On Monday, USD CAD is developing upward momentum from September 13 and is momentarily approaching the 1.3650 mark through which the 38.2% Fibonacci grid of the 1.4667 to 1.2011 decline passes.
The dollar is supported by geopolitical uncertainty, global recession risks and the related rising demand for protective assets as well as national statistics.
Friday saw the release of the US Business Activity Indexes data that showed the manufacturing sector rose from 51.5p to 51.8p and the service sector from 43.7p to 49.2p.
At the same time, the Canadian is under pressure from lower oil prices and macroeconomic data. Canadian retail sales for July were down 2.5% while the forecast was for a decline of no more than 2.0%.
Canada's inflation rate is down noticeably, but the figure remains at a record 8.1%, which suggests the Bank of Canada will continue its hawkish course.
USD CAD Technical analysis
Bollinger indicator on the daily chart has reversed into strong growth.
MACD indicator continues to rise in a positive range and holds a strong buy signal.
Stochastic oscillator remains in the area of maximum values.
After consolidation above the level of the Fibonacci grid at 1.3650, consider entering into long positions with Take Profit at 1.3750. Stop-loss is set at 1.3600.
A rebound from 1.3650, followed by consolidation of the price below 1.3600 will be a necessary condition for sales. Target level is 1.3500. Protective stop will be placed at 1.3650.
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