The USD/CAD has decreased significantly in yesterday’s trading session, but now is struggling to rebound and to climb toward fresh new highs, remains to see what will happen later today because the BOC will publish the Overnight Rate. The currency pair is showing some exhaustion signs, the USDX looks too overbought to continue the bullish movement, so the pair could start a bearish movement in the coming days, most likely will have a clear direction today after the BOC, the fundamental factors will bring life on this pair. The US dollar index has retested a very important dynamic resistance and now could drop again, the greenback will decrease as well if the index will fall in the coming period.

You can notice that the price has failed to close above the 1.3119 horizontal resistance and now could approach the lower median line (LML) of the ascending pitchfork, any drop below the lower median line and below the 23.6% retracement level will attract more seller’s. I’ve said that the price looks exhausted because has failed to retest again the median line of the ascending pitchfork, has failed once again to climb toward the 38.2% retracement level. The rate is moving sideways on the short term, the price has retested the range resistance and now is somehow expected to drop again. Maybe the price will increase if will have a major surprise from the BOC, the Bank of Canada is expected to maintain the Overnight Rate on hold today, at 0.50%, the rate didn’t suffer any change since July 2015, when was cut by 0.25%. The BOC Monetary Policy Report along with the BOC Press Conference could bring some volatility on this pair. The US is to release also important economic data, the Import Prices could increase by 0.6% in June, less than the 1.4% in May, the economic indicator has continued to increase in the previous 3-months, while the Federal Budget Balance could increase from -52.5B to 24.2B. The Loonie could increase a little also if the US Crude Oil Inventories will drop further, the Crude Levels could reach the -2.3 million barrels in the previous weeks, the Oil price could increase on the short term and could push the Loonie higher. The USD/CAD could resume the upward movement only if the rate will stay above the 23.6% retracement level and above the lower median line of the ascending pitchfork, you can see that has touched the 23.6% level in yesterday’s trading session, but was unable to close right on this level, the USD is fighting hard to drag the price higher, but I'm skeptical that the price will have enough energy to resume the bullish movement.

I’ve drawn a minor descending pitchfork to understand better the price action, you can see that the price has found strong resistance at the 23.6% retracement level and now is approaching the minor upper median line (uml) and the Daily downtrend line, we have an important confluence area at the intersection of the mentioned resistance levels, if the confluence will hold, then we have a good opportunity to go short on this pair.

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