The USD/CAD kicked off this week with the bearish sentiment. The yesterday’s trading session saw a dip from 1.1283 to 1.1219.
As of this writing, the pair is being traded around 1.1220. The market is in highly indecisive mode ahead of the important economic releases both by the Bank of Canada and the US Bureau of Labor Statistics. Both the Buyers and the sellers are extra-cautious and the price is lingering over the trend line support at 1.1214-1.1218. If the pair succeeds in breaking out this support, the next support lies at 1.1097, the 50% Fib level of the last leg from 1.0810 low to 1.1383 high.
On the upside, there lies a resistance around 1.1300, the psychological number. The bullish sentiment may remain intact as indicated by the trendline and the price is being traded above 50, 100 and 200 SMAs as well.
The US and Canada both have important economic releases scheduled today that may significantly impact the market.
US Consumer Price Index (YoY)
The yearly CPI as released by the US Bureau of Labor Statistics is forecasted to be at 1.6% as compared to 1.7% in August. As an indicator of inflation, a high CPI reading is considered bullish while a low reading is considered bearish for the US dollar.
BOC Interest Rate
The Bank of Canada is due to announce the interest rate decision today. Along with this, it will also release the monetary policy statement as well as MPC report during the New York session. The interest rate is expected to remain unchanged at 1%. It will be bullish for the CAD if we see a hawkish statement from the BoC and vice versa. It would be interesting to know the impact on USD/CAD after the decision.
As per the technical and fundamental analysis, it is better to stay at sidelines ahead of the economic releases. Let the market get some clarity before opening any position.