Forex Trading: USD/CAD lost the bearish momentum August 17, 2018

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USD/CAD is trading in the red and seems too exhausted to approach the near-term upside obstacles. Price has dropped aggressively as the USDX has turned to the downside after the last upside momentum.

The USD has lost ground versus all its rivals today, but this could be only a temporary retreat. The USDX could come to test and retest a dynamic support in the upcoming days before will move higher again. The dollar index maintains a bullish perspective on the short-term despite the current drop.

The pair plunged after the Canadian data were released. The CPI rose by 0.5%, beating the 0.1% estimate and the 0.1% growth in the former reading period, while the Core CPI increased by 0.2%, more versus the 0.1% in the previous reporting period. Moreover, the Canadian Foreign Securities Purchases were reported at 11.55B, much above the 4.91B estimate.

On the other hand, the USD has decreased further versus its rivals as the US Prelim UoM Consumer Sentiment was reported at 95.3, much below the 98.1 estimate and below the 97.9 in the former reading period. The CB Leading Index increased by 0.6%, beating the 0.4% estimate, but wasn’t enough to save the USD from the downside.

Price could test and retest the 150% Fibonacci line in the upcoming hours if the USDX will drop much deeper. The rate has failed to reach the sliding line (sl) of the ascending pitchfork, signaling an exhaustion.

It has also failed to approach and retest the first warning line (WL1) of the descending pitchfork. Only a valid breakout above the WL1 and above the inside sliding line (sl) it will signal a further increase. However, a failure to stay above the 150% Fibonacci line could announce a potential downside movement, but only a valid breakdown below the 50% Fibonacci line will confirm this scenario.

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