USD/CAD Trims Earnings, Key Support Nearby

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Highlights

  • USD/CAD started a downward correction from 1.2675.
  • It traded below a major uptrend line at 1.2580 on the 4-hour chart.
  • EUR/USD could attempt a move above 1.0900, and GBP/USD faces hurdles near 1.3080.
  • The Canadian CPI rose 6.7% in March 2022 (year-on-year), up from 5.7%.

USD/USD technical analysis

The US Dollar attempted a break up above 1.2700 against the Canadian Dollar. However, USD/CAD failed near 1.2675 and started a downward correction.

Looking at the 4 hour chart, the pair traded the support level of 1.2620 and the 200 simple moving average (green, 4 hour). There was a break below a major uptrend line at 1.2580.

The pair broke below the 50% Fib retracement level of the upside move from 1.2402 low to 1.2676 high. It settled below the support at 1.2560 and the 100 simple moving average (red, 4 hours).

The next major support is near the 1.2465 level. It is near the 76.4% Fib retracement level of the upward move from the 1.2402 low to 1.2676 high. Further losses could perhaps open the doors for a move towards the 1.2400 level.

On the upside, USD/CAD might face resistance near the 1.2565 level and the 100 simple moving average (red, 4-hours). The next major resistance is near the 1.2620 level.

Basically, the Canadian Consumer Price Index (CPI) for March 2022 was released yesterday by Statistics Canada. The market was looking for a 6.1% rise from the same month a year ago.

The actual result was above market expectations, with the Canadian consumer price index rising 6.7%. The monthly change was 1.4%, up from the last 1%.

As for the EUR/USD, the pair might attempt a wave of recovery above the resistance levels of 1.0900 and 1.0920. Similarly, GBP/USD needs to break through 1.3080 for a steady rise.

Economic releases

  • US Initial Unemployment Claims – Forecast of 180,000, down from 185,000 previously.
  • Fed Chairman Powell’s speech.
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