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The Canadian dollar continues to advance against the falling greenback, enjoying rising oil prices. This week’s GDP release in Canada will rock the loonie. Here’s an outlook and an updated technical analysis for USD/CAD.

Last week Retail Sales jumped up 0.4 % in January following 0.4% plunge in December. Excluding the automobile sector it gained 0.7% following 0.2% drop in the previous month. The BOC is hoping economy will regain its power by speeding business investment and exports.

USD/CAD daily chart with support and resistance lines marked. Click to enlarge:

Canadian Dollar Chart USD CAD April 25-29

 

  1. GDP: Friday, 13:30. Gross Domestic Product climbed 0.5% in January the strongest figure in seven years preparing the ground for a strong quarterly figure indicating expansion in the manufacturing sector.   The rise was in line with predictions following a similar increase as in the previous month. A flat rate is expected now.

*All times are GMT.

USD/CAD  Technical  Analysis

The Canadian dollar started the week with a drop, but it quickly recovered. After piercing through the 0.96 line, the pair even temporarily breached the 0.9510 line (discussed last week), but couldn’t settle below it, eventually closing at 0.9540.

Looking down, we continue to discuss old lines that have awakened after this fall. Once again, support is found at 0.9510, which was only a minor line in 2007, but proved to be quite strong now.  It’s followed by 0.9415, which also played a role back then.

Even lower, 0.92 is also of significance, followed by the all time low of 0.9056. We might reach that area if the greenback continues its course.

Looking up, 0.96 is the distinctive and immediate line of resistance. IT was clear now. It’s followed by  0.9667, which worked well in the past two weeks and as a trough at the beginning of the year.

Moving higher, we find 0.98 another support line from 2007, that proved to be a strong line in recent weeks. It’s followed by the minor  0.9930.  This is the 2010 low and it now works as strong resistance if the pair gets close to these levels.

The next minor resistance line is very close – 0.9977, another low from 2010.  We now reach the distinctive line of USD/CAD parity. This is also resistance, although after it was crossed many times, its significance is reduced.

I remain bearish on USD/CAD.

The GDP release will probably show that the Canadian economy is doing well. Together with rising oil prices and the weakness expected from the US FOMC Meeting, USD/CAD has a lot of room for further falls.

Further reading:

 

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