USDCAD has formed higher lows on its 4-hour time frame, moving above a new ascending trend line connecting the lows since mid-February. Price found resistance at the 1.3650 minor psychological level and seems to be in the middle of a correction.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 38.2% level lines up with an area of interest or former resistance at the 1.3500 major psychological level. The 100 SMA just crossed above the 200 SMA to suggest that the path of least resistance is to the upside.
Stochastic is just turning down from the overbought region, though, indicating that buyers are taking a break and letting sellers take over. In that case, a larger pullback to the trend line or 61.8% Fib near the moving averages could be possible.
Canadian retail sales data turned out mixed as the core reading came in better than expected while the headline figure fell short of estimates. The CMHC warned that property markets in Toronto could be overheating but the US crude oil inventories report showed a larger than expected draw in stockpiles, easing oversupply concerns for the commodity.
Meanwhile, the Trump tax reform plan turned out disappointing for dollar bulls as it didn’t contain as many details as expected. Also, the White House announcement on Trump agreeing not to terminate NAFTA for now is leading to short-term gains for CAD.
By Kate Curtis from Trader’s Way