USD/CAD Reversal In Play Ahead Of The BOC!| KOL Analysis•Olimpiu Tuns

USD/CAD is trading in the red today, but this could be only a temporary drop before the price will resume the short term rebound. The pair has managed to break above the major downtrend line, so today’s economic data could validate the bullish reversal.

The USD has decreased a little today as the USDX has reached another low at 96.06 in the morning. The dollar index remains under high selling pressure in the short term, the 96.00 area represents a critical support zone. A bounce back, rebound from this area could help the greenback to appreciate versus its rivals.

A USDX’s further drop below the 96.00 psychological level will weaken the USD. Unfortunately, the USD has failed to register significant growth, even if the US inflation figures have beaten expectations in yesterday’s session. The CPI rose by 0.6%, versus 0.5% estimated and after the 0.1% drop in the former reading period, while the Core CPI has increased by 0.2%, more compared to the 0.1% forecast.

Technically, the USDX is somehow expected to drop deeper after the valid breakdown from the minor up channel and after yesterday’s aggressive breakdown from the minor range, below the 96.43 static support.

l USD/CAD Above The Downtrend Line!

USD/CAD has ignored the downtrend line, it has closed above it, and now it could come back to test and retest it before going higher. The pair could resume its rebound if it will validate the breakout above the downtrend line and above the upper median line (uml) of the minor descending pitchfork.

The Canadian and the US economic data could be crucial for USD/CAD today, the BOC is expected to maintain the BOC Rate Statement steady at 0.25%, but the BOC Press Conference and BOC Rate Statement could shake the market and could bring high volatility on this currency pair. The Canadian Manufacturing Sales could increase by 9.2% in May, versus the 28.5% decline in April.

The USD needs support from the US economy to be able to recover, only some better than expected numbers from the US and a dovish BOC could boost USD/CAD today. The United States Industrial Production is expected to increase by 4.5%, while the Capacity Utilization Rate could jump from 64.8% to 67.9% in June.

USD/CAD has managed to pass above the downtrend line in the short term, but I believe that only a valid breakout above the 1.3666 static resistance will really confirm a bullish reversal, another leg higher.

l USD/CAD Within An Up Channel!

USD/CAD is traded at the half of the ascending channel between the lower median line (LML) and the inside sliding line (SL) of the ascending pitchfork, another higher high, a jump and close above the 1.3646 yesterday’s high could validate a further upside movement towards the sliding line (SL).

The potential reversal, leg higher, will be invalidated if USD/CAD will fail to stay above the broken downtrend line and above the Pivot Point (1.3563) level. Another higher high on the H4 chart and a valid breakout above the 1.3666 level will bring a great buying opportunity, the first target is seen at the SL, while the second one could be represented by the R1 (1.3808) level.

A broader upwards movement will be validated only by a valid upside breakout from the up channel. Also, a pin bar, a false breakdown with great separation below the PP (1.3563), below the downtrend line, and below the upper median line (uml) will bring a long opportunity as well.

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