Our USDCAD forecast notes that the pair has extended its upwards movement even if the US Dollar Index (DXY) has dropped today. The pair has increased to as much as 1.2590, where it has found resistance. Now it’s trading in the red at 1.2547 as DXY’s sell-off weakened the greenback.
The US dollar was punished by the Unemployment Claims earlier today. Surprisingly or not, the indicator was reported higher at 373K, even if the specialists expected to see a drop from 371K to 345K.
USD/CAD is dropping at the time of writing and forex traders will be aware that it could come back to retest the broken levels. Tomorrow, the Canadian Employment Claims and Unemployment Rate could bring high volatility to the pair.
The Loonie could take full control again if the economic data comes in as expected. The Employment Change is expected around 172.5K in June versus -68.0K in May, while the Unemployment Rate could drop from 8.2% to 7.8% which will be good for CAD.
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USDCAD forecast – technical analysis: consolidation before rally resumes
Our USDCAD forecast sees the possibility of a retest of the 78.6% (1.2516) retracement level and the R1 soon. A temporary retreat is natural after the last amazing rally. The pair could consolidate above the broken obstacles before resuming its growth.
Poor Canadian economic data could boost the pair. The next major upside target is seen at the 100% level, at 1.2653 level. It’s traded far above the uptrend line, so the bias is still bullish and this drop could be only a temporary one.
We cannot exclude a potential decline towards 1.25 psychological level after its failure to reach 1.26 and after the price closed around the current levels, printing a bearish engulfing.
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