USD/CAD: Eyes on seven month uptrend line at 1.3229/06

USD/CAD has given traders some action on Wednesday with Canadian CPI hitting the market where, while headline inflation firmed up to 1.9% in March, matching market expectations, the pick-up in core inflation measures firming to 1.97% y/y on average following upward revisions to February. However, given the economy's poor backdrop, the CAD struggles to maintain the bid.

"We would fade the move in core CPI, as it was largely attributable to base-effects and is unlikely to be repeated going forward. Moreover, the growth outlook remains relatively muted especially after a sharp drop in real exports for February," analysts at TD Securities argued.

USD/CAD levels

USD/CAD has been respecting the Fibo retracement levels of the late Dec highs to Feb swing lows and in more recent daily flows, the price has ranged between the 38.2% - 61.8% Fibo of the range with an attempt here and there through the levels only to be rejected.  

According to analysts at Commerzbank, USD/CAD formed a top at 1.3467 in early March (through the 61.8% Fibo), and while below it, targets 1.3229/06 and below:

"We are of the opinion that USD/CAD formed a top at 1.3467 in early March and that it did so at the end of an abc Elliott wave correction from the February low at 1.3070. While the 1.3467 high isn’t bettered, we will continue to expect the 200 day moving average and the seven month uptrend line at 1.3229/06 to not only be reached but for these levels to also be slipped through. The 2018-19 uptrend line at 1.3087 represents our downside target. Further down sits the October trough at 1.2783. Were the March high at 1.3467 to be exceeded, however, we would have to turn short-term bullish and target the December and January peaks at 1.3661/64."