The greenback extended upward movement against its Canadian counterpart on Tuesday, taking the price of USD/CAD to more than 1.1645, ahead of US consumer confidence figure. There are no releases due from Canada until the next week. However, the recent decline in oil prices produced bearish impact in the Loonie.
The USD/CAD is going through range trading after it hit the 5-year high at 1.1673 on December 15. It may enter the correction phase in coming days.
As of this writing, the pair is trading around 1.1644, only few pips above than the opening price that is 1.1634. The pair is struggling to break the immediate resistance at 1.1647. The pair did break this level during the early hours of Asian session, but the price is again pulled back. Success in breaking this level may allow the pair to move ahead to test the 5-year high at 1.1673 to print the fresh high for the current year.
On the downside, the pair is expected to find a support around 1.1600, the psychological number ahead of 1.1543, the 23.6% Fib level. The next support may be seen around 1.1397, the confluence of 50% fib level and 50-Day SMA ahead of 1.1332, the 61.8% Fib level, as demonstrated in the above chart.
The overall bias is bullish because of higher lows on the daily chart. The bias will remain bullish as far as the support area around 1.0809 is intact.
The US dollar is going bullish against the Canadian dollar after the recent positive data. The GDP of US in 3rd quarter came out at 5.0% exceeding the expectations of 4.3%. This strong data indicated the strengthening US economy and further supported the chances of FED raising the interest rates in 2015.
US Consumer Confidence
The US consumer confidence remained at 93.2 points this December, higher than that of 88.7 points in the month before. As an indicator of economic expansion, a high reading is considered bullish for the US dollar. Thus a better than expected figure may allow the USD/CAD to correct higher.
As per the technical and fundamental analysis, it is better to stay at sidelines and wait for the pair to enter into correction phase. Going long may be preferred in short to medium term if the daily candle closes above 1.1673.