Canadian Dollar Remains Range Bound Before Inflation News
The US Dollar (USD) inched lower against the Canadian Dollar (CAD) on Friday, decreasing the price of USD/CAD to less than 1.3400 ahead of the Canada’s Consumer Price Index (CPI) data. The technical bias remains bullish because of a higher high in the recent upside move.
Technical Analysis
As of this writing, the pair is being traded around 1.3466. A hurdle can be seen near 1.3477, the confluence of two trendline resistance levels as demonstrated in the given below daily chart with pink and black colors. A break and hourly closing above the 1.3477 resistance shall trigger fresh buying pressure, opening the door for a move towards the 1.3597 resistance, the high of last major upside rally on higher timeframes.
On the downside, a support may be seen near 1.3455, the short-term horizontal support level ahead of 1.3442, the 23.6% fib level and then 1.3219, the low of last major downside move on the daily timeframe. The technical bias shall remain bullish as long as the 1.3219 support zone is intact.
How USDCAD Reacted on CPI Releases in Past?
USD/CAD increased by 25 pips after the release of last CPI report on 24th March, 2017. The actual outcome was 2.0 percent as compared to the forecast of 2.1 percent.
The pair, however, fell by almost 80 pips after the release of February’s CPI report as the actual outcome remained 2.1 percent, well above the average projections of 1.6 percent.
Trade Idea
Considering the overall technical and fundamental outlook, selling the pair may be a good strategy if the Canada’s CPI comes better than forecast and vice versa.
What Assets to Trade?
In addition to USDCAD, trading CADJPY, GBPCAD and CHFCAD can be a good strategy as the aforementioned pairs are highly reactive to the Canada’s CPI release.