The USD/CAD dropped further and seems unstoppable on the short term. It should reach fresh new lows in the upcoming period after the breakdown below an important dynamic support. Price is into a corrective phase on the Daily chart, this could continue as the USDX drops like a rock on the short term.

Technically, it should drop much deeper because most likely will be attracted by some very strong dynamic support line, which are acting as a magnet. I’ve said in the last weeks that the pair remains under massive selling pressure because is trapped below important resistance levels and after  the failure to stabilize above a broken upside target.

The Loonie increased significantly after the Canadian data were sent to the public, even if the numbers have come in mixed. The Canadian Retail Sales have increased only by 0.2%, less versus the 0.7% estimate and compared to the 1.6% in the former reading period, while the Core Retail Sales increased by 1.6% in November, beating the 0.8% estimate and the 0.8% growth in the former reading period. The USD/CAD squeezed a little in the last half an hour as the United States Unemployment Claims have come in better than expected, the Initial Claims were reported at 233k in the previous week, lower versus the 239K estimate.

Price dropped further after the false breakout above the 1.2460 static resistance and above the median line (ml) of the minor black ascending pitchfork.  The breakdown below the sliding line (sl) of the minor ascending pitchfork has confirmed a further drop. The next major downside target is at the lower median line (LML) of the red descending pitchfork. It could be attracted by the lower median line (lml) of the minor ascending pitchfork.

Price will drop further as long as the USDX will resume the bearish momentum. the dollar index could reach new lows because we don’t have any support level to stop the momentum.