Our USDCAD price forecast was being written as the instrument appreciated over the past couple of hours, but the pressure remains high after US economic data disappointed earlier.
The pair is located right below an important upside obstacle, so we cannot exclude a new drop if the DXY falls as well.
The US Final GDP remained steady at 6.4% matching expectations, but unfortunately, the Unemployment Claims have decreased less than forecast, from 418k to 411k, while economists had been expecting to see a possible drop to 383k.
Just three days ago USD/CAD had hit a two month high, but now the road a head is more uncertain, but consolidation could bring bullish opportunities.
Moreover, the Goods Trade Balance deteriorated from -$85.7 billion to -$88.1 billion, compared to -$87.4 billion estimates, while the Durable Goods Orders data showed an increase of only 2.3% versus 2.9% expected. Adding to the worries about a slowdown in the rate of growth, the Core Durable Goods Orders registered a 0.3% improvement which compares unfavourably with the 0.8% rate that had been expected.
The government’s double-barrelled response to the pandemic, with both a fiscal and monetary boost applied simultaneously is driving up imports and worsening the trade deficit.
In comments provided to the Financial Times, Mahir Rasheed, economist at Oxford Economics, said: “Robust demand amid reopening and the encouraging health backdrop fuelled greater import volumes in May while external demand lagged.”
Also, the Preliminary Wholesale Inventories showed stocks of goods building up, increasing by 1.1% versus 0.8% expected, and that was after a 1.0% growth in the former reading period.
USDCAD price forecast: technical analysis
USD/CAD has turned to the upside after failing to stay near the 38.3% retracement level. Now, it has jumped above the immediate downtrend line, signalling a potential upside reversal. It is pressuring the 38.2% retracement level drawn on the last swing higher. The price could slip lower if it stays below this Fib obstacle.
Technically, our USDCAD price forecast sees a potential consolidation in the short term could bring us a new long opportunity.
The 1.2315 level stands as static resistance. Making a valid breakout above this high could signal the potential for price growth, at least until the weekly pivot point (1.2356).
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