The currency pair dropped sharply in the last two sessions and now is trading much below some very important support levels. The drop has invalidated a further increase, so we may see a further drop on the short term

The rate could approach and retest some very important support levels before will start to increase again.

The USD has lost significant ground as the USDX has plunged in the yesterday’s trading session. The dollar index is trading in the red today again and it may continue to drop on the short term because it has failed t stabilize above some very strong resistance levels.

USDX is trading at 92.70 level and could come down to approach the 91.00 psychological level today if the Canadian data will come in better than expected.

The Canadian Employment Change is expected to drop from 32.3K to 17.8K in April, while the Unemployment Rate is expected to remain steady at 5.8%. The Gov Council Member Wilkins Speaks today, but I don’t think that will have an important impact.

The US Import Prices could increase by 0.5% in April and could beat the 0.1% growth in March. The US will release also the Prelim UoM Consumer Sentiment, which is expected to decrease from 98.8 to 98.4 points.

The rate failed to take out the dynamic resistance from the outside sliding line (SL) and now has plunged below the upper median line (UML). It should drop further and will pressure the 50% Fibonacci line (ascending dotted line) in the upcoming hours or days.

The rate could come back to retest the UML and maybe the upper median line (uml) of the red ascending pitchfork before will drop again.

The failure to close near the SL will send the rate down aggressively. Only the fundamental factors could push the USD/CAD towards this dynamic resistance.