The USD/CAD pair dropped in the short term even if the Dollar Index tried to rebound. It was traded at 1.2916 at the time of writing. Technically, the price could slip lower after ignoring strong downside obstacles.
As you already know from analyses, the Dollar Index is in a corrective phase, that's why the USD depreciates versus its rivals. Fundamentally, the Canadian dollar received a helping hand from the Canadian retail sales data. Retail Sales rose by 0.9% exceeding the 0.8% estimates, while the Core Retail Sales registered a 1.3% growth versus the 0.5% growth forecasted.
Tomorrow, the Canadian CPI and Core CPI could really shake the price. From the technical point of view, the current drop could be only temporary.
USD/CAD Temporary Drop!
You knew from my previous analysis that the USD/CAD pair could drop a little after reaching the 1.3052 - 1.3076 resistance area. Now, it has validated its breakdown below the weekly pivot point of 1.2960 and through the 23.6% (1.2946) retracement level signaling more declines.
The next downside target is represented by the 38.2% (1.2864) retracement level. Also, the 1.2860 immediate low represents a static downside obstacle.
USD/CAD Outlook!
Technically, the current drop could be over around the 1.2860 former low. False breakdowns through this level or a strong bullish pattern could announce a new bullish momentum. An upside continuation could be activated by a valid breakout above the 1.3076. This scenario could bring new long opportunities.
In my opinion, only dropping and stabilizing below the upper median line (uml) could activate a larger drop and could invalidate an upside continuation after a temporary drop.
