Canada’s economy grew 0.1% in March and 0.3% in Q1. Annualized GDP came in at 1.2% in March.
This data was underwhelming. You can see the growth trend flattened since accelerating in 2009.
This data, while not a big surprise, did pressure the Canadian Dollar.
USD/CAD was edging lower before the GDP release, but rallied immediately after the data became available to the public.
This week’s price action has been choppy but bearish, retreating from last week’s high of 1.0941 down to 1.0822 before the GDP reaction. If the GDP reaction does not extend above the current falling trendline seen in the 1H chart, look for traders to fade USD/CAD further to end the session, or begin the Monday session.
A break above the trendline neutralize this week’s bearish market, but a break above 1.0885-90 area will be needed to open up a bullish outlook in the 1H chart, which would at least bring the 1.0941 resistance in sight.
Looking at the daily chart, you see that a break above 1.0941 opens up 1.1053.
However, if price breaks below 1.0810, we have the 1.0737-50 area as a near-term target. Below that the 1.0585-1.06 area comes into play.
Because USD/CAD is at the crossroad between a 2013 rally, and a 2014 consolidation that is turning bearish, we should look at USD/CAD without directional bias. Note that price is trapped between the 200-,100-,50-day moving averages, another sign of non-direction.
In this environment, let’s limit the bullish outlook to 1.0941 and 1.1053. The bearish outlook will have a big challenge in the 1.0735-50 area.
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