A main theme in the forex market this week was the USD softening after the FOMC. Let’s see how that manifested in the EUR/USD. Today, Strong retail sales and hot inflation data from Canada is boosting the Loonie. Let’s take a look at the USD/CAD.
EUR/USD rallied this week after putting in a price bottom last week. There was broad USD-weakness after the FOMC event risk, and the EUR/USD popped up from the price bottom, only to stalled at 1.3643. As we get into the 6/20 session, we see that traders faded the pair down to a rising trendline. A break below 1.3550 should clear the trendline and the moving averages in the 4H chart. If the RSI also dips below 40, then we could be looking at a bearish continuation signal, refocusing traders on the 1.35 handle and the 1.3476 low on the year. Above 1.3560, the pair remains bullish in the very short-term, with upside toward 1.3676 June high.
USD/CAD is blasting through consolidation support today after very hot inflation and retail sales data from Canada. The CPI in May came in at 0.5% on the month, and 2.3% on the year. This was a pick up from April’s reading and also beat most economists’ forecasts. Retail sales also grew 1.1% in April, faster than the 0.1% in March. Economists had forecast a 0.4% growth.
As both inflation and demand data moved higher and beat estimates, USD/CAD fell below its recent consolidation support at 1.0815. The dip is also breaking below the 200-day SMA. The 1.0737 pivot might provide some short-term support. But as long as price is below 1.09, there is downside risk toward the low on the year near 1.06, and the Dec. 2013 low at 1.0560.
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