USD/CAD Technical Bias: Bearish
Key Takeaways
“¢ USDCAD managed to hold an important bullish trend line post disappointing Canadian retail sales data.
“¢ Market sentiment favors more losses in USDCAD moving ahead.
“¢ USDCAD trend line support seen at 1.0850 and resistance ahead at 1.0960.
The Canadian dollar managed to gain some ground intraday against the US dollar despite horrible retail sales data, as selling pressure increased recently for the USDCAD pair.
Technical Analysis
There is a huge trend line on the daily timeframe for the USDCAD, which has held the downside in the pair on numerous occasions. The USDCAD pair is again heading towards the trend line support area, which is now coinciding with the 38.2% Fibonacci retracement level of the last leg higher from the 1.0182 low to 1.1276 high at around 1.0850. The mentioned support level can be considered as a breakout zone for the pair, as if it breaks down, then heavy losses might occur in the short term. A break lower might take the pair towards the 50.0% fib level, followed by the 61.8% fib level. However, it will not be that easy for sellers to breach the trend line, as the 200-day simple moving average also sits just below the highlighted trend line, which might also act as a strong support for the pair.
Alternatively, if the USDCAD pair jumps higher from the current levels, then the 50-day SMA might come into play. If the USDCAD pair manages to overtake the same, then the previous swing area at 1.1020 might act as a resistance. This particular level has acted as a support and resistance on several occasions.
Canadian Inflation Data
Later today, the Statistics Canada will publish the Consumer Price Index (CPI) data. The forecast is slated for a 0.3% rise in the CPI in April 2014 compared to March 2014. Moreover, the change in annual inflation is expected to be around 2% in April. If the outcome comes out as expected, then the Canadian dollar might gain some ground moving ahead.
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