USD/CAD dropped significantly right after the United States data were released, the greenback has taken a hit from the poor economic data. Price slipped lower and touched a strong support level and now has squeezed again, signaling that the bulls are still in the game on the short term.

USDX dropped sharply as well and touched the 92.99 level, but now has come back and is located near the 93.30 level, only a further drop will send the USD/CAD much lower on the short term. The index could still move in a range in the upcoming period as I’ve said in the previous weeks.

A reversal on the USDX could come if the behavior will change (if will start to make higher lows), could move between the 93.81 and the 92.49 major static support, a failure to reach the 92.55 previous low will signal that a larger rebound is imminent.

The United States CPI disappointed earlier, has increased only by 0.1% in July, less compared to the 0.2% estimate, while the Core CPI rose by 0.1%, failing to reach the 0.2% estimate, has remained steady at 0.1% growth for the second month in July.

Price found temporary resistance at the 23.6% retracement level and now has come back to retest the 1.2655 previous resistance level. A minor consolidation here will signal a broader rebound, the next upside targets will be at the median line (ML) of the major descending pitchfork and at the upside line of the descending channel.

Remains under some pressure as long as is trading within the descending channel’s body, could breakout from this pattern if the dollar index will have enough energy to jump and stabilize above the 94.00 psychological level.

The rebound was natural after the failure to retest the downside line of the descending pitchfork and to approach the lower median line (LML) of the major descending pitchfork. However, we may still have a minor decrease before will really start a larger upside movement, could come down to recapture more directional energy.