The USD/CAD currency pair on Monday pulled back to trade at around 1.3141 after rejecting a retest of last week’s highs of 1.3185 early on. The pair rallied in the morning to top 1.3176 but lacked enough momentum to take it above this level.
The currency pair continues to trade in a descending wedge coming off a short-term sideways consolidation movement. This indicates that the bears have retaken control from the bulls after the trend reversal towards the end of last month.
USD/CAD Fundamentals Overview
From a fundamental perspective, the USD/CAd currency pair is trading ahead of the relatively quiet trading period in both the US and Canada. This explains the thin trading period experienced on Monday and could continue through Friday. Nonetheless, there is still a significant amount of data that will be trickling through during the week.
On Monday, the Canadian GDP for October missed the expected (MoM) change of 0.0% with -0.1%. There isn’t much activity expected for the rest of the week as residents observe Christmas Day and Boxing Day holidays. However, there will be a lot more data streaming in from the US.
Apart from the already released durable goods orders and New Homes numbers, traders will be looking forward to the initial and continuing jobless claims data coming on Thursday, while on Tuesday, the Redbook index update will provide some proving ground for the US dollar going into Christmas.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair appears to have recently pulled off overbought levels of the RSI Indicator in the 60-min chart. This was triggered by today’s pullback following last week’s late rally.
Therefore, with the pair trading off the 100-hour SMA, the bulls will be more optimistic going into Tuesday and will target short-term profits at around 1.3176 or higher at 1.3203. On the other hand, the bears will look to pounce for profits at around 1.3100.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency pair appears to be trading within a consolidative triangle pattern, which could result in a bearish breakout. The currency pair is pegged below both the 100-day and the 200-day SMA line, which again supports the bearish case.
Therefore, the bears will be targeting long-term profits at around 1.3011, 1.2917, or lower at 1.2794. On the other hand, the bulls will hope for a quick rebound that pushes the pair above the trendline resistance towards 1.3315, 1.3441, or higher at 1.3559.