USD/CAD Forecast Feb. 15-19 – Canadian Dollar Gains Ground

 

U.S. dollar banknote with map

USD/CAD posted moderate losses last week and dropped below the 1.27 level. There are four events in the upcoming week, including inflation and retail sales. Here is an outlook for the highlights and an updated technical analysis for USD/CAD.  

There were no tier-1 events in Canada last week.

In the US, inflation numbers were a bit lower than expected, and the US dollar’s response was muted. Headline inflation dipped from 0.4% to 0.3%, while Core CPI fell from 0.2% to 0.0%. Unemployment claims rose for the first time in four weeks, rising from 779,000 to 793,000. The week wrapped up on a down note, as UoM Consumer Sentiment for January dropped from 79.2 to 76.2 points. It was the lowest level since July 2020.

USD/CAD daily graph with resistance and support lines on it. Click to enlarge:

  1. Manufacturing Sales: Monday, 13:30. The indicator came in at -0.6% in November, its first decline since August. The December forecast stands at 0.2%.
  2. Inflation Report: Wednesday, 13:30. Headlines inflation disappointed with a reading of -0.2% in December, missing the forecast of 1.0%. Trimmed CPI, which excludes the most volatile items in the headline CPI, ticked lower to 1.6%, down from 1.7%.
  3. ADP Non-Farm Employment Change: Thursday, 13:30. This employment indicator has resumed its losing ways, with a decline of 28.8 thousand in January. Will we see an improvement in February?
  4. Retail Sales: Friday, 13:30. Retail sales showed a strong upward move in November, rising from 0.4% to 1.3%. Core retail sales sparkled, rising from 0.0% to 2.1%.

Technical lines from top to bottom:

We start with resistance at 1.3074.

1.2977 is protecting the symbolic 1.30 level.

1.2916 (mentioned last week) was last tested in resistance in mid-December.

1.2782 is next.

1.2684 is an immediate support level.

1.2587 is next.

1.2459 has held in support since February 2018.

1.2329 is the final support level for now..

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