USDCAD has been moving sideways for the past few weeks and is currently testing the top of its range on the 1-hour time frame. If the resistance holds, price could move back to the range support at the 1.2675 level.
Stochastic is moving in the middle, suggesting that price could go in either direction. RSI is also in the middle, suggesting that the sideways movement might continue. Meanwhile, the 100 SMA is staying above the 200 SMA, suggesting that the path of least resistance is to the upside.
If an upside break occurs, USDCAD could be in for more gains, possibly past the 1.2800 major psychological resistance. The rectangle is around 100 pips in height so the resulting breakout rally could be of the same size.
USDCAD Fundamental Factors
US retail sales are up for release later today and this could be a catalyst for an upside break or a move back towards the range support. Headline retail sales are projected to show a 0.7% uptick, lower than the previous 1.0% increase, while the core retail sales figure could indicate a 0.2% increase, slower compared to May’s 1.2% gain.
Changes in oil prices could also be a driving factor for USDCAD moves, as the looming deal with Iran could spur an increase in production levels and drive prices even lower. This could mean more losses for the Canadian dollar, which is positively correlated to crude oil prices.
As always, updates on the Greek situation could impact market risk sentiment, which has also been responsible for price flows among the higher-yielding commodity currencies and the safe-haven US dollar. Greek government officials and creditors already agreed on a bailout deal but the country still missed its IMF payment this week and has yet to seek parliamentary approval.
Risk-off flows could lead to an upside break of the range resistance while a return in risk appetite could spur a move to the range support and even a downside break.
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