Theoretically, if CPI is positive, the currency is positive too. If Canada CPI is positive, USDCAD would fall down and vice versa. Canada CPI increased in three consecutive months, from 0.7%-0.9%-1.2%
Clearly, dovish bias of BoC had remarkable effect on Loonie. The question is whether the advance of CPI would continue or halt below 2% target.
I think the Canada CPI will be stable around 1.2%-1.3% . Advance above 1.5%, BoC could rethink their bias, but that is the problem of future.
Come back Technical Analysis:
Look at on the chart, there is a falling pattern formed after one month decline of USDCAD . We could consider this is the correction period after a long advance. The problem is the target of this correction. Usually, a falling down below 50% Fib Retracement could mark the uptrend officially stops. USDCAD now be above 38.2% Fib retracement, so we should be cautious about changing in the trend.
38.2% Fib retracement level now provides a good , but I think this is not a strong support, this level was pierced three times in two weeks, and it could be pierced anytime. A break this level would drive the price to 50% Fib retracement level.
Next weeks, if US economy is still stagnation, 50% Fib Retracement would be the level U/C will test and stable above this level.
USDCAD now looks like a car which has no fuel as well as driver. I think traders should be patient.
A break above the upper line of falling would be the BUY signal to 1.1066 level: 23.6%Fib retracement.
A break below the bottom line of falling and 38.2% Fib retracement would be the SELL signal to 1.09 level : 50% Fib retracement level.
I stand out USDCAD : Wait and observe.
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