The USD/CAD currency pair on Wednesday plunged to trade at a new 3-month low of about 1.3318 before recovering late on to top 1.3400 after US CPI. The currency pair has been trading within a sharply descending channel since the middle of last month amid increased bearish pressure.
It remains below the 100-hour and the 200-hour SMA lines in the 60-min chart. Today’s late rebound prevented the pair form dropping to oversold levels of the 14-hour RSI.
USD/CAD Fundamental 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 Wednesday, the US CPI for May missed the (MoM) expectation of 0.0% with -0.1%. The (YoY) expectation also came short of 0.2% with 0.1%. On the other hand, the CPI ex-food and energy for May disappointed with a (YoY) and the (MoM) performances of 1.2% and -0.1% versus expectations of 1.3% and 0.0%, respectively. The US Federal Reserve also chose to keep the base interest rate unchanged at 0.25%.
Earlier in the week, the US wholesale inventories and JOLTs job opening outperformed expectations. The NFIB Business Optimism Index for May also came in higher at 94.4 versus the expected reading of 86. Looking forward, the initial jobless claims for the final week of May are coming in on Thursday, while the preliminary Michigan Consumer Sentiment Index for June is set for Friday.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAd currency pair appears to be trading within a sharply diving channel in the 60-min chart. This indicates a short-term bearish bias in the market sentiment. The pair has now dropped below the 100-hour and the 200-hour SMA lines.
The bulls will be targeting rebound profits at around 1.3446 or higher at 1.3489. On the other hand, the bears will look to extend the current short-term declines towards 1.3361 or lower to 1.3318.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAd currency pair appears to have plunged sharply in the last few weeks. This comes amid increased unrest in the US following the brutal murder of George Floyd. The ongoing anti-racism protests have halted progress made following the re-opening of the US economy last month.
The bulls will be targeting long-term rebound profits at around 1.3606 at 61.80% Fib level or higher at 1.3810 at 50% Fib level. On the other hand, the bears will look to pounce for profits at 1.3167 or lower at 1.2963.