After the huge fundamental drop on Friday the USD/CAD currency pair began a short term period of surge. However, the ascent of the Greenback against the Canadian Dollar is highly unlikely.
The pair is set to face the resistance of a descending channel pattern and the 55-hour simple moving average at the 1.2620 mark. Afterwards, the decline of the US Dollar against the Loonie is most likely going to continue. In that scenario the currency exchange rate would reach for the next closest support level, which already on Monday was located at the 1.25 mark. At that level the support of the channel and the weekly S1 were located at. However, the pair faces a long term support line, which might stop the decline.
Trade closed: target reached
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As expected on Monday, the combined resistance of the 55-hour SMA and the upper trend line of the junior descending channel pattern stopped the pair just before the release of the Canadian Retail Sales.
The release was covered on the Dukascopy online webinar by our analyst, and it was almost a certainty that the pair will bounce off the resistance. Moreover, beforehand a larger scale channel down was mapped, and the rate stopped its release fall exactly at that line.
In regards to the near future, the pair will continue the decline influenced by both pattern trend lines until it reaches the weekly S1 at the 1.25 mark.