The USD/CAD currency pair on Friday rallied to a new 2-year high of about 1.3614 after Canadian retail sales data. The currency pair continues to trade within an ascending channel formation in the 60-min chart.
The pair has now extended gains to trade several levels above the 100-hour moving average line. As a result, the current pair on Friday entered overbought conditions of the 14-hour RSI before making a late pullback.
USD/CAD Fundamentals Overview
From a fundamental perspective, the USD/CAD currency pair is trading at the back of a relatively busy period in both markets. On Friday, the preliminary S&P Global Manufacturing PMI for September outshone the forecast of 51.1 with a reading of 51.8. The Services PMI for the period also outperformed 45 with 49.2, while the Composite PMI of 49.3 was better than the consensus market estimate of 44.7. Earlier in the week, the Federal Reserve raised the base interest rate by 75 basis points to 3.25% up from 2.5% in line with expectations.
In Canada, retail sales for July missed the market forecast of -2% with a change of -2.5% (MoM). Retail sales ex-autos also fell short of the expected change of -1.2% with a change of -3.1% (MoM). Earlier in the week, the Bank of Canada core consumer price index for August missed the expected (YoY) change of 6% with a change of 5.8%. The (MoM) equivalent also came short of 0.3% with a change of 0%, while the general CPI missed on both (YoY) and (MoM) basis with 7% and -0.3%, respectively, versus 7.3% and -0.1%.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair seems to be trading within an ascending channel formation in the 60-min chart. This indicates a significant short-term bullish bias in the market sentiment.
Therefore, the bulls will be looking to extend the current wave of gains toward 1.3614 or higher to 1.3655. On the other hand, the bears will be targeting potential pullback profits at about 1.3538 or lower at 1.3499.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency pair seems to have recently completed an upward channel breakout from a gently ascending channel formation. This indicates a significant shift in the market sentiment from modest bullish to strongly bullish.
Therefore, the bulls will be looking to pounce on extended gains at about 1.3800 or higher at 1.4050. On the other hand, the bears will look to pounce on potential pullbacks at about 1.3365 or lower at 1.3114.