“¢ Quickly reverses upbeat Canadian CPI/retail sales data-led sharp fall.
“¢ The ongoing slump in crude oil prices weighing heavily on the Loonie.
“¢ Move back towards the 1.3300 handle now looks a distinct possibility.
The USD/CAD pair quickly reversed a knee-jerk slide to sub-1.3200 level and rallied around 60-70 pips to refresh session tops in the last hour.
Having stabilized above the 1.3200 handle, the pair tumbled back closer to session lows, around the 1.3185 region, in reaction to stronger-than-expected Canadian macro data – consumer inflation figures and monthly retail sales data.
However, the ongoing slump in oil markets, with WTI crude oil breaking below $51.00/barrel mark – the lowest level since Oct. 2017, weighed heavily on the commodity-linked Loonie and turned the post-data dip as an opportunity to initiate some fresh bullish positions.
“Modest gains in Canadian retail sales will help the economy weather the plunge in crude oil prices but they cannot replace the export earnings or the loss of crude sales to US shale drillers,” Joseph Trevisani, FXStret’s senior analyst said after the Canadian data were made public on Friday.
The pair surged back to mid-1.3200s, reversing around 50% of the losses posted in the past two trading session, with bulls now eyeing a follow-through up-move back towards reclaiming the 1.3300 handle and challenging 4-1/2 month tops set earlier this week.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the 1.3275-80 region, above which the pair seems all set to surpass the 1.3300 handle and retest the 1.3315-20 supply zone. On the flip side, the 1.3235-30 region now becomes an immediate support to defend and is followed by the 1.3200 handle, which if broken might accelerate the fall further towards weekly lows, around the 1.3140 area.
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