USD/CAD drops aggressively and could retest a dynamic support very soon.  Is trading in the red as the Loonie was helped by the Canadian data, on the other hand, the USD drops as the USDX slipped lower in the last few hours.

Technically the price could still increase in the upcoming weeks despite today’s drop, could drop much more before will really start an amazing growth. I’ve said in the previous weeks that the rate should make an accumulation before will start a larger increase, so we could still have a sideways movement in the upcoming period.

The Loonie rallied as the Canadian GDP increased by 0.3% in June, beating the 0.1% estimate and the 0.2% growth in the former reading period. Surprisingly or not, the greenback dropped even if the Unemployment Claims have increased less than expected, were reported at 236K in the previous week, below the 237K estimate, while the Personal Income rose by 0.4% in the previous month, exceeding the 0.3% estimate and the 0.0% growth in the former reading period. Moreover, the Personal Spending increased by 0.3%, less versus the 0.4% estimate, while the Core PCE Price Index rose by 0.1%.The Chicago PMI remains steady at 58.9 points, even if the economists have expected to see a drop to 58.7 points.

The greenback has taken a hit from the Pending Home Sales, which has decreased by 0.8%, despite the 0.4% growth forecast.

USD/CAD plunged aggressively after the false breakout above the 1.2655 static resistance and now is expected to challenge the 50% Fibonacci line. Could drop also to retest the 1.2464 static support and the lower median line (LML) of the major black ascending pitchfork. I’ve drawn the black ascending pitchfork only to catch a potential upside movement.

Only a valid breakdown below the mentioned support levels will confirm a further drop and will invalidate another broader increase. USD/CAD could develop a chart pattern on the short term, the breakout from it will bring us a clear direction and a great trading opportunity.