USD/CAD Highly Volatile Ahead of the US CPI Data

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The USD/CAD currency pair on Tuesday plunged to trade at a new 5-day low of about 1.3277 before bouncing back to top 1.3320. The currency pair pulled back late on to settle just below the 1.3300 level.

The pair continues to trade in a highly volatile descending channel ahead of the US CPI for July. Tuesday’s quick rebound pushed the currency pair back to the normal trading zone of the 14-hour RSI in the 60-min chart.

USD/CAD Fundamentals Overview

From a fundamental perspective, the USD/CAD currency pair is trading ahead of a relatively busy period in the US market. Tomorrow, traders will be anxiously waiting for the US consumer price index data for July, expected at around 12:30 GMT. This will be coming hot on heels of the US producer price index data released on Tuesday. 

The PPI for July beat the (YoY) expectation of -0.7% with -0.4%. The (MoM) equivalent beat 0.3% with 0.6%. On the other hand, PPI ex-food and energy beat the (YoY) and (MoM) expectations of 0% and 0.1%, respectively with 0.3% and 0.5%. On Monday, the US JOLTS job openings for June outperformed the expectation of 4.9 million with 5.889M.

In Canada, housing starts for July beat the (YoY) expectations of 210k with 245.6k, up from 211.7k housing starts reported in the previous period.

USD/CAD Technical Analysis (the 60-min Chart)

Technically, the USD/CAD currency pair appears to be trading within a highly volatile descending channel in the 60-min chart. This indicates a relatively short-term bearish bias in the market sentiment. The pair has recently bounced off oversold levels of the 14-hour RSI to surge back to the normal trading zone.

The bulls will be looking to build on this rebound by targeting short-term profits at around 50% and 61.80% Fib levels at 1.3327 and 1.3348, respectively. On the other hand, the bears will target profits at around 23.60% Fib level at 1.3277 or lower at 1.3249.

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair appears to be trading within a sharply descending channel. This indicates a strong long-term bearish bias in the market sentiment. The pair has now fallen below the 76.40% Fib level off its current multi-year highs.

The bears will be looking to extend the current declines towards 1.3123 or lower to 100% Fib level at 1.2953. On the other hand, the bulls will target long-term rebound profits at around 1.2458 or higher at 61.80% Fib level at 1.3611.

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