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  • The USD/CAD pair could extend its sell-off after making a new lower low.
  • A valid breakout above 61.8% and through the upper median line (UML) may signal further growth.
  • The Canadian inflation data could be decisive today.

The USD/CAD price rebounded after reaching 1.2794, posting a false breakdown below the 1.2800 psychological level. DXY’s rebound helped the USD to recover after its massive drop.

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As you already know, the Dollar Index maintains a bullish bias despite temporary retreats. DXY’s correction was expected after the last strong rally and ahead of the next monetary policy meeting.

However, the fundamentals could drive the price today. That’s why you have to be careful. The Canadian Consumer Price Index is expected to report a 0.5% growth versus 1.4% growth in the previous reporting period. In addition, the Core CPI, Trimmed CPI, Median CPI, and the Common CPI indicators will be released as well.

As you already know, the US data came in mixed yesterday. The Retail Sales indicator rose by 0.9% less versus 1.0% estimates, while the Core Retail Sales surged by 0.6% exceeding the 0.4% forecasts.

In addition, the Industrial Production and Capacity Utilization Rate came in better than expected, while the Business Inventories reported worse than expected data.

Later, Housing Starts and Building Permits indicators could drop. Worse than expected, data could weaken the greenback in the short term.

USD/CAD price technical analysis: Corrective mode

usd/cad price

The USD/CAD price found support on the descending pitchfork’s median line (ml), and now it moves sideways below the 61.8% (1.2852) retracement level.

As you can see on the 4-hour chart, the rate failed to reach the 78.6% retracement level signaling that the sellers are exhausted. The bias remains bearish as long as it stays below the descending pitchfork’s upper median line (UML).

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Breaking above this dynamic resistance and stabilizing above it may signal that the downwards movement ended and that the bulls could push it higher. Jumping, closing, and stabilizing above the upper median line (UML) and the 61.8% may signal more gains ahead.

Still, it’s premature to talk about this scenario. I’ll wait for the Canadian inflation data to see how the rate will react. A downside continuation could be activated by a valid breakdown below 1.28 psychological level, a new lower low.

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