Current trend

After the rapid decline of the American dollar yesterday, the USD/CAD pair managed to restore some of its positions and is trading at 1.3681, however, the situation may change after the publication of macroeconomic reports from Canada.

Thus, analysts expect that September wholesale sales will remain unchanged at 2.3%, and the figure for the manufacturing sector will decrease by 0.1% after growing by 0.7% a month earlier, which would be the first drop since mid-summer. The implementation of forecasts will confirm a new wave of slowdown in economic activity in the country, putting pressure on the Canadian currency.

The American dollar reached its autumn low at 103.800 in the USD Index amid a sharper-than-expected decline in the consumer price index. In the long term, the negative dynamics of the indicator indicate a weakening of inflation, which is a positive thing, and the October correction from 3.7% to 3.2% will allow US Federal Reserve officials to keep interest rates at the same level. However, from a local perspective, the indicator did not change relative to the estimated increase of 0.1% considered in the quotes, and the monthly change in the core value was 0.2% instead of 0.3% previously.

Support and resistance

On the daily chart, the price is correcting within a local ascending corridor with dynamic boundaries of 1.3920–1.3650, approaching the support line.

Technical indicators are slowing down the buy signal: the EMA fluctuation range on the Alligator indicator is narrowing, and the AO histogram is forming corrective bars above the transition level.

Resistance levels: 1.3740, 1.3850.

Support levels: 1.3650, 1.3550.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.3650 with the target at 1.3550. Stop loss – 1.3700. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.3740 with the target at 1.3850. Stop loss – 1.3680.