The dollar has rallied across the board, up 0.3% versus the euro and by 0.6% against the yen, and other major crosses, following news that the U.S. Senate had passed a budget blueprint that will help push forward the Republican party’s planned $1.5 tln tax cut. USDCAD has rallied back above 1.2500 with the U.S. dollar encountering demand after the Senate passed the budget . With the Fed still seen on track to hike the Fed funds rate by 25 bp in December, and with BoC policymakers having actively dispelled any notion that it is on a committed tightening path, the overall bias expected to remain to the upside. The BoC’s quarterly business survey, released earlier in the week, showed economic activity to be remaining robust in a state of moderation following a strong performance over the summer period.
Today, USDCAD rebounded by its yesterday’s lows at 1.2450, and it is currently traded above round level at 1.2500. The break of the 1.2500 level which is also the 20-period MA in the 4-hour chart, gave an indication that upside movement is likely to continue for the day. However, the latest logged leg candle that closed above 1.2500 and closer to today’s highs, is what actually triggered our Long position in USDCAD. Hence an entry was taken at 1.2511, with support at 50-Day MA, at 1.2430. Targets were set at 1.2560 (H4) and 1.2590( Daily). Meanwhile MACD is negative in 4-hour chart, but remains positive for the whole October in a Daily time-frame.
As per my post on October 18 : “The pair is in an uptrend since early September, with a consolidation seen between 23.6 and 38.2 Fibonacci level on October and hence a Strong support level at 23.6 Fib. at 1.2425 and a more immediate support at 20-Day MA which supports the pair very well.” – this still holds, with a trend-line drawn since September satisfying even better, pair’s price movement . any break below that , will indicate a weakness down to 1.2320 long time-frame support level.
However focus is today on Canadian CPI and Retail Sales at 12:30 GMT. Canada CPI expected, to grow 0.2% in September relative to August, leaving a pick-up in the annual growth rate to 1.6% in September from 1.4% in August. Canada retail sales expected, to rise 0.5% m/m in August after the 0.4% gain in July. CPI implies a boost on retail sales values from modestly rising prices. Retail sales volumes expanded in every month from January to June of this year before dipping 0.2% in July.
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