The USD/CAD pair dropped to 1.3150 area during the early European session on Friday but staged a rebound in the second half of the day. As of writing, the pair was virtually unchanged on the day at 1.3190 and on track to snap an eight-week losing streak.
The poor performance of major equity indexes in the US seems to be helping the USD gather strength in the American session. At the moment, the US Dollar Index (DXY) is posting small daily gains at 93.38 and the S&P 500 Index (SPX) is losing 0.5%.
Earlier in the day, the monthly data published by the US Bureau of Labor Statistics showed that the Core Consumer Price Index (CPI) rose from 1.6% to 1.7% in August on a yearly basis but was largely ignored by market participants.
Meanwhile, after suffering heavy losses during the first half of the week, crude oil is making a technical correction on Friday and helping the commodity-related loonie limit its losses against the greenback. At the moment, the barrel of West Texas Intermediate is up 1.05% on the day at $37.40.
USD/CAD technical outlook
Credit Suisse analysts think that USD/CAD could extend its losses if it closes below 1.3129, the broken trendline coming from March.
“A close beneath 1.3129 would reinforce the view that the setback is over and that the medium-term downtrend is taking back over. Support is seen thereafter at 1.3088/76, beneath which should allow for a move back to 1.3047/38. Removal of here would then reinforce the bearish bias further for a fall back to 1.2994, then medium-term support at 1.2952," analysts said. “A move back above 1.3270 in contrast would see a base complete to suggest a more important correction higher, with next important resistances see.”
Additional levels to watch for
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