Upbeat Canadian GDP data released a few minutes ago by Statistics Canada has allowed the Canadian Dollar to gain a slight reprieve, as it pulls back from intraday highs. Canadian GDP (quarterly) came in at 0.3%, which was better than the consensus and previous numbers of 0.1%.
Despite the upbeat Canadian GDP report, the pullback on the USDCAD is likely to be limited as the Canadian Dollar has taken a hammering in the week, as falling oil prices have taken a toll on the commodity currency.
The USDCAD is presently trading at 1.34372 as at the time of writing, off intraday highs of 1.34645 on the news release.
As the coronavirus outbreak continues to rage across the world, lesser demand from China has hurt crude oil prices, which are now heading towards the wrong side of $50.
The USDCAD has been able to breach the descending trendlines, which bordered a critical resistance zone. This was after price action broke out of the bullish flag with a strong 200-pip plus move this week. The previous highs of 22 March and 18 June 2019 (1.34328) mark the initial resistance to the breakout move. If the price is unable to break this area, then a pullback towards the 1.33487 price level (which intersects the upper descending trendline) may be on the cards. This move would enable this former resistance to act as support. Further breakdown brings 1.32974 into focus, by which time price would be firmly back into the former resistance zone enclosed by the two descending trendlines.
On the flip side, a break of the 1.34328 price level opens the door wider for the price to complete the measured move from the bull flag. 1.35231 would be a logical target which matches the termination of the measured move from the bull flag.