The USD/CAD currency pair on Friday plunged to retest the current weekly lows of about 1.3214 after the latest round of US PMIs missed expectations. The currency pair has been trading within a relatively bearish channel since the start of the month. This came at the back of a sharp rise during the final week of January.
The currency pair’s recent reversal has pulled it off overbought levels of the RSI indicator in the 60-min chart. The pair has also fallen below the current levels of the 100-hour and the 200-hour SMA lines.
USD/CAD Fundamentals Overview
From a fundamental perspective, the USD/CAD currency pair is trading at the back of some key developments in the US market. On Wednesday, building permits for January beat the (MoM) expectation of 1.45M with 1.551M. Housing starts also impressed by outshining the (MoM) expectation of 1.425M with 1.567M. On the other hand, producer price index ex-food and energy beat the (YoY) expectation of 1.3% with 1.7%.
On Thursday, the Philadelphia Fed Manufacturing Survey for February beat the expectation of 12 with 36.7. And onFriday, the Markit Manufacturing and Services PMIs missed the expectations of 51.5 and 53 with 50.8 and 49.4, respectively. Existing home sales for January outperformed the (MoM) estimate of 5.43M with 5.46M.
In Canada, the consumer price index for January beat the (MoM) expectation of 0.2% with 0.3%. The (YoY) outcome was also better than expected at 2.4% versus 2.3%. The BoC’s core CPI was in line with expectations on both measures.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair appears to be trading within a descending channel amid increased selling pressure. This indicates the existence of a short-term bearish bias in the market sentiment.
Therefore, the bears will be targeting short-term profits at around 1.3191. 1.3161, or lower at 1.3119. On the other hand, the bulls will be looking to pounce on rebound profits at around 1.3248, 1.3270, or higher at 1.3300.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency pair appears to be trading in a gently descending channel, which indicates a slight bearish bias in the market sentiment. The pair has recently bounced off overbought levels of the RSI indicator. It also appears to be enjoying strong support just above the 100-day SMA line.
Therefore, the bulls will be targeting rebound profits at around 1.3378 or higher at 1.3554. On the other hand, the bears will look to keep the downward momentum by targeting profits at around 1.3133 or lower at 1.2945.