USD/CAD increased today and tries to recover after the last two day’s drops. It remains to see what will really happen because this could still be a temporary increase. Price has shown an exhaustion in the previous days after the failure to reach a dynamic resistance.

It is fighting hard to recover and to approach the 1.33179 former high, but it remains to see if the buyers will have enough power to send the rate so high.

It is very important to see what will happen on the USDX because if the index will resume the current bullish momentum, then the USD/CAD should increase as well.

Loonie is sluggish after the Canadian data release. The CPI rose by 0.3%, beating the 0.1% estimate, while the Core CPI increased by 0.4% after the 0.0% growth in the former reading period. The Retail Sales increased by 0.2%, exceeding the 0.1% estimate and after the 0.1% drop in the former reading period, but unfortunately, the Core Retail Sales have increased only by 0.1%, less versus the 0.3% estimate.

USD/CAD could slip lower as the US data have disappointed earlier, the Flash Services PMI decreased from 54.8 to 54.4 points, ignoring the 55.0 forecast, while the Flash Manufacturing PMI dropped from 55.7 to 55.4 points, even if the specialists have expected to see an increase to 55.8.

You can see that the rate has failed to reach the inside sliding line (SL) of the major ascending pitchfork and now has decreased a little. It is struggling to get back above the 150% Fibonacci line, but a failure to close above it could force the rate to drop significantly again.

I believe that only a valid breakout above the SL will confirm a further increase in the upcoming period. A false breakout above the SL or another failure to reach it will really confirm a massive sell-off.