USD/CAD reacts to fundamentals

Note: This section contains information in English only.
Source: Dukascopy Bank SA


The USD/CAD has been mapping the recently released macroeconomic data releases and the US Federal Reserve monetary policy statement. At 13:30 GMT on Wednesday, it was revealed that US Retail Sales have increased more than thought. Meanwhile, the Canadian inflation hit expectations. Namely, there is more demand for the USD than though and the CAD demand remains as forecast. This caused a surge and breaking of the channel up pattern to the upside.

Later on, at 19:00 GMT, the US Fed caused an initial surge of the USD by decreasing stimulus. However, after almost reaching the 1.2950 mark, the rate began a decline, as the markets realized that monetary easing and the increasing of the supply of the USD will continue, despite the lower pace. This resulted in a decline, which by the start of Thursday's European trading had reached the 1.2800 level and had no technical support.

If the rate continues to decline and the 1.2800 mark does not act as support, the rate could reach the 200-hour simple moving average at 1.2754. Further below, note the weekly simple pivot point and a previous low level zone at 1.2710/1.2730.

However, if the USD recovers against the CAD, a potential surge would have to face the resistance zone and levels at 1.2835/1.2853, before aiming at the 1.2900 mark.
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