Key Highlights
- The US Dollar faced a major resistance near 1.3170-80 against the Canadian Dollar and declined.
- There was a break below a key bullish trend line with support at 1.3090 on the 4-hours chart of USD/CAD.
- Recently, the Canadian Wholesales Sales for June 2018 declined 0.8% (MoM).
- Today, the Canadian Retail Sales for June 2018 will be released, which is forecasted to increase by 0.1% (MoM).
USDCAD Technical Analysis
The US Dollar faced a tough resistance near the 1.3170-1.3180 area against the Canadian Dollar. The USD/CAD pair made a few attempts to surpass 1.3170-80, but it failed and declined sharply.
Looking at the 4-hours chart, the pair dropped below the 1.3100 support area and the 200 simple moving average (green, 4-hours). More importantly, there was a break below the 50% Fib retracement level of the last wave from the 1.2962 low to 1.3174 high.
There was also a break below a key bullish trend line with support at 1.3090 on the same chart. The pair settled below the 1.3060 level and the 100 simple moving average (red, 4-hours).
If the pair continues to trade lower and settles below the 76.4% Fib retracement level of the last wave from the 1.2962 low to 1.3174 high, it could ignite more bearish moves towards the 1.2960 low. Below this, the pair may well test the 1.2920 support.
On the upside, if the pair corrects higher, the broken support at 1.3060 and the 100 SMA will most likely act as a crucial resistance.
Recently in Canada, the Wholesales Sales report for June 2018 was released by the Statistics Canada. The market was looking for a rise of 0.8% in June 2018, compared with the previous month.
The actual result was disappointing as there was a 0.8% decline in June 2018, which was a lot lower than the last increase of 0.9%. Overall, USD/CAD might correct higher in the short term, but upsides are likely to be capped near 1.3030 or 1.3060.
Economic Releases to Watch Today
- US Existing Home Sales for July 2018 (MoM) – Forecast +0.6%, versus -0.6% previous.
- Canadian Retail Sales June 2018 (MoM) – Forecast +0.1%, versus +2.0% previous.
- Canadian Retail Sales ex Autos June 2018 (MoM) – Forecast -0.1%, versus +1.4% previous.
