USD/CAD bounces from support after weak retail sales report. What's next

Technical Analysis

Author: Adam Button | usdcad

USD/CAD technical analysis

The Canadian dollar is suffering from a string of bad data but the rise in USD/CAD has been tempered by the US dollar's own woes. For most of the past month, they've battled to a stalemate.

However, technically, the uptrend since early September broke yesterday and the US dollar stumbled on a number of fronts. So that's a USD negative.

Given the substantial weakness in Canadian retail sales today, you would have expected more CAD selling, so that should have been a USD positive. Perhaps the gains have been restrained by the US holiday.

Technically, it's a standstill. The uptrend is broken but a small double bottom could be forming at the November lows. In addition the 50-61.8% retracement zone of the rally over the past month is lending minor support.

Finally, the 55-day moving average will cross the 100-dma sometime in the next week.

I don't see a clear bias in the chart but given the emerging, and broad US dollar weakness, my bias is to the downside. If support at 1.2666 gives way, I envision a drop down to 1.2450.