The USD is gaining ground across the majors in the wake of Wednesday’s FED Interest Rate Decision. One of the biggest movers has been the USD/CAD, putting in a rally of more than 75 pips. Given the recent strength of WTI crude oil pricing, the bullish breakout above 1.3350 comes as a bit of a surprise.
For the Canadian dollar, the next 24 hours are going to be pivotal. Friday’s U.S. pre-market period brings release of the BoC CPI (Feb.) and Canadian Retail Sales (Jan.). Analysts expect the BoC CPI to slide to 1.2% and Retail Sales to come in stronger at 0.4%. If these numbers perform well, a possible resurgence in the Loonie is possible. If not, the USD/CAD is likely to test an established Double Top formation on the daily chart.
USD/CAD: Technical Outlook
Even with May WTI crude oil futures hanging above $60.00, the Greenback is rallying versus the CAD. Although the bullish pressure may be short-lived, topside resistance is on the horizon.
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Until Friday’s closing bell, the daily Double Top pattern at 1.3466 and 1.3467 will be an area to watch. At press time (1:00 PM EST), rates are just about 70 pips south of this level. In the event Friday’s Canadian economic numbers come in soft, a test of the Double Top is possible.
Bottom Line: Until elected, I will have sell orders queued up from 1.3459. With an initial stop at 1.3784, this trade produces 25 pips on a standard 1:1 risk vs reward management plan.
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