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USDCAD Correction After September Maximum Update

10/17/2022 3:31 PM

The quotes of the USD/CAD pair updated the September maximum of 1.3830 last week, but the "bulls" failed to consolidate above this level due to the correction of the USD, which was caused by the release of contradictory macroeconomic statistics last Friday.

On the one hand, the export price index for September decreased by 0.8%, which is better than analysts' forecast of -1.0%, and for imports – decreased by 1.2% with preliminary estimates of -1.1%. The key indicator that led to the fixation of long positions in the dollar is the volume of retail sales for September, which remained at zero, despite the forecast of 0.2%.

Contradictory data are being received on the Canadian economy: the volume of wholesale sales in August increased by 1.4%, exceeding the expected 0.8%, but in the manufacturing sector the indicator adjusted by -2.0 with a forecast of -1.8%. The Canadian dollar is also supported by high prices for "black gold" (86.65 dollars per barrel of WTI Crude Oil).

The long-term trend in the USD/CAD pair is upward. Last week, the price updated the September high at 1.3830, but failed to consolidate higher and is now returning to resistance. Closing today below the level of 1.3830 is likely to push the pair to a downward correction with targets at 1.3600 and 1.3505. The RSI indicator forms a Divergence reversal pattern, which confirms the idea of a possible downward correction of the instrument.

As part of the mid-term trend, buyers reached the target zone 5 (1.3919–1.3894), which could not be broken, as a result of which the price declined and tested the key support of the trend 1.3747-1.3724. Thus, the instrument is currently trading in the corridor between the target zone 5 and the key trend support, the exit of the price from which will prompt the further direction for trading.

Resistance levels: 1.3830, 1.4100. | Support levels: 1.3600, 1.3505.

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