This week, the USD/CAD pair grew and now reached its 2009 highs. The reasons for the CAD weakening were an unexpected decision by the Bank of Canada to cut interest rates from 0.75% to 0.50%, as well as the general weakness of the Canadian economy, especially in non-energy exports. The economy recovery is expected not earlier than the first half of 2017.
The main interest of investors today was with inflation stats from the US and Canada. In the US, the Consumer Price index came out at 0.1%, in Canada – 1% (both indices matched their forecast). The USD was supported by the real estate sector data, as both Building Permits and Housing Starts came out better than expected.
Support and resistance
The pair keeps trading within the upward channel and is now testing the key resistance level at 1.3000. Its breakout would allow the pair to grow to 1.3070. Otherwise, the correction towards 1.2870 (middle MA of Bollinger Bands, lower border of the upward channel) is likely.
Technical indicators remain neutral. MACD histogram is in the positive zone and its volumes are stable. Stochastic lines are in the oversold zone and moving horizontally. Only Bollinger bands are facing up.
Support levels: 1.2940, 1.2870.
Resistance levels: 1.3000, 1.3070, 1.4000.
Open long positions after the price consolidation above 1.3000 with the target at 1.3070 and stop-loss at 1.2960. Short positions can be opened after the breakdown of the level of 1.2940 with the target at 1.2870 and stop-loss at 1.2990.