USDCAD falls to lowest level since April 6

The USDCAD has moved to a new low after the higher-than-expected CPI data. Inflation is soaring and Bank of Canada tightenings (50 basis points will likely be seen at the next meeting now) will be used to address the surge.

The price of the USDCAD moved below the low from April 14 at 1.2520 reaching 1.25142. That is still short of the next target at the 61.8% retracement of the move up from the April 5 low. The retracement level comes in at 1.25065. Get below that level would increase the bearish bias.

The price action today has already seen a sharp move to the downside on the US dollar weakness.

Technically, the Asian session high price stalled against its 100 day moving average at 1.26245, and then moved back below the 100/200 hour moving averages near 1.2604 (they were near converged).

A swing area near the 1.2571 level (it was also the 38.2% retracement), was broken as well. That area is the low of what was a value area (area where most of the price action has traded since April 7). The high of the value area stalled the rally yesterday near 1.2645 (see red box in the chart above).

The price action since April 7 has seen moves above and below that value area, but most of the price action has been within the red box (see hourly chart above).The breakout of the red box today lead to more selling as traders shifted the bias to the downside.

What now?

Watch the 50% midpoint of the same trading range at 1.25387. Stay below that level would keep the sellers firmly in control. Another level would be near the swing low from April 11 at 1.2550.

What traders will not want to see is a move back above the 1.2571 level into the red box (i.e., value area).

A move below the 61.8% retracement at 1.25065 would have traders targeting 1.2479 area. A swing low from April 6 came in near that level. There also other lows from April 1, and April 4 around that level.