USDCAD Modestly Lower on Upbeat Canadian CPI Data, Crude Prices
The USDCAD is modestly lower on the day after data showed that the Canadian CPI rose to 0.3%, which was better than the consensus number of 0.2%. It was also higher than the previous figure of 0.0%.
Consumer price index for January 2020 on an annualized basis registered at 2.4%, up from December’s figure of 2.2%. The data registered an 11.3% increase in prices of gasoline on an annualized basis when compared with a month earlier. Prices of vegetables also rose as bad weather moderated cultivation.
The Canadian Dollar got some lift on this news and gained 16 pips on the USD, pushing the pair down to 1.32273 as at the time of writing.
The CAD is building on the rise in crude oil prices on the day. However, the downside on the USDCAD may be capped as the price is close to the support level formed by the lower of the two descending trendlines that connect price tops from June 2019 till date. At this price level, we also see the lower border of an evolving falling wedge coming into play to support price, with the support at 1.32254 lurking just underneath this area.
The technical expectation of the falling wedge is for the price to break to the upside to continue the previous uptrend. If this plays out as expected, then the USDCAD could push out of the wedge to target the resistance at 1.32974, with multiple highs of August and December 2019 forming the next resistance at 1.33487. 1.34328 will become relevant if continued upside on this pair can break above the higher descending trendline as well as the 1.33487 resistance line.
On the flip side, further downside push which can breach the lower border of the wedge and the support at 1.32254 invalidates the pattern and sets the tone for a new push towards 1.31501 (previous lows of 20 June and 11 September 2019). 1.30632 remains a relevant downside target and comes into play if 1.31501 gives way.