Dollar/CAD had a busy week, falling initially but regaining some ground later on. The upcoming week features inflation and retail sales numbers. What is the next move for the pair? Here are the highlights and an updated technical analysis for USD/CAD.
The Canadian dollar was at the mercy of oil prices, which initially dropped but later recovered. The US dollar had more twists and turns to its trading, with an initial surge followed by a crash and a later recovery. The Canadian ADP reports showed a gain of over 10,000 jobs, better than the official report.
[do action=”autoupdate” tag=”EURUSDUpdate”/]USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
- Wholesale Sales: Tuesday, 13:30. The volume of sales at the wholesale level serves as a warmup for the consumer data later on. After a rise of 0.7% last month, we may see a slide now.
- Retail sales: Thursday, 13:30. The volume of sales rose by 0.2% back in November and now we get the belated data for December. Core sales are also of interest, especially as they leaped by 1.6% in November. They may see a drop now.
- Corporate profits: Thursday, 13:30. Corporate profits jumped by 8.5% in Q3, reflecting strength. We may see a more moderate rise in this volatile measure.
- Canadian inflation report: Friday, 13:30. The Bank of Canada raised the interest rate in January but seems to hesitate about the next move. A rise in inflation may change their minds. Back in December, headline CPI dropped by 0.4% m/m but measures of core inflation ticked higher, with the Common CPI standing at 1.6%, Median CPI at 1.9%, and the Trimmed CPI at 1.8%.
* All times are GMT
USD/CAD Technical Analysis
Dollar/CAD dropped towards the 1.2435 level, discussed last week, before bouncing back up.
Technical lines from top to bottom:
1.2790 was the high in mid-November and serves as resistance. 1.2665 was a was a double-bottom in November and works as strong support.
It is followed by 1.26, a round number that worked as resistance in October. 1.2540 capped the pair in early October when it traded in a narrow range.
1.25 remains a battleground. 1.2450 served as support in Februry. 1.2335 gave support to the pair in late September and it worked well in January 2018.
Even lower, 1.2250 cushioned the pair on its fall in February 2018. It is closely followed by 1.22
Strong support only awaits at 1.2070. The round number of 1.20 is next. And below there, only 1.18.
I remain bullish on USD/CAD
The Canadian dollar took advantage of the weak US dollar, but this may not necessarily last for long. In addition, downward pressure on oil prices could weigh.
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Further reading:
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar predictions
- USD/JPY forecast – analysis for dollar/yen
- AUD/USD forecast – projections for the Aussie dollar.
- Forex weekly forecast – Outlook for the major events of the week.
Safe trading!
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