Current trend

Against the recovery of the American dollar, the USD/CAD pair is correcting around 1.3575.

The Canadian dollar is under pressure after the publication of statistics on the dynamics of retail sales. The January figure decreased by 0.3% after growing by 0.9% earlier compared to forecasts of 0.4% and excluding cars – from 0.6% to 0.5%, while analysts expected 0.4%. Investor activity may increase after the gross domestic product (GDP) release at 14:30 (GMT 2), a key indicator reflecting the state of the national economy and considers domestic consumption, investment, government spending, and exports. According to preliminary estimates, the January GDP will be 0.4% after zero dynamics earlier.

The American dollar is correcting, trading at 104.00 in USDX. Q4 GDP may decline from 4.9% to 3.2%, GDP deflator – from 3.3% to 1.6% previously, and sales within GDP – from 3.6% to 3.5%. On Friday at 14:30 (GMT 2), the personal consumption expenditures price index will be published. According to preliminary estimates, the February indicator will increase from 0.3% to 0.4% MoM and from 2.4% to 2.5% YoY, and the core value will decrease from 0.4% to 0.3% MoM and remain at 2.8% YoY. The US Fed considers the indicator when calculating average inflation in the country, so it can significantly affect interest rate forecasts.

Support and resistance

On the daily chart, the quotes move in a new range between first-order levels (I), and after reaching the second-order left resistance level (II) at 1.3604, the price continues to rise.

The most likely scenario is an increase towards the crosshair of the right second-order resistance (II) and the left second-order resistance (II) at 1.3659, after which the price may reach the crosshair of the left third-order resistance (III) and the right third-order resistance (III) at 1.3820.

In the event of a downward reversal, further dynamics will develop in a poor downward trend, where the local crosshair of the third-order right support (III) and the third-order left support (III) at 1.3481 will become the nearest target, and the crosshair between the third-order left support (III) and the right first-order support (I) at 1.3354 – the long-term one.

Resistance levels: 1.3659, 1.3820.

Support levels: 1.3481, 1.3354.

Trading tips

Long positions may be opened after the price rises and consolidates above 1.3659, with the target at 1.3820. Stop loss – 1.3580. Implementation period: 7 days or more.

Short positions may be opened after the price declines and consolidates below 1.3481, with the target at 1.3354. Stop loss – 1.3540.