USD/CAD weekly consolidation below 200-DMA; 'Death Cross' targets 1.21 or lower

Currently, USD/CAD is trading at 1.3111, up +0.33% or 45-pips on the day, having posted a daily high at 1.3114 and low at 1.3060.

The American dollar vs. Canadian dollar flew under the radar as traders were busy building up short positions somewhere else; example decent trading activity in the GBP/USD pair. The truth of the matter is the evident price consolidation the currency experienced kept any interest away as for 5-consecutive sessions its 200-DMA was saluted but not touched; was at risk but never in real danger.

On the data front, not a heavy week for the CAD economic docket as Manufacturing Shipments (MoM) was probably the most valuable news release clocking 2.3%, a positive figure above the consensus at 0.1% and solid previous at 1.5%. Next week's attention should be focused on Retail Sales ex Autos (MoM) 0.1% previous, then Retail Sales (MoM) 0.2% and those are the most accurate indicators to gauge the consumer 'spending habits.'

However, veteran technicians and aficionados should turn their eyes to the weekly timeframe as the 50-DMA seems to be ready to break to the downside the 100-DMA (chart not-included). If 'past performance does not indicate future performance' but does serve as an alert or leading indicator, then there is evidence to not rule out further CAD appreciation towards 1.21 or lower. 

DXY inter-markets: temporary top in place?

Historical data available for traders and investors indicates during the last 7-weeks that USD/CAD pair, a commodity-linked currency, had the best trading day at +1.71% (Jan.18) or 227-pips, and the worst at -1.02% (Jan.17) or (133)-pips. As of writing, the US 10yr treasury yields fell from 2.46% to 2.39%, down -1.46% on the day or -0.0356.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.3220 (50-DMA), then at 1.3275 (100-DMA) which seems to build a 'Walls of Troy' multi-year resistance region since July 2015 and finally above that at 1.3386 (high Jan.20). While supports are aligned at 1.2968 (low Jan.31), later at 1.2818 (low Sept.7) and below that at 1.2650 (low Jun.8).

On the other hand, Stochastic Oscillator (5,3,3) seems to alter the route heading north. Therefore, there is evidence to expect further Canadian dollar losses in the near term.The pair requires a close and open above the 200-DMA near 1.3135 to dilute any bearish pressure that could drag it lower back to 1.2965 or lower.

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On the long term view, if the 'double Doji' candlestick formation from 1.3587 (high Nov.) and 1.3597 (high Dec.) is in fact, a relevant top, then any upside potential seems limited for this currency pair. Then, to the downside, supports are aligned at 1.2986 (short-term 23.60% Fib), later at 1.2626 (long-term 50.0% Fib) and finally below that at 1.2460 (low May.2016). As of writing, USD/CAD trades around 1.3104, therefore upside barriers are aligned at 1.3311 (short-term 38.2% Fib), then at 1.3468 (long-term 61.8% Fib) and finally above that at 1.3574 (short-term 50.0% Fib).

USD/CAD inter-markets: seems to hold near-term range ahead of next week's key releases