Dollar/CAD had a mixed week on high ground but it did not pick a new direction. The upcoming week is quite busy with inflation, retail sales and also GDP that is released early. What’s next for the pair? Here are the highlights and an updated technical analysis for USD/CAD.
BOC governor Stephen Poloz did not tell us we didn’t know, but the notion that interest rates are not going anywhere fast remained unchanged. Oil prices eventually provided support to the loonie. In the US, the dollar was supported by a stronger than expected retail sales report and an advance towards approving the tax bill. However, the greenback struggled amid falling inflation and a second dissenter at the Fed.
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
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USD/CAD Technical Analysis
Dollar/CAD started the week by hovering above 1.2790, a level mentioned last week. It then dropped but never went too far.
Technical lines from top to bottom:
1.3160 provided support back in June. 1.3020, just above the round level of 1.30, worked as resistance back in July.
1.2920 capped the pair in late October and turned into a double-top in No. It is followed by 1.2840 capped the pair in mid-November and also had a role in the past.
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.
1.2435 was a cushion for the pair during the month of October. 1.2335 gave support to the pair in late September.
I am bullish on USD/CAD
After a week of consolidation, the loonie could come under renewed pressure. The inflation report could serve as a reminder that the BOC is not ready to hike anytime soon. In addition, oil prices have limited room to the upside.
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