- Canadian Dollar started trading higher once again versus the US Dollar, and looks poised for more gains.
- There was a support trend line on the H4 chart of USD/CAD, which was broken today.
- In Canada, the Consumer Price Index (CPI) released by the Statistics Canada posted an increase of 1.5% in May 2016, which was less than the forecast of 1.6%.
Today, Canada saw a major economic release, as the Consumer Price Index (CPI) report was published by the Statistics Canada. The market was positioned for a decline in the CPI in May 2016 from 1.7% to 1.6% (YoY).
The result was disappointing, as the Canadian CPI posted an increase of 1.5% only in May 2016, compared with May 2015. In terms of the monthly change, there was an increase of 0.4%, which was again lower compared with the forecast of 0.5%.
The report published highlighted that “Prices rose in all major components in the 12 months to May, with four of eight major components posting smaller year-over-year gains in May than in April. The smaller year-over-year gain in food prices in May compared with April contributed the most to the deceleration in the CPI”.
Overall, the result was not what the market expected, but still the Canadian dollar managed to gain bids and traded higher versus the US Dollar.
USD/CAD Price Analysis
The USD/CAD pair looks like made a top near 1.3080-90 levels and may continue to move down. There was a bullish trend line formed on the H4 chart, which was broken just after the CPI report.
The pair also moved below the 100 and 200 simple moving averages on the same chart, suggesting that the bears are taking control.
If the current trend continues in USD/CAD, then there is a chance of a test of 61.8% Fibonacci retracement level of the last wave from the 1.2655 low to 1.3087 high where the bulls may try to defend any further downsides.