On Friday, the USD/CAD currency pair pulled back from the session highs of about 1.3822 to trade at about 1.3778. The currency pair also completed a downward breakout from an ascending channel formation in the 60-minute chart.

The pair has now fallen to trade at the 100-hour moving average line. Friday’s pullback prevented the currency pair from rallying into the overbought levels of the 14-hour RSI.

USD/CAD Fundamentals Overview

From a fundamental perspective, the USD/CAD currency pair trades during a relatively busy period in both markets. On Friday, Canada’s retail sales for July matched the forecasted (MoM) change of -0.8%. The retail sales ex-autos for the period missed the forecast of -0.7% with a change of -1.2%.

Earlier in the week, the Bank of Canada lowered the base interest rate by 25 basis points to 2.5%, down from 2.75%, in line with expectations. On the other hand, the consumer price index for August missed the forecasts of 0% (MoM) and 2% (YoY), with -0.1% and 1.9%, respectively.

In the U.S., the initial jobless claims for the week ending September 12 came in lower than expected, with 231k versus a forecast of 240k, down from the preceding week’s claim count of 264k. The Philadelphia Fed Manufacturing Survey for September also beat the forecasted reading of 2.3 wth a reading of 23.2, up from -0.3.

The Federal Reserve lowered the base interest rate by 25 basis points to 4.25%, down from 4.5%, in line with expectations. Building permits for August missed the expectation of 1.37 million, with a tally of 1.312 million, while housing starts fell short of 1.37 million, with 1.307 million. 

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

Technically, the USD/CAD currency pair has completed a downward breakout from an ascending channel formation. The 14-hour RSI has also pulled back to avoid rallying into overbought conditions.

Therefore, the bears will look to extend the current pullback towards 1.3737 or lower to 1.3694. On the other hand, the bulls will look to pounce on rebounds at about 1.3822 or higher at 1.3865.

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair trades within an ascending channel formation. However, the 14-day RSI still has room left to run before reaching overbought conditions.

Therefore, the bulls will look to ride the current rally toward 1.3913 or higher to 1.4052. On the other hand, the bears will look to pounce on pullbacks at about 1.3629 or lower at 1.3484.