The US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Monday, dragging the price of USDCAD to less than 1.4150 following the release of some important economic releases. The technical bias remains bullish because of a Higher High in the recent upside rally.
As of this writing, the pair is being traded around 1.4131. A support can be noted near 1.3980, the 38.2% fib level ahead of 1.3761, the 50% fib level and then 1.3700, the psychological level. A break and daily closing below the 1.3700 support area could incite renewed selling pressure towards the 1.3271 support region as demonstrated in our daily chart.
On the upside, the pair is expected to face a hurdle near 1.4251, the 23.6% fib level ahead of 1.4688, the swing high of the last major upside rally and then 1.5000, a major psychological level. The technical bias will remain bullish as long as the 1.3812 support area is intact.
Annual inflation in Canada rose in December at its fastest pace in over a year as consumers paid higher prices for fruits and vegetables, in a sign of the impact a depreciating Canadian dollar is having on consumers’ pocketbooks. The all-items consumer-price index advanced 1.6% in December from a year earlier, Statistics Canada said Friday. The consensus among traders was for a 1.7% increase in December, according to economists at Royal Bank of Canada. On a month-over-month basis, headline CPI declined 0.5% in December, while core inflation dropped 0.4%.
Considering the overall technical and fundamental outlook, selling the pair around current levels appears to be a good strategy in short to medium term.