- WTI weakness and dovish BOC portrays the pair’s weakness.
- A break of 1.3470 confirms the short-term falling wedge.
Although pullback in crude oil seems to have added further weakness in the Canadian Dollar (CAD), the USD/CAD pair is still under a short-term “falling wedge” bearish formation as it trades near 1.3460 ahead of European open on Tuesday.
The quote couldn’t take advantage of the recent USD dip and the latest pullback in the crude prices as speculations concerning the Bank of Canada (BOC’s) bearish outlook remains intact after Wednesday’s policy meeting.
Also, the latest data from China failed to repeat previously printed upbeat figures and exerted pressure on global commodities, including crude. With the oil being Canada’s largest export item, any changes in the energy benchmark become well received by the CAD.
Traders will be on the lookout for today’s Canadian GDP and second-tier data from the US, followed by weekly crude oil stock report from the API, for fresh clues.
Forecasts suggest 0.1% growth for Canada’s February month gross domestic product (GDP) versus +0.3% prior. The current month US Chicago purchasing managers’ index could increase to 59.0 from 58.7 whereas pending home sales for March may reverse previous -1.0% contraction with +0.5% increase. I should also be noted that the CB consumer confidence grew 124.1 during March.
The US crude oil stocks’ report for the week ended on April 29 could trigger crude price moves. The private industry report, namely the American Petroleum Institute (API), is a closely watched catalyst ahead of tomorrow’s official reading. The figure grew 6.9 million barrels during last-week that ended on April 19.
Technical Analysis
A short-term falling-wedge formation gets confirmed if the pair rallies past-1.3470 pattern resistance, which in turn opens the door for an advance towards 1.3500 and 1.3520 consecutive numbers to the north.
An ascending trend-line since April 17 seems to restrict the quote’s immediate declines near 1.3450, a break of which highlights support-line of the formation, at 1.3430 now. If sellers refrain from respecting 1.3430, 1.3415 and 1.3400 might flash on their radar.
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