On Wednesday, extensive selling pressure and immediate rebound were seen on the Canadian dollar (CAD) due to the price fluctuation in crude oil prices and a general trend towards the US Dollar (USD).
This week, the Loonie investors are awaiting Canada's release of Retail Sales figures on Friday. However, the imminent publication of US Purchasing Managers' Index (PMI) data will likely overshadow these figures.
US Dollar Bears Are Active From Durable Goods
Wednesday saw a significant decline in the value of the US Dollar following the release of favorable weekly Initial Jobless Claims. The report escalated investor apprehension regarding the possibility of additional Federal Reserve (Fed) tightening. However, the Durable Goods orders changed the sentiment immediately, pushing the US Dollar Index back to the daily open area.
As per the latest report, the initial Jobless Claims for the week reached a five-week low of 209,000, which was below expectations. Additionally, Durable Goods Orders in the United States decreased by 5.4%, a greater decline than anticipated, following a 4.6% increase the previous month.
Canadian Economy Is Nearing Equilibrium
Tiff Macklem, the governor of the Bank of Canada, stated that policymakers might have satisfactorily tackled the inflation issue, consistent with market anticipations that interest rates have reached their highest point. Macklem expressed assurance that inflation will decelerate in the future months, even though the Canadian consumer price index raised 3.1% in October, the slowest rate since June.
The Governor expressed optimism that the Canadian economy is nearing equilibrium, as evidenced by signs of corporate pricing behavior returning to normal. This development represents a substantial inflation risk that the central bank closely monitors. Amid the economic stabilization process, policymakers prioritize wage growth and short-term inflation expectations to reinstate the inflation target of 2%.
An immediate bullish pressure is seen in the Canadian Dollar (CAD) after the statement, eliminating all daily gains for the USDCAD price. However, the long-term market trend is still bullish, which needs a valid trading signal from the technical perspective.
USDCAD Technical Analysis
In the daily chart of USDCAD, a corrective bullish pressure is seen where the broader market is within an ascending channel. Moreover, the dynamic 20-day EMA is the immediate support, which is above the 1.3631 static level.
Based on the daily outlook, an ascending trendline resistance breakout could be an immediate long opportunity, targeting the 1.3900 level. Moreover, the intraday correction and an additional bullish rejection from the 1.3682 to 1.3600 zone could be another long opportunity.
On the bearish side, a sharp downside pressure with a bearish close below the 1.3600 level could eliminate the bullish possibility and lower the price toward the 1.3417 level.
