Technical Bias: Bullish
- USDCAD falls for the fourth straight day
- US and Canada inflation releases are due today
- A bullish pin bar or engulfing candle will trigger longs
The US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Friday, dragging the price of USDCAD to less than even 1.2150 ahead of some key economic releases. The technical bias however remains bullish in the long run due to a Higher High on the daily chart.
As of this writing, the pair is being traded near 1.2190. A support can be seen around 1.2142, the low of yesterday ahead of 1.2000, a major psychological number. The technical bias will remain bullish as long as the 1.1802 support area is intact.
On the upside, the pair is likely to face a resistance near 1.2326, the high of yesterday ahead of 1.2782, the high of last upside move and then 1.2833, the high of last major rally as demonstrated in the above daily chart.
Consumer Price Index
Canada’s Consumer Price Index (CPI) report– a key gauge for inflation—is due today during the US morning session. According to the average forecast of different economists, the CPI remained 0.0% in March as compared to 1% in the same month of the year before. Generally speaking, higher CPI readings are considered positive for the economy and vice versa. So a better than expected actual outcome could incite renewed selling pressure in the price of USDCAD.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term if we get a bullish pin bar or bullish engulfing candle. It is always recommended not to open any position before major release and let the market set any direction after the news releases.