USD/CAD Bullish Worth Sequence Intact Forward of Canada Retail Gross sales

Canadian Greenback Speaking Factors

USD/CAD makes an attempt to retrace the advance following the replace to Canada’s Client Worth Index (CPI) because it pulls again from a contemporary weekly excessive (1.2144), however the trade fee could proceed to carve a collection of upper highs and lows because the Relative Power Index (RSI) bounces again from oversold territory.

USD/CAD Bullish Worth Sequence Intact Forward of Canada Retail Gross sales

USD/CAD seems to have reversed course forward of the 1.2000 deal with although the three.4% print for Canada’s CPI marks the very best studying since Could 2011 because the core fee exhibits a much less pronounced rise in inflation, with the determine widening to 2.1% from 1.9% throughout the identical interval.

It stays to be seen if Canada’s Retail Gross sales report will sway USD/CAD because the replace for March confirmed family spending growing 4.8% versus forecasts for a 4.0% print, and indicators of a stronger restoration could spark a bullish response within the Canadian Greenback because the Financial institution of Canada (BoC) tapers its quantitative easing (QE) program.

It appears as if the BoC will step by step cut back its emergency measures all through the rest of the 12 months because the central financial institution upgrades its financial outlook and initiatives “actual GDP development of 6 ½ % in 2021, moderating to round Three ¾ % in 2022 and three ¼ % in 2023,” however the crowding conduct carried over from final 12 months appears poised to persist as retail merchants have been net-long USD/CAD since Could 2020.

The IG Consumer Sentiment report exhibits 78.68% of merchants are nonetheless net-long USD/CAD, with the ratio of merchants lengthy to quick standing at 3.69 to 1.

The variety of merchants net-long is 7.40% decrease than yesterday and 9.00% decrease from final week, whereas the variety of merchants net-short is 14.10% larger than yesterday and 17.49% larger from final week. The decline in net-long place has helped to alleviate the lean in retail sentiment as 81.62% of merchants have been net-long USD/CAD final week, whereas the rise in net-short curiosity comes because the trade fee pulls again from a contemporary weekly excessive (1.2144).

With that mentioned, USD/CAD could proceed to exhibit a bearish pattern in 2021 as the lean in retail sentiment persists, however the trade fee could proceed to carve a collection of upper highs and lows over the approaching days because the Relative Power Index (RSI) bounces again from oversold territory.

USD/CAD Charge Every day Chart

Supply: Buying and selling View

• The broader outlook for USD/CAD stays tilted to the draw back because it trades to a contemporary yearly low (1.2013) in Could, with each the 50-Day (1.2406) and 200-Day (1.2821) SMA’s nonetheless monitoring the destructive slope carried over from the earlier 12 months.
• The Relative Power Index (RSI) highlighted an identical dynamic because the indicator pushed under 30 for the primary time in 2021, however the oscillator could proceed to point out the bearish momentum abating because it bounces again from oversold territory and holds above 30.
• USD/CAD could stage a bigger rebound because the collection of upper highs and lows from earlier this week stays intact, however want a detailed above the 1.2140 (50% enlargement) area to deliver the former-support zone round 1.2250 (50% enlargement) to 1.2260 (38.2% enlargement) on the radar.
• Subsequent space of curiosity coming in round 1.2360 (100% enlargement) adopted by the Fibonacci overlap round 1.2410 (23.6% enlargement) to 1.2440 (23.6% enlargement).

— Written by David Tune, Forex Strategist

Observe me on Twitter at @DavidJSong