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Will the upcoming U.S. GDP release spur another leg lower for the Greenback?

Here’s the support level I’m watching on USD/CAD.

Before moving on, ICYMI, today’s Asia-London session watchlist looked at the potential support level on EUR/GBP ahead of mid-tier data from Europe. 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:

Upcoming Potential Catalysts on the Economic Calendar:

  • ECB monetary policy meeting accounts up for release
  • U.S. advanced Q2 GDP reading at 12:30 pm GMT
  • U.S. initial jobless claims at 12:30 pm GMT
  • U.S. pending home sales at 2:00 pm GMT

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart
USD/CAD 1-hour Forex Chart

Bounce or break?

It looks like USD/CAD is attempting to bust through the bottom of its short-term range!

If that happens, it could be followed by a drop that’s at least the same height as the rectangle pattern or close to a hundred pips.

Technical indicators are giving mixed signals. The 100 SMA is below the 200 SMA to hint that a downside break is likely, but Stochastic is already in the oversold territory to reflect exhaustion among sellers.

It could all boil down to the outcome of the U.S. advanced GDP report for Q2 2021, as analysts are counting on a stronger growth figure of 8.5% for the period.

Even so, the FOMC announcement earlier this week already downplayed the green shoots in the U.S. economy, citing temporary factors and concerns about the Delta variant.

This means that the dollar might still shrug off potential upside surprises in the GDP report and could be prone to a sharper selloff if the data disappoints.

Should this currency pair bounce back to the top of its short-term range, I might stay on the lookout for a short play if resistance holds!