Market Analysis

USDCAD: Questioning the strong Fibonacci retracement resistance

Today we have the US consumer price index (CPI) which is expected by market analysts to fall to 2.4% year-on-year in September, comparing to the 2.7% registered in the previous period. The CPI is a key indicator to measure inflation and changes in purchasing trends.

Consumer price index (CPI) in Canada fell to 2.8% year-on-year in August compared to 3.0% registered in the previous month, and consistent with analysts’ forecast of 2.8%. August CPI data was driven by a slowdown in the cost of gasoline, utilities, and shelter.

Since the beginning of October, the USDCAD gained over 1.5% and is in a potential phase change, shifting from a distribution to a bullish phase.

On yesterday session, the USDCAD rallied with a wide range and closed near the high of the day, in addition, managed to close above Tuesday’s high, which suggests a strong bullish momentum.

The stochastic is showing a strong bullish momentum and crossed above the 50 midline.

The currency pair made the year-to-date high on late June at 1.3386 and since then has been in a downward trend that came to a halt in early October. In fact, it managed to bounce off a daily support and began an upward correction that is now testing the 61.8 Fibonacci retracement which may prove to be a tough resistance to crack.

ActivTrades US consumer price index  CPI  USDCAD Forex

USD/CAD Daily Candlestick Chart


Written by Hugo O’Neill, External Analyst


*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.

All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at its own risk.