The USDCAD is following a bearish trend before the release of important inflation data later today. Despite recent price movements in Gold and Silver, the Canadian dollar remains below the 50-period Exponential Moving Average. Traders will closely monitor the USDCAD this week due to the upcoming release of significant economic data that could impact currency valuations.
Overview
The USDCAD is following a bearish trend before the release of important inflation data later today. Despite recent price movements in Gold and Silver, the Canadian dollar remains below the 50-period Exponential Moving Average. Traders will closely monitor the USDCAD this week due to the upcoming release of significant economic data that could impact currency valuations.
High Impact Economic Events
Tuesday 12:30 pm (GMT+0): CPI m/m (CAD)
Tuesday 12:30 pm (GMT+0): Median CPI y/y(CAD)
Tuesday 12:30 pm (GMT+0): Trimmed CPI y/y (CAD)
Wednesday 02:00 am (GMT+0): Official Cash Rate (NZD)
Wednesday 02:00 am (GMT+0): RBNZ Monetary Policy Statement (NZD)
Wednesday 02:00 am (GMT+0): RBNZ Rate Statement (NZD)
Wednesday 06:00 pm (GMT+0): FOMC Meeting Minutes (USD)
Thursday 07:15 am (GMT+0): French Flash Manufacturing PMI (EUR)
Thursday 07:15 am (GMT+0): French Flash Services PMI (EUR)
Thursday 07:30 am (GMT+0): German Flash Manufacturing PMI (EUR)
Thursday 07:30 am (GMT+0): German Flash Services PMI (EUR)
Thursday 08:30 am (GMT+0): Flash Manufacturing PMI (GBP)
Thursday 08:30 am (GMT+0): Flash Services PMI (GBP)
Thursday 01:45 pm (GMT+0): Flash Manufacturing PMI (USD)
Thursday 01:45 pm (GMT+0): Flash Services PMI (USD)
Friday 06:00 am (GMT+0): Retail Sales m/m (GBP)
Friday 02:00 pm (GMT+0): Revised UoM Consumer Sentiment(USD)
Technical Analysis
The USDCAD pair bounced from the lows of 1.31770 on December 27 to reach the highest price for 2024, which was 1.38459. On May 3, the bears took control of the market and pushed the exchange rate lower, below the 50-period Exponential Moving Average, paving the way for a downtrend. Specifically, the peak formed at 1.38750 failed to surpass the previous peak of 1.38459, and subsequently, the exchange rate fell below the trough of 1.36315, indicating a technical reversal to the downside known as a failure swing in technical analysis. By using the Fibonacci tool on the trough and the peak of the reversal, three potential price targets can be considered, provided that the sellers remain in control. Both the Exponential Moving Average (EMA) and the Momentum oscillator support the bearish outlook. Prices are trading below the EMA line, while the Momentum oscillator registers values below the 100 baseline.
Potential Upside Targets
If the bulls manage to take control of the currency pair, traders may consider the following three potential upside targets:
1.36876: The initial price target stands at 1.36876, representing the 23.6 percent Fibonacci Retracement drawn from the trough of 1.31770 to the highest peak of 2024 at 1.38459.
1.38750: The second price objective is seen at 1.38750, corresponding to the peak marked on April 30.
1.38459: An additional potential price objective could be identified at 1.38459, representing the all-time high for the current year.
Potential Downside Targets
Should the bears remain in control of the market, traders may consider the following three potential downside targets:
1.35388: The initial target stands at 1.35388, aligning with the 161.8 percent Fibonacci Extension drawn from the trough to the peak of the failure swing.
1.33878: The second potential support is found at 1.33878, corresponding to the 261.8 percent Fibonacci Extension drawn from the trough 1.36315 to the peak of 1.37850.
1.31770: An additional potential support could be identified at 1.31770, representing the trough marked on December 27.
Conclusion
The bearish outlook for the USDCAD remains in effect as price is still below the 50-period Exponential Average, and the Momentum oscillator values are below the 100 baseline. The release of the Consumer Price Index data later today may provide more insight into the Loonie's path.
The current downward trend in the USDCAD suggests that exchange rates may decline even further. To navigate this volatile market, traders must stay on top of economic events and geopolitical changes so they can make informed trading decisions.