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USD/CAD Remains In Uptrend Above 1.3200

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Aayush Jindal

Key Highlights

  • Recently, the US Dollar retested the key 1.3345resistance against the Canadian Dollar.
  • A major bullish trend line is forming withsupport near 1.3240 on the 4-hours chart of USD/CAD.
  • Canada’s CPI increased 0.5% in July 2019 (MoM),more than the +0.2% forecast.
  • The US Manufacturing PMI could increase from50.4 to 50.5 in August 2019 (Preliminary).

USD/CAD Technical Analysis

In the past few days, there was a steady rise in the US Dollar above 1.3200 against the Canadian Dollar. The USD/CAD pair climbed above the 1.3300 resistance, but it struggled to break the key 1.3345 resistance.

USD/CAD Technical Analysis US Dollar Canadian Dollar

Looking at the 4-hours chart, the pair failed on more thantwo occasions near the 1.3340-1.3350 area. The last swing high was near 1.3345before the pair corrected lower.

There was a break below the 1.3300 support plus the 50% Fibretracement level of the upward move from the 1.3251 low to 1.3345 high. Itopened the doors for more losses towards the 1.3251 swing low.

However, there are many supports on the downside near the1.3240 and 1.3220 levels. Moreover, there is a major bullish trend line formingwith support near 1.3240 on the same chart. The 100 simple moving average (red,4-hours) is also following the trend line near 1.3240.

If there is a downside break below the trend line support,the pair could test the 1.3200 support level. An intermediate support is nearthe 1.236 Fib extension level of the upward move from the 1.3251 low to 1.3345high.

On the upside, the main resistance is near the 1.3340 and1.3350 levels. A successful break above 1.3350 could open the doors for a pushtowards the 1.3400 and 1.3420 levels.

Fundamentally, the Canadian Consumer Price Index (CPI) forJuly 2019 was released by the Statistics Canada. The market was looking for a 0.2%rise in the CPI compared with the previous month.

The actual result was well above the market forecast, as theCPI increased 0.5%. Looking at the yearly change, there was a 2.0% rise in theCPI, more than the 1.7% forecast, but similar to the last reading.

The report added:

Year-over-year growth in the services index slowed in July (+2.4%) compared with June (+2.8%). This slowdown was offset by an increase in the goods index (+1.3%), as the year-over-year decline in gasoline prices slowed and price growth increased for durable goods and food.

Overall, there could be a short term decline in USD/CAD, but as long as there is no daily close below 1.3200, the pair is likely to continue higher. Moreover, there are a few recovery signs emerged for both EUR/USD and GBP/USD in the past few sessions.

Economic Releases to Watch Today

  • Germany’s Manufacturing PMI August 2019(Preliminary) - Forecast 43.0, versus 43.2 previous.
  • Germany’s Services PMI August 2019 (Preliminary)- Forecast 54.0, versus 54.5 previous.
  • Euro Zone Manufacturing PMI August 2019(Preliminary) – Forecast 46.2, versus 46.5 previous.
  • Euro Zone Services PMI August 2019 (Preliminary)– Forecast 53.0, versus 53.2 previous.
  • US Manufacturing PMI August 2019 (Preliminary) –Forecast 50.5, versus 50.4 previous.
  • US Services PMI August 2019 (Preliminary) –Forecast 52.8, versus 53.0 previous.
  • US Initial Jobless Claims - Forecast 216K,versus 220K previous.
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