USDCAD TECHS: Bearish Theme
- RES 4: 1.4948 High Mar 2003
- RES 3: 1.4814 High Apr 2003
- RES 2: 1.4503/1.4793 High Fb 4 / 3 and key resistance
- RES 1: 1.4380 High Feb 10
- PRICE: 1.4227 @ 16:16 GMT Feb 19
- SUP 1: 1.4107 50.0% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 2: 1.4011 Low Dec 5 ‘24
- SUP 3: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
- SUP 4: 1.3894 Low Nov 11 ‘24
USDCAD is recovering, but remains more broadly closer to recent lows. The pair has cleared key support at 1.4261, the Jan 20 low. This strengthens a bearish theme and signals scope for an extension of the current bear cycle - a correction. Scope is seen for a move towards 1.4107, a Fibonacci retracement. Initial firm resistance to watch is 1.4380, the Feb 10 high. A move above this hurdle would highlight an early bullish reversal signal.
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USDCAD TECHS: Breaches Support
- RES 4: 1.4671 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4486 Intraday high
- PRICE: 1.4323 @ 16:50 GMT Jan 20
- SUP 1: 1.4262 Low Jan 20
- SUP 2: 1.4226 50-day EMA
- SUP 3: 1.4120 Low Dec 11
- SUP 4: 1.4011 Low Dec 5
A sharp sell-off in USDCAD Monday resulted in a print below support at 1.4280, the 20-day EMA. Pice has also traded through the 20-day EMA, at 1.4364. The reversal has exposed the next key support at 1.4226, the 50-day EMA. A clear breach of the 50-day EMA would undermine the recent bullish theme and signal scope for a deeper retracement. Key resistance and the bull trigger has been defined at 1.4486, Monday’s intraday high.
CANADA: GS See Significant Uncertainty Over Tax Holiday Impact On CPI
- Goldman Sachs highlight four key elements to watch in the December CPI report:
- i) “our forecast assumes a 34bp drag on headline inflation from the start of the GST/HST tax holiday in mid-December, but we acknowledge significant uncertainty around how the cumulative 70bp tax holiday drag will be distributed across the December and January inflation releases.”
- ii) “we expect a spike in energy inflation, but soft food inflation due to the sales tax holiday on several food items such as restaurant meals.”
- iii) “we forecast an uptick in homeowners’ replacement cost inflation—reflecting higher new house prices—and a slight moderation in rent prices, as asking prices declined for the third consecutive month.”
- iv) “we expect mortgage interest cost inflation will continue to moderate following rate cuts.”
AUDUSD TECHS: Corrective Bounce
- RES 4: 0.6429 High Dec 12
- RES 3: 0.6384 High Dec 13
- RES 2: 0.6335 50-day EMA
- RES 1: 0.6302 High Jan 6
- PRICE: 0.6261 @ 16:49 GMT Jan 20
- SUP 1: 0.6131 Low Jan 13
- SUP 3: 0.6100 Round number support
- SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.5994 1.618proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the latest recovery appears corrective. The pair has recently breached 0.6179, Dec 31 low, maintaining the price sequence of lower lows and lower highs. Moving average studies are in a bear-mode position too. Scope is seen for an extension towards 0.6100. Resistance at 0.6229, the 20-day EMA, has been pierced. The next resistance to watch is 0.6335, the 50-day EMA.
