Corrective Decline in USD/CAD Begins, Gold Price Constrained
- USD/CAD began a downside resolution from the 1.3080 region.
- On the 4-hours chart, it traded below a significant bullish trend line with support located close to 1.2975.
- The $1,850 resistance zone is still difficult for the price of gold to overcome.
- In Q1 2022, the US Gross Domestic Product may decline by 1.5 percent.
USD/CAD Technical Analysis
Above the 1.3000 mark against the Canadian Dollar, the US Dollar picked up speed. USD/CAD, however, reached a high above 1.3080 and then began a new fall.
The pair started a negative correction from the 1.3078 high, according to the 4-hour chart. The support levels of 1.3000 and 1.2980 were breached.
The upward movement from the 1.2517 swing low to 1.3078 high’s 38.2 percent Fibonacci retracement level was below the pair’s trading range. On the same chart, it also traded below a significant bullish trend line with support located close to 1.2975.
The 100 simple moving average (red, 4-hours), the 200 simple moving average, and the 1.2800 support are all being crossed by the pair as it consolidates at this time (green, 4-hours). Also close to 1.2800 is the 50 percent Fib retracement level of the upward movement from the 1.2517 swing low to 1.3078 high.
The pair may drop even more if the downside broke through the 1.2800 support level. Near the 1.2685 zone, there is a key significant support.
The USD/CAD pair may encounter resistance near the 1.2920 level on the upside. The pair may advance in the direction of 1.2980 in the near future if a clear rise over the 1.2920 resistance zone occurs. Possible next significant resistance is at 1.3080.
When looking at the price of gold, there was no upward breakout above the $1,850 resistance, and the price now faces the possibility of further declines.
Today’s Economic Release
- The German Consumer Price Index for June 2022 (YoY) (Prelim) is forecast to increase by 7.9% compared to the previous month’s rate of 7.9%.
- German Consumer Price Index for June 2022 (MoM) (Preliminary) – Forecast +0.3%, up from +0.9% in the previous month.
- US Gross Domestic Product for Q1 2022 is expected to decrease by 1.5 percent from the previous quarter.
Author: Amogo Solomon
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