The US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Friday, dragging the price of USD/CAD to less than 1.0850 ahead of some key economic events. The sentiment however remains positive due to Higher High in the recent upside rally as demonstrated in the following chart.
As of this writing, the pair is being traded near 1.0848. A support may be seen around the current level, the 38.2% fib level ahead of 1.0800, the confluence of psychological number, 55-Day Simple Moving Average (SMA) and 50% fib level as demonstrated in the following chart.
On the upside, the pair is expected to face a hurdle around 1.08850, the 200-Day SMA ahead of 1.0907, the 23.6% fib level and then 1.1000, the psychological level as well as swing high of the recent upside rally. The sentiment will remain bearish as far as the 1.0827 support area is intact.
The Canadian economy grew at 2.7% in the second quarter as compared to 1.2% in the quarter before according to the median projection of different economists. The Statistics Canada will release the Canada’s Gross Domestic Product (GDP) report today in the US session. Generally speaking, higher GDP readings are considered positive for the economy, hence a better than expected actual outcome will be seen as bearish for the pair and vice versa.
US Personal Income
The US Bureau of Economic Analysis will release the Personal Income report on Friday (today). According to the average forecast of different analysts, the personal income registered 0.3% increase in July as compared to 0.4% in the month before. Generally speaking, higher personal income is considered positive for the US economy thus a worse than expected actual reading will be seen as bearish for the pair and vice versa.
Considering the overall technical and fundamental outlook, buying the USD/CAD around the 1.0800 handle appears to be a good strategy in short to medium term as described above.