USD/CAD fell to a new weekly low of 1.3733, with selling accelerating after the U.S. Treasury's bond announcement earlier in the week. Stronger Canadian retail sales and talk of a U.S.-Canada trade framework added further pressure on the pair, with sellers now defending the 1.3765-1.3778 zone.
Canadian data and trade talk weigh on the pair
Canada's retail sales report came in better than expectations today, keeping pressure on USD/CAD. The pair traded lower on the day, though it saw a modest bounce off session lows.
The broader move this week has run firmly to the downside, with selling accelerating following the U.S. Treasury announcement earlier in the week. Ongoing discussions around a framework for a U.S.-Canada trade agreement have also helped support the Canadian dollar.
Technical levels break down
USD/CAD started the week by moving into a key support area defined by a lower channel trendline and the 200-day moving average near 1.3846. Buyers leaned against that support and pushed the price higher Tuesday and into Wednesday. However, the rebound stalled ahead of the 100-day moving average at 1.39138, while sellers also leaned against last week's midweek low near 1.3908.
That failure proved important. As dollar selling intensified after the Treasury announcement, USD/CAD tumbled back below the 200-day moving average and the lower channel trendline, increasing the bearish bias. The pair then broke below the 61.8% retracement of the move up from the May low at 1.38169, opening the door toward the next swing area between 1.3765 and 1.3778.
Sellers pushed the pair through that swing area yesterday, but the move could not be sustained and price bounced back higher. Today, however, sellers returned and pushed the pair back below the swing area to a new weekly low at 1.3733.
What next for USD/CAD
The 1.3765-1.3778 swing area is now the key close-risk level for sellers. Staying below it keeps sellers in firm control and leaves the downside bias intact.
A move back above 1.3778 would represent another failed break below that support and could disappoint sellers. That would shift focus back toward the broken 61.8% retracement at 1.38169. Above that, traders would watch the underside of the broken channel trendline, currently near 1.3824 and moving lower.
Source: Investinglive
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