USD/CAD extends drop towards 1.3300 amid an improving market mood, ahead of retail sales

USD/CAD is trading just above 1.3300, lower on the day.
Oil prices are rising and US stocks futures are moving to positive territory.
The technical picture is mixed for the pair ahead of Canada's retail sales report.

Yohay Elam FXStreet

USD/CAD is trading just above 1.3300, down on the day and after hitting a high around 1.3360. The price of oil, Canada's critical export, is on the rise. The West Texas Intermediate (WTI) is trading around $53.50.

In addition, US S&P stock futures are now in positive territory, indicating an upbeat open on Wall Street. They were in the red earlier in the day. The Canadian Dollar is a "risk" currency, rising with an improving market mood. Earlier, concerns about global growth, echoed by the Bank of Japan among others, weighed on sentiment.

The loonie faces a significant test later on. Canada releases retail sales data for November and the volume is projected to drop. The figures tend to have a significant impact on USD/CAD.

Crude Oil Inventories are not published today, Wednesday, as they normally are. The publication has been postponed to Thursday due to the bank holiday earlier in the week.

USD/CAD Technical Analysis

Dollar/CAD is trading above the 50 Simple Moving Average on the four-hour chart but above the 200 SMA. Momentum is slightly positive and the Relative Strength Index is nearly balanced.

Support awaits at 1.3320, the 50 SMA, and more importantly at 1.3220 which was a swing low in January. Further support is seen at 1.3185 that supported USD/CAD earlier in the month.

1.3320 capped the pair last week and is still fought over. The next resistance is at 1.3360 which capped the pair earlier in the day. 1.3430 is the next line to watch. It provided support in late December.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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