USD/CAD: Weekly Technical Analysis for June 23-27, 2014

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The U.S dollar lost strength against the Canadian dollar as upbeat retail sales and inflation data from Canada boosted the loonie, while the greenback remained pressured by the Federal Reserve’s latest policy statement.

Fundamentally, official data showed that retail sales in Canada rose 1.1% in April, exceeding expectations for a 0.4% gain, after an increase of 0.1% in March, whose figure was revised up from a previously estimated 0.1% fall. Core retail sales, which exclude automobiles, in Canada increased by 0.7% in April, more than the expected 0.4% rise. March’s figure was revised up to a 0.2% gain from a previously estimated uptick of 0.1%.


Also reports showed that consumer price inflation in Canada rose 0.5% last month, compared to expectations for a 0.2% gain, after a 0.3% increase in April.Core consumer price inflation, which excludes the eight most volatile items, rose 0.5% in May, beating expectations for a 0.2% uptick, after a 0.2% rise in April.


Meanwhile, the greenback remained under pressure after the Fed gave no indication of when interest rates could start to rise at the conclusion of its two-day meeting on Wednesday, which gives investors no clue about economic projections in the U.S economy. In addition, the Fed’s forecast of where interest rates might reach in the long term fell from 4% to 3.75%. More-so, the central bank cut its bond purchases by $10 billion a month, to $35 billion, saying there was “sufficient underlying strength” in the U.S. economy to continue tapering.


Technically weekly bias remains on the downside as 21 and 55 EMA crossover to the downside is established on the 1 hour, 4 hours and Daily time-frames. More supply to 1.0600 psychological zones is expected as a fresh sell off signal is seen on MACD oscillator. However, am expecting a minor retracement to the upside first before falling resumption on the pair as RSI and stochastic shows an over-sold market.

Supply of the pair might be dampened if price break 1.08327 resistance and we might see a further rise to 1.08936 ( Thursday high made by the FOMC announcement). A break of 1.08936 resistance might resume further rise to 1.09596. Key Economic reports investors would be watching out for in the coming week are U.S Core durable goods, New Home sales, Existing Home sal

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