USD/CAD Pulls Back Off Weekly Highs After US PPI

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The USD/CAD currency pair on Friday pulled back off the current weekly highs of about 1.3635 to trade at around 1.3600 following the latest round of US PPI data. The currency pair has been trading within consolidative wedge over the last few weeks and recently bounced off the trendline resistance.

This came at the back of a short-term rebound off 1.4499. The pair has now surged above the 100-hour and the 200-hour SMA lines in the 60-min chart. It also appears closer to the overbought levels of the 14-hour RSI.

USD/CAD Fundamentals Overview

From a fundamental perspective, the USD/CAD currency pair is trading at the back of a relatively busy period in the US market. On Friday, the US Producer Price Index ex-food and energy for June missed the (YoY) expectation of 0.4% with 0.1%. The general PPI also missed expectations on both (YoY) and (MoM) basis. On Thursday, the initial and continuing jobless claims outperformed expectations with 1.314M and 18.062M, respectively versus 1.375M and 18.95M. 

Earlier in the week, the US ISM non-Manufacturing PMI for July beat the expectation of 50.1 with 57.1. The ISM non-Manufacturing New Orders Index and Employment Index 44 and 30.7 with 61.6 and 43.1, respectively. The ISM non-Manufacturing Prices paid also outperformed the expectation of 53.9 with 62.4. The Markit Services PMI and the PMU composite also beat expectations.

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

Technically, the USD/CAD currency pair appears to be trading within a consolidative wedge in the 60-min chart. This appears to be shaping up for a potential breakout amid a lack of clear directional momentum.

The bulls will be targeting short-term profits at around 1.3647 or higher at 1.3699 going into next week. On the other hand, the bears will look to pounce for pullback profits at around 1.3549 or lower at 1.3499.

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair appears to be trading within a descending channel. This indicates a long-term bearish bias in the market sentiment. The pair has now crossed the 61.80% Fib level downwards.

The bears will be looking to extend the current declines towards 76.40% Fib level at 1.3350 or lower at 1.3100. On the other hand, the bulls will target profits at around 50% and 38.20% fib levels at 1.3808 and 1.4011, respectively.

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