USD/CAD: technical & fundamental
USD/CAD closed yesterday above the line connecting July and September highs. Today US dollar approached resistance line of the shorter-term uptrend since the middle of September and rose to the 1.0550 area.
Canadian dollar weakened ahead of the data releases due today at 13:30 GMT. Canadian inflation is expected to decline encouraging the Bank of Canada to keep interest rates on hold. The Fed’s (FOMC) meeting minutes released this week was, on the contrary, less dovish than expected.
Still, beware that a good retail sales reading could make loonie retrace the lost ground. In addition, analysts at Saxo Bank point out that part of the CAD’s weakness this week is due to the buying of EUR/CAD. So, if EUR/USD falls dragging euro down, demand for Canadian dollar may rise.
USD/CAD has a good support in the 1.0415/0400 area. Closer support lies at 1.0500, 1.0485 (Nov.19 high) and 1.0440. On the upside targets lie at 1.0560/70 and 1.0600. All in all, buying on the dips seems to be the right strategy. Later there will be the month-end repatriation flows which usually mean that investors will sell CAD and but USD.
Chart. Daily USD/CAD