Key Highlights
- The US Dollar failed to break the 1.3070 resistance and declined against the Canadian Dollar.
- USD/CAD broke a major bullish trend line with support at 1.3010 on the 4-hours chart.
- The US Industrial Production in Sep 2018 increased 0.3%, similar to the forecast.
- Today, the Euro Zone CPI for Sep 2018 will be released, which is forecasted to increase 2.1% (YoY).
USDCAD Technical Analysis
The US Dollar remained in a decent uptrend above 1.3000 until it faced a strong resistance near 1.3070 against the Canadian Dollar. As a result, the USD/CAD pair started a downside move and declined below 1.3000.
Looking at the 4-hours chart, the pair clearly failed on a few occasions to break the 1.3070-1.3080 resistance. It declined and broke the 23.6% Fib retracement level of the last wave from the 1.2782 low to 1.3069 high.
More importantly, the pair broke a major bullish trend line with support at 1.3010 on the 4-hours chart. Additionally, there was a close below the 1.3000 support and the 200 simple moving average (green, 4-hours).
On the downside, the next important support is at 1.2920 and the 50% Fib retracement level of the last wave from the 1.2782 low to 1.3069 high. If there is a break below 1.2920, the pair could move into a bearish zone and it might decline towards 1.2850.
On the other hand, if there is an upward move, the pair needs to clear the 1.3000 resistance and the 200 SMA to revisit the 1.3070 resistance zone.
Fundamentally, the US Industrial production report for Sep 2018 was released by the Board of Governors of the Federal Reserve. The market was looking for a rise of around 0.3% in the production compared with the previous month.
The actual result was similar to the forecast, but it was less than the last increase of 0.4%. Looking at the total industrial production at an annual rate, there was a rise of 3.3% in September 2018.
The report added that:
Output growth in September was held down slightly by Hurricane Florence, with an estimated effect of less than 0.1 percentage point.
Overall, the US Dollar may continue to move down and pairs like EUR/USD and GBP/USD could benefit in the short term.
Economic Releases to Watch Today
- UK Consumer Price Index Sep 2018 (YoY) – Forecast +2.8%, versus +2.7% previous.
- UK Core Consumer Price Index Sep 2018 (YoY) – Forecast +1.8%, versus +2.1% previous.
- Euro Zone CPI for Sep 2018 (YoY) – Forecast +2.1%, versus +2.1% previous.
- Euro Zone CPI for Sep 2018 (MoM) – Forecast +0.2%, versus +0.2% previous.
- US Housing Starts Sep 2018 (MoM) – Forecast 1.237M, versus 1.282M previous.
- US Building Permits Sep 2018 (MoM) – Forecast 1.280M, versus 1.229M previous.
