USD/CAD trading in range ahead of key data

  • The USD/CAD is trading in a clear trading range around the 1.26 level.
  • Stocks and oil prices are relatively stable, and tension mounts ahead of the US inflation report tomorrow.
  • The technical picture for the pair remains positive.

The USD/CAD is trading around the 1.26 level, trading in a clear range between 1.2555 and 1.2633. The range characterized the pair's trading in the past few days with a narrower range amid stability in markets. 

USD/CAD fundamental movers

The price of oil, Canada's leading export, has stabilized under $60 on WTI Crude Oil. A report by the International Energy Agency showed that a supply is set to overtake demand in 2018, yet the differences are slim.

Stock markets are stable after a week of turbulence. Lower volatility and lower trading volumes in shares are also seen in the Canadian dollar. On Friday, the publication of Canada's jobs report sparked a sharp move to the upside that did not materialize into a sustained gain.

Markets are also trading in a limited range in anticipation for the top-tier US publications tomorrow: inflation and retail sales. Core CPI is the key figure to watch, and it is forecast to remain unchanged at 1.8% y/y. See the full preview here.

Also, the weekly oil inventories report is due to move the Canadian dollar as well.

USD/CAD bigger technical picture looks positive

Momentum has been positive in the past few days. In addition, the RSI is stable above 50 but below oversold territory. Both indicators point to further gains. The pair recently crossed the 50-day SMA, which also serves as a bearish sign. However, it trades below the 200-day SMA.

Above the range line of 1.2633, resistance awaits at 1.2682, the swing high on Friday. The 200-day SMA comes at around 1.2750.

Support awaits at the range limit of 1.2553 and further below at 1.2490, a stepping stone on the way up for the pair. 

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