The US Dollar (USD) extended upside movement against the Canadian Dollar (CAD) on Friday, increasing the price of USDCAD to more than 1.2200 ahead of some major economic releases. The technical bias will remain bullish due to a Higher High and Higher Low in the recent wave on daily chart.
As of this writing, the pair is being traded around 1.2232. A support can be noted near 1.2163, the 61.8% fib level ahead of 1.2126, the intraday low of yesterday and then 1.2000, the psychological number.
On the upside, the pair is expected to face a hurdle near 1.2239, the 50% fib level ahead of 1.2315, the 38.2% fib level and then 1.2561, the swing high of the last major upside rally as demonstrated in the above daily chart.
Consumer Price Index
On Forex calendar, Statistics Canada is due to release Canada’s Consumer Price Index (CPI) report today during the early New York session. CPI is considered a main gauge for Inflation. According to the average forecast of different economists, the CPI in Canada remained 0.8% in May as compared to the same figure in the same month of the year before. Generally speaking, higher CPI reading is considered positive for the economy and vice versa thus a worse than expected actual outcome might incite buying pressure in the price of USDCAD and vice versa.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing below the yesterday’s low.