Dollar/CAD was on the up and up reaching the highest since June 2017 due to dovish words by Poloz, tweets by Trump, and poor Canadian data. What’s next? The inflation and retail sales reports on Friday are the main events. Here are the highlights and an updated technical analysis for USD/CAD.
BOC Governor Poloz said that the Canadian economy can continue growing on and on without creating too much inflation and that the BOC is obliged to let it run. This hurt the loonie. Later on, Trump insisted that Canada had a trade surplus with the US, aggravating tensions. A Mexican comment about NAFTA without the US also weighed on the Canadian dollar. Data in Canada was not too encouraging either, with a second consecutive drop in new home sales.
USD/CAD daily graph with support and resistance lines on it. Click to enlarge:
All times are GMT
USD/CAD Technical Analysis
Dollar/CAD had only one direction: up. After some hesitation, it broke above 1.30 (mentioned last week) and left dust behind it.
Technical lines from top to bottom:
1.3460 capped the pair last year and is high above in the sky. 1.3320 was the top of the range back in June last year.
1.3180 was a support line in 2017 and now turns into resistance. 1.31 is a round number and immediate resistance.
1.30 is a round number that is eyed by many. 1.2920 was a triple top in late 2017 and switches positions.
1.2790 was 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.
I am bullish on USD/CAD
While the pair may be entering overbought territory, the dovish sentiment from Poloz and yet another potential slump in inflation could keep the pair depressed, at least until NAFTA concerns are alleviated.
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