The price of US Dollar (USD) fell on Monday against the Canadian Dollar (CAD), dragging the USDCAD pair to less than 1.3160 after Friday’s consumer price index report by the Bank of Canada. The technical bias remains bullish because of a Higher High and Higher Low in the recent wave.
As of this writing, the price of USD/CAD is being traded around 1.3153. A hurdle may be noted near 1.3198-1.3200 which is the confluence of psychological number as well as swing high of Friday as demonstrated in the following chart. A sustained break above the 1.3200 handle could incite renewed buying interest, validating a move towards the 1.33 zone.
On the downside, the pair is likely to find a support around 1.3119, the 23.6% fib level ahead of 1.3015, the 50% fib level and then 1.3000, the psychological number. The technical bias will remain bullish as long as the 1.3040 support area is intact.
The Consumer Price Index (CPI) rose 1.0% in the 12 months to September, after increasing 1.3% in August.
The smaller year-over-year increase in the CPI in September compared with August was mostly attributable to an 18.8% year-over-year decline in gasoline prices in September, following a 12.6% decrease the previous month.
Prices were up in seven of the eight major components on a year-over-year basis in September, with the rise in the CPI led by higher prices for food. Increases in the household operations, furnishings and equipment index and the shelter index also contributed to higher consumer prices. The transportation index, which includes gasoline, recorded its 11th consecutive year-over-year decline.
Considering the overall technical and fundamental outlook, selling the pair could be a good strategy only if we get a valid reversal candle on the daily chart in the form of bearish pin bar, bearish engulfing or shooting star.