The USD got a slight boost during the April 30th session after a better-than-expected jobless claims data. The USD/CAD for example bounced up from below 1.20 back to 1.21. However, we should remain bearish on the USD/CAD for now. Let’s take a look at today’s data points and the technical development in the USD/CAD.
US Jobless Claims: 262K
Previous Week: 296K
US jobless claims data have not had much impact, especially in the recent weeks when it neared 300K. The 262K reading was a pleasant surprise, and is the lowest print since at least the financial crisis. Still we will need a couple more weeks of strong jobs data, including next Friday’s NFP release, for the USD to revive its strength. Be cautious about this intra-session rally in the greenback.
CAN GDP m/m (Feb.): 0.0%
Previous: -0.2% (revised from -0.1%)
Canadian GDP in the winter months have been weak due to the oil price shock. However, the market might not pay much attention to the February print because oil prices have since stabilized.
Let’s take a look at the USD/CAD. Remember that in the USD/CAD – Breakout Continuation Scenario and Projection, we saw a bearish continuation towards the 1.1950 area.
In the 4H chat we can see that price was holding above 1.1950 earlier this week. After today’s data, USD/CAD rallied above a falling speedline, but the technical set up remains bearish in the 4H chart. As price approaches the 50-period SMA and the 4H RSI approaches 60, a bearish market should start fading the pair again and put pressure back on the 1.1950 low.
Now, if price does not fall back below 1.20 and does push above 1.22, we should look for a bullish correction, but limit the outlook to the 1.2360-1.24 which was a multi-month consolidation support area. This is another area where a bearish market would fade against the rally.
To the downside, even though price has reached a breakout projection near 1.1950, there is further downside risk towards a support/resistance pivot around 1.18.
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