The USD/CAD has been consolidating after it made a low on the year at 1.1938 at the end of April. We had a failed attempt to break this low last week, which formed a range consolidation between the 1.1938 low and 1.22 high.
We saw the RSI pop up above 60, which reflected loss of the bearish momentum. However, there was still bearish bias as price held under the 200-, 100-, and 50-period SMAs, which are sloping down in bearish alignment. This week, the USD/CAD was falling towards the consolidation low, and today’s disappointing US retail sales data help extend it to a new low on the year. Granted, the breakout is not clear yet, we should still respect the fact that the prevailing trend has been bearish.
On the daily chart, let’s examine a few bearish projections.
The next key pivot will be around the 1.18 pivot from January. Below that the 200-day SMA resides around 1.1750. Then the next resistance pivot, which might turn into support, is around 1.1675.
Another projection method is to use the width of the broken range as a guide. 1.22 to 1.1940 is around 260 pips. 260 pips below 1.1940 would target the 1.1680 area, which is within the noted target range between 1.1675 and 1.18.
The next 2 fundamental factors for the USD will be Thursday’s jobless claims and Friday’s preliminary consumer sentiment data. If these data points are in-line with expectation or worse, we can see USD/CAD continue to slide. Better-than-expected data might help the USD/CAD find support in the short-term. However, if price remains under 1.20, the bearish outlook would be intact. It might need a break above 1.21 to open up any significant bullish outlook, which would still be tested around a previous multi-month consolidation range support at 1.2360-1.24.
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