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USDCAD – Test of All-important 1.40

Key Points

  • Canadian Dollar collapsed against the US Dollar and continued to trade lower after the Canadian CPI release.
  • The USDCAD pair almost reached the 1.40 level after the report was released.
  • Today, the Canadian Consumer Price Index (CPI) released by the Statistics Canada posted a decline of 0.1% in November 2015, compared with the forecast of a 0.1% increase.
  • In terms of the yearly change, the Canadian Consumer Price Index posted an increase of 1.4% in November, compared with the forecast of 1.5%.

Technical Analysis

The USDCAD pair tested the all-important 1.40 resistance area today. The pair is in an uptrend, and following a bullish trend line on the hourly chart. All three key simple moving averages (100, 200 and 50) are perfectly aligned on the downside to act as a support if the pair moves or corrects lower.

USDCAD

On the upside, a daily close above the 1.40 level may call for more gains in the near term.

Buying dips near the highlighted trend line and support area looks like a good deal moving ahead.

Canadian CPI

The Canadian Consumer Price Index (CPI), which is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services was reported by the Statistics Canada during the NY session today. The forecast was slated for an increase of 0.1% in November 2015, compared with the preceding month. However, the outcome was disappointing, as the Canadian CPI decreased by 0.1%.

Looking at the yearly change, the Canadian Consumer Price Index came in at 1.4%, compared with the same month a year ago. The forecast was slated for a 1.5% rise.

Overall, the report missed the mark completely and ignited an upside reaction in the USDCAD pair. Buying dips favored in the short term.

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