The USD/CAD is trading 0.34% higher after generally positive US data lifted the greenback over the Loonie this Thursday. A 3.5% drop in crude oil prices on the West Texas Intermediate (WTI) variant also helped suppress any bullish activity from the Canadian Dollar.
US Retail Sales data revealed mixed results, with the core component of the report coming in lower while the headline number beat the market expectations. Any conflicts within the numbers were put to bed by the stellar performance of the Empire State Manufacturing Index.
While the market had expected this number to improve from -31.3 to -12.1, it came in at -1.5. The vast improvement has added strength to the greenback’s performance, which had seen some tremendous strength earlier in the week from hotter-than-expected consumer inflation data.
The Loonie has not been able to find any joy this week as crude oil prices continue to tumble below the $100 mark. Yesterday’s report from the International Energy Agency (IEA) on lower demand growth for Q4 2022 continues to suppress commodity-linked assets such as the CAD. As such, the USD/CAD finds itself trading more than 200 pips to the upside.
From a technical analysis standpoint, the USD/CAD continues to trade within the bullish market structure but has so far respected the ceiling formed by the 20 February 2020 low/1/7 September highs at 1.32120. Only when this ceiling is broken can the bulls make a push for the 1.32655 resistance (17 August 2020 high). The 1.33275 price mark (10 June 2020 low and 8 October 2020 high) forms the next upside target, followed by the 1.34149 price mark, where the 29 September 2020 high is located.
On the flip side, rejection from the 1.32120 ceilings allows for a corrective decline, targeting 1.31346 initially (15 July 2022 low) before 1.30774 (17 June high and 2 September low) comes into the picture. 1.29884 becomes the new target if the correction continues, leaving 1.29241 (11 May low) and 1.28679 (20 May high/16 June low) as additional harvest points for the bears on further price deterioration.