USD/CAD Correcting Lower, Canada’s CPI Next

  


Key Highlights

  • USD/CAD struggled to surpass 1.3270 and recently corrected lower.
  • There was a break below a key bullish trend line at 1.3230 on the 4-hours chart.
  • Canada’s Consumer Price Index is likely to increase 0.3% in Oct 2019 (MoM).
  • EUR/USD and GBP/USD are currently showing bullish signs.

USD/CAD Technical Analysis

This month, the US Dollar climbed higher steadily after it surpassed 1.3200 against the Canadian Dollar. However, USD/CAD struggled to climb above 1.3270 and recently started a downside correction.

USD/CAD Technical Analysis US Dollar Canadian Dollar

Looking at the 4-hours chart, the pair corrected below a
couple of important supports near the 1.3250 and 1.3230 levels. Moreover, there
was a break below a key bullish trend line at 1.3230.

The pair even tested the 50% Fib retracement level of the
upward move from the 1.3115 low to 1.3270 high. On the downside, there are many
key supports, starting with 1.3170 and the 100 simple moving average (red,
4-hours).

Besides, the 61.8% Fib retracement level of the upward move
from the 1.3115 low to 1.3270 high is near the 1.3174 level. The next major
support is near the 1.3150 level, below which the pair is likely to decline
towards the 1.3100 area.

Conversely, USD/CAD could start a fresh increase from 1.3170
or 1.3150. On the upside, an initial resistance is near 1.3230. A successful
break above 1.3230 might lead the price towards the 1.3250 and 1.3270 levels.

Fundamentally, the US Building Permits report for Oct 2019
was released by the US Census Bureau, at the Department of Commerce. The market
was looking for no change in the Building Permits, compared with the last -2.4%.

However, the actual result was positive, as the US Building
Permits increased 5% in Oct 2019 (seasonally adjusted annual rate of 1,461,000).
Besides, privately‐owned housing starts increased 3.8%.

The report added:

Single‐family housing starts in October were at a rate of 936,000; this is 2.0 percent (±6.3 percent) above the revised September figure of 918,000. The October rate for units in buildings with five units or more was 362,000.

Overall, USD/CAD is likely to bounce back as long as above
1.3150. Looking at EUR/USD and GBP/USD, both are showing positive signs above
1.1050 and 1.2900 respectively.

Upcoming Economic Releases

  • Canadian Consumer Price Index Oct 2019 (MoM) –
    Forecast +0.3%, versus -0.4% previous.
  • Canadian Consumer Price Index Oct 2019 (YoY) –
    Forecast +1.9%, versus +1.9% previous.

Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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