USD/CAD Signaling Bullish Continuation After Oil Price Collapse

Key Highlights

  • USD/CAD started a fresh increase above the 1.4000 resistance.
  • A crucial bearish trend line was breached with resistance near 1.4020 on the 4-hours chart.
  • The Canadian Retail Sales grew 0.3% in Feb 2020 (MoM), down from the last +0.6%.
  • The Canadian CPI could increase 1.2% in March 2020 (YoY), down from the last 2.2%.

USD/CAD Technical Analysis

Earlier this month, the US Dollar declined towards the 1.3850 support against the Canadian Dollar. USD/CAD traded as low as 1.3855 and recently started a steady increase.

Looking at the 4-hours chart, the pair gained pace after it broke the 1.3950 and 1.4000 resistance levels. Besides, there was a break above a crucial bearish trend line with resistance near 1.4020.

The pair surpassed the 1.4200 resistance and settled nicely above both the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

It tested the 50% Fib retracement level of the last major decline from the 1.4667 high to 1.3855 low. The current price action suggests that USD/CAD is trading in a positive zone and it could continue to rise above 1.4300.

The next key resistance is near the 1.4350 level. It coincides with the 61.8% Fib retracement level of the last major decline from the 1.4667 high to 1.3855 low. Any further gains could push the pair towards the 1.4500 resistance area in the near term.

If there is a downside correction, the previous resistance near 1.4100 and the 100 SMA is likely to act as strong support in the coming days.

Fundamentally, the Canadian Retail Sales report for Feb 2020 was released by the Statistics Canada. The market was looking for a 0.2% increase in sales compared with the previous month.

The actual result was better than the forecast, as the Canadian Retail Sales grew 0.3% in Feb 2020 (MoM). Besides, the last reading was revised up from +0.4% to +0.6%.

The report added:

Retail sales rose for the fourth consecutive month, up 0.3% to $52.2 billion in February. This marked the first time retail sales grew for four months in a row since the period ending in October 2018.

Overall, USD/CAD might correct a few pips, but it remains well supported for more upsides considering the recent fall in US oil prices.

Upcoming Economic Releases

  • UK Consumer Price Index March 2020 (YoY) – Forecast +1.5%, versus +1.7% previous.
  • UK Core Consumer Price Index March 2020 (YoY) – Forecast +1.6%, versus +1.7% previous.
  • Canadian Consumer Price Index March 2020 (MoM) – Forecast -0.4%, versus +0.4% previous.
  • Canadian Consumer Price Index March 2020 (YoY) – Forecast +1.2%, versus +2.2% previous.