I’m looking at this textbook trend retracement setup on the short-term chart of USD/CAD today.
Will buyers defend any of these support zones?
Before moving on, ICYMI, today’s Asia-London session watchlist looked at the range on GBP/AUD ahead of the U.K. jobs release. Be sure to check that out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- Japanese tertiary industry activity index down 0.7% as expected
- RBA minutes: Premature to end bond-buying program
- Asian shares close mixed ahead of U.S. retail sales, FOMC
- German final CPI unchanged at 0.5%
- U.K. claimant count fell by 92.6K vs. projected 25K increase
- U.K. average earnings index up 5.6% vs. 4.9% forecast
Upcoming Potential Catalysts on the Economic Calendar:
- BOE Governor Bailey’s speech at 12:15 pm GMT
- U.S. headline and core retail sales at 12:30 pm GMT
- U.S. headline and core PPI at 12:30 pm GMT
- U.S. industrial production at 1:15 pm GMT
What to Watch: USD/CAD
This pair has been trading above a rising trend line that’s been holding since the start of the month, and it looks like another test of support is due.
Are buyers hanging out at this area?Technical indicators are suggesting so, as the 100 SMA is above the 200 SMA to reflect the presence of bullish momentum. In addition, Stochastic looks ready to pull up from the oversold region to signal that buyers are returning.
Dollar bulls might be waiting around the 61.8% Fib that lines up with the 100 SMA dynamic inflection point. The 200 SMA might also be able to keep losses in check since it coincides with the rising trend line.
The upcoming U.S. retail sales could determine whether or not the Fib levels might hold, as a pickup in consumer spending might encourage dollar bulls to charge again.
Keep in mind also that dollar traders would likely price in expectations ahead of the FOMC decision later this week, and that an upgrade in inflation forecasts is eyed.