USD/CAD plunges below 1.2700 on broad US dollar weakness

USD/CAD dipped to a fresh four-day low at 1.2633.
Risk-on market mood weighs on the greenback despite a hawkish Fed.
The loonie is advancing on good economic data and rising oil prices.

Christian Borjon Valencia FXStreet

During the Asian session, the USD/CAD reached a high of 1.2795. But as the European session got underway, the USD/CAD staged a comeback plummeting beneath 1.2700, down 0.79%, trading at 1.2672 at the time of writing.

The market sentiment is upbeat after a volatile Wednesday session. The market shrugs off the Federal Reserve plans for a tapering, Chinese Evergrande fears abate, and US stocks indices are rising between 0.92% and 1.35%.

In the commodities complex, Western Texas Intermediate (WTI), which price affects the price of the loonie, is up 1.77%, trading at $73.19.

US Jobless Claims and Canadian Retail Sales weighed on the USD/CAD

In the US, the Bureau of Labor and Statistics (BLS) reported that the US Jobless Claims for the week ended on September 18 rose to 351K, versus the estimated 320K. The increase in the unemployment claims reflects the unpredictability in weekly data. In the first week of September, the reading declined, though, in the last couple of weeks increased, suggesting that the economy could be slowing.

Additionally, the US Markit Manufacturing PMI declined slightly in September to 60.5 from 61.1 previous.

Meanwhile, Statistics Canada revealed that the Retail Sales for July shrank by 0.6%, less than the 1.2% foresee by economists. Excluding autos, Retail Sales declined 1% in the same period, versus 1.5% estimated by analysts. According to the report, 0.5% of the retailers were shut in July, compared to the 5.2% closed in June.

USD/CAD Price Forecast: Technical outlook

Daily chart

USD/CAD is approaching the 50-day moving average (DMA) at 1.2618. A daily break of that level could pave the way for further losses. The first support would be the psychological 1.2600. A break of that level will push the USD/CAD towards the September 10 low at 1.2582. A clear breach of that level could motivate the sellers to challenge the 200-DMA at 1.2524.

On the flip side, the buyers need to reclaim 1.2700. A daily break of the figure could expose 1.2800.

The Relative Strength Index, a momentum indicator, is at 49 heading lower, supporting the bearish bias.

KEY TECHNICAL LEVELS TO WATCH

USD/CAD

Overview
Today last price	1.2672
Today Daily Change	-0.0101
Today Daily Change %	-0.79
Today daily open	1.2773

Trends
Daily SMA20	1.2665
Daily SMA50	1.2617
Daily SMA100	1.2421
Daily SMA200	1.2525

Levels
Previous Daily High	1.2826
Previous Daily Low	1.2698
Previous Weekly High	1.2774
Previous Weekly Low	1.2601
Previous Monthly High	1.2949
Previous Monthly Low	1.2453
Daily Fibonacci 38.2%	1.2747
Daily Fibonacci 61.8%	1.2777
Daily Pivot Point S1	1.2705
Daily Pivot Point S2	1.2638
Daily Pivot Point S3	1.2577
Daily Pivot Point R1	1.2834
Daily Pivot Point R2	1.2894
Daily Pivot Point R3	1.2962

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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