- The flag pattern could announce a new upwards movement.
- The US should have a big impact later today.
- Only a new lower low activates more declines.
The USD/CAD price dropped in the short term and is trading at 1.3697 at the time of writing. The downside pressure remains high as the US dollar tumbles in the short term.
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Fundamentally, the economic data and high-impact events moved the rate during the week. The US CPI rose by 0.4%, as expected. Core CPI increased by 0.5%, beating the 0.4% estimated, while PPI, Core PPI, Retail Sales, and Core Retail Sales came in worse than expected.
Yesterday, the US Unemployment Claims, Housing Starts, and Building Permits reported positive data, while the ECB increased the Main Refinancing Rate by 50 bps as forecasted.
Today, the US data could be decisive in the short term. The Prelim UoM Consumer Sentiment may drop from 67.0 to 66.9 points. Industrial Production could report a 0.2% growth after the 0.0% growth in the previous reporting period, while the Capacity Utilization Rate is expected at 78.5% in February versus 78.3% in January.
In addition, the US Prelim UoM Inflation Expectations and the Canadian IPPI, RMPI, and Foreign Exchange Purchases data will also be released.
USD/CAD Price Technical Analysis: Bullish Pattern
The USD/CAD pair found resistance above the median line (ML) of the ascending pitchfork, and then it turned to the downside. As you can see on the H1 chart, the rate dropped within a down-channel pattern. The weekly S1 of 1.3651 and the former low of 1.3651 represent downside obstacles. The sell-off could be over around these levels.
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Technically, the down-channel pattern could represent a bullish pattern. A valid breakout through the downtrend line activates an upwards movement. Still, in the short term, the currency pair could move sideways, trying to accumulate more bullish energy before turning to the upside. Only a new lower low and a valid breakdown below 1.3651 activates more declines.
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