The USD/CAD currency pair pulled back on Tuesday to trade below the key level 1.3200 despite positive developments in the US-China trade talks. The currency pair continues to trade in a downward movement following last week’s late plunge.

The pair attempted to recover on Monday rallying to top 1.3240 up from last week’s low of about 1.3170 in a non-active day with Canada (Thanksgiving day) and the US (Colombus Day) both observing holidays.

USD/CAd Fundamentals Overview

From a fundamental perspective, the last few days have been positive in terms of US-China trade talks. President Trump certainly sounds optimistic after saying trade talks are now on ‘Phase1’. In retrospect, this could have played a key role in rallying the loonie, which relies a lot on the performance of the Chinese economy with China being one of its largest export customers.

In terms of economic data, there is nothing much to look back to in the last couple of days. But there is a lot to look forward to in the coming days. On Tuesday, the average US 3-month and 6-month Auction rates for last week edged lower to 1.64% and 1.62$ respectively, down from 1.68% and 1.69% in the previous period.

Looking forward, US retail sales ex-Autos are coming in tomorrow. Business Inventories will be in later in the day as well as the NAHB Housing Market Index. On the other hand, Canada’s Consumer Price Index for September will be coming in at around 12:30GMT as well as BoC’s Core CPI.

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

Technically, the USD/CAD currency pair appears to have recently made a bearish breakout from an ascending channel following last week’s plunge. The pair has now resumed to a previous descending channel, which follows a double-top reversal pattern formation.

Therefore, the bulls will be targeting short-term rebound profits at around 1.3220 or higher at 1.3240. On the other hand, the bears will hope that the current pullback can continue towards 1.3180 or lower at 1.3160.

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair appears to be attempting a bullish reversal off a bearish curve in a consolidative bullish wedge. The pair is currently trading on the edge of the trendline support, which could trigger the next rebound.

Therefore, the bulls will be targeting long-term profits at around 1.3296, 1.3385 or higher at 1.3534. On the other hand, the bears will try to maintain control by targeting profits at around 1.3144, 1.3053 or lower at 1.2906.

In summary, the USD/CAD currency pair appears to be experiencing short-term bearish pressure after last week’s plunge but in the long-term, the bulls appears to be about to take control.