AUD/CAD is facing rejection near a major resistance zone; the pair might start retracement from current levels as per price action analysis, failing to which will be very bullish for the pair.
At the time of writing, the pair is being traded near 1.0000 which is a psychological level and a confluence of various resistance levels. The pair is expected to start retracement from this level; however a break and daily close above 1.0000 will be seen as very bullish and might threaten 1.0227.
Immediate support can be noted around 0.9916, 23.6% fib level, ahead of 0.9804, 50% fib level. A break and daily close below 50% fib level shall expose 0.9691. Bias for the pair is bullish and will remain bullish as far as the price remains above 0.9590.
Today, Bank of Canada (BoC) is scheduled to announce Consumer Price Index (CPI) – a main gauge for inflation – as well as Core CPI – a relatively more accurate reading for inflation. According to median projection of different analysts surveyed by Bloomberg, CPI ticked up to 1.3% in January as compared to 1.2% in the same duration of the previous year. However, CPI Core remained unchanged in past 12 months as per the forecast. Generally speaking, a higher reading of CPI is considered a positive sign for the economy while a low reading (far from 2%) is believed negative for a country as it creates deflation. So if today we saw better than expected CPI outcomes, that would be bearish for AUD/CAD as CAD will tend to rise after the positive reports and vice versa.
Moreover, Canada’s retail sales data for the month of January is also due in the US session today. Markets are expecting a fall in sales to -0.4 during the previous month compared with 0.6% in a month before
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