The greenback inched lower against the Canadian dollar on Friday, taking the price to less than 1.1260, ahead of the Canada CPI numbers.
After creating the yearly high at 1.1466 on November 5, the USD/CAD is on its way down to test the 1.1250 handle. The pair opened the Asian trading session at 1.1302. The early hours of the trading session has seen some surge in the price up to 1.1326 but is being dragged down by the bears who look set to take control of the market. However, the overall bias is bullish because of the higher low on the daily chart.
As of this writing, the pair is being traded around 1.1281, heading down to test the support around 1.1270, the psychological number and 23.6% fib level. In case the pair succeeds in breaking this level, the next major support lies in the 1.1120 to 1.1160 zone, as demonstrated by the formation of daily triangle in the following chart. A breakout is likely from the daily triangle as it is getting more and more squeezed with the passage of time. Renewed selling interest could be spurred if the pair succeeds in breaking the 1.1190 support, the confluence of trend line and 50-day SMA.
On the upside, a major resistance can be noted around 1.1360 to 1.1400, the psychological number and high of November 11. A breakout through the said levels could open doors for the fresh multi-year highs.
CAD Consumer Price Index (YOY)
The Canadian CPI remained at 2.1% this October, a bit higher as compared to 2.0% in the same month of the previous year, as per the forecast of different analysts. Scheduled to be released by Statistics Canada during the early US Session, a high CPI is considered positive for the Canadian dollar thus a better than expected figure will further support the bearish momentum in the price of USD/CAD.
As per technical and fundamental analysis, cautious behavior is suggested ahead of the economic releases. A breakout through the daily triangle could offer a great trading opportunity in short to medium term.