The USD/CAD is in a correction phase, the pair has managed to break below the major uptrend line, the Loonie has dominated the greenback from the start of this year. The USD/CAD has decreased sharply in the first days of this week and the price has fallen below a notable support zone, but the price has rebounded in yesterday’s trading session as the US dollar was pushed higher by the US dollar index, which has managed to jump higher even if the United State economic data have come much worse than expected.
You can see on the daily chart that the price has resumed the correction phase after the uptrend line retest, the USD/CAD has found temporary support right below the horizontal support area from below the 1.2834 swing high, the pair has jumped above this level in the Asian session and looks determined to climb even higher if the US dollar index will have enough energy to embrace new highs in the coming hours. The currency pair remains under selling pressure, we could have a broader retracement if the price will come back and close below the yesterday’s low. However, we could have a short rebound if the price will consolidate above the 1.2834 level, we could have also a short Falling Wedge pattern, but we’ll have to wait till this chart patter is confirmed.
The Loonie wasn’t inspired by the BOC Press Conference, the Bank of Canada has maintained the Overnight Rate on hold at 0.50%, the rate remains unchanged after July 2015. The Canadian inflation remains lower, so we may see further easing in the coming period, the BOC could take action to help the inflation to reach the 2% target.
The US dollar has increased somehow unexpectedly after the poor Retail Sales data, the US retail sales have dropped by 0.3% in March even if the traders have expected a 0.1% growth. The Core Retail Sales indicator has increased by 0.2%, buy less compared to the 0.4% estimate, moreover the Producer Price Index has fallen by 0.1% in the last month, the economic indicator has come in much worse than the 0.3% prediction, while the Core PPI has decreased by 0.1%. The USD has ignored the poor economic numbers and has jumped higher on the short term, maybe the dollar was too oversold to drop further.
The price has increased significantly in the last hours and has closed above the 1.2834 level again, I’ve drawn a short term ascending pitchfork to show you better the price action, the USD/CAD could approach the horizontal resistance from the 1.3010 level where he could find strong resistance. The Falling Wedge will be confirmed only if the price will jump and consolidate above the short downtrend line, the rate could try to reach the median line (ML) of the ascending pitchfork as long as stays above the lower median line (LML).
We had a short consolidation right above the 1.2834 historical level and now the price looks determined to climb toward new peaks, the short term target is at the median line (ML), the price could retest the lower median line (LML) again before will jump toward the ML.