November and August, Davis wrote in a report yesterday.

The U.S. dollar bought 98.38 Canadian cents as of 9:40 a.m. in Tokyo, little changed from its 98.37 close in New York. Canada’s currency is known as the loonie, named for the image of the aquatic bird on the C$1 coin.

C$1.0040 is the 50 percent Fibonacci retracement level of its decline from C$1.0447 on June 4 to 96.33 cents on Sept. 14, according to data compiled by Bloomberg. It was last seen on Nov. 16, when the greenback climbed to that month’s peak at C$1.0057. Its August high was C$1.0085, reached on Aug. 2.

Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break below support, or levels where there may be orders to buy, indicates it may decline to the next level. A breach of resistance, where sell orders may be clustered, signals an advance.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.

To contact the reporter on this story: Kristine Aquino in Singapore at

To contact the editor responsible for this story: Rocky Swift at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.