The pair USD/CAD continues to rise due to the poor data on the US consumer price index, released last Friday. In April this index has exceeded experts’ expectations, reaching the level of -0.2% on annual basis, which is a sign of acceleration in deflation. On the other hand, Canadian consumer price index for April fell from 1.2% to 0.8%, which was much deeper decline, than that of the American index, and therefore, demand for the USD has increased. Attention today shall be focused on the number of orders for durable goods in the USA. It is expected that this index will fall up to -0.4%, disrupting USD positions.
Support and resistance
At the moment the pair is testing the level of 1.2365 (Fibonacci retracement of 50.0%). Breakdown of this level will enable further rise in the pair up to 1.2420 and 1.2470 (Fibonacci retracement of 61.8%). However, given negative forecast for one of the key macro-economic indexes of the USA, it is likely that the price will reverse and go down to 1.2290 and 1.2265 (middle line of Bollinger bands and Fibonacci retracement of 38.2%).
Technical indicators do not give clear signals. Bollinger bands are directed upwards. MACD histogram is in the positive zone; its volumes are stable. Stochastic can leave overbought zone in the near future and form a sell signal.
Support levels: 1.2290 and 1.2265.
Resistance levels: 1.2365, 1.2420 and 1.2470.
It is advisable to open short positions below the level of 1.2340 with the targets of 1.2290 and 1.2265. Long positions with the targets of 1.2420 and 1.2470 can be opened after breakdown of the 1.2365.