Current trend

Last week, the USD/CAD pair added 0.85% in value, reacting to the strengthening of the downward dynamics of "black gold" quotes against the background of increased investor concerns about the likely continuation of the "hawkish" monetary policy in the USA and the instability of the Chinese economy: WTI Crude Oil dropped by 2.85%. Since the Canadian economy is export-oriented, the national currency has also lost ground. In addition, the inflation statistics for July turned out to be weak: on an annualized basis, the indicator increased from 2.8% to 3.3%, surpassing analysts' forecasts of 3.0%, and on a monthly basis – from 0.1% to 0.6%. Core annual inflation remained at the same level of 3.2% year-on-year, contrary to preliminary estimates of a slowdown to 2.8%, and production sales in Canada fell by 1.7% in June after an increase of 1.2% earlier and with a 2.0% correction expected by experts, which signals continued pressure in the economy.

The USD strengthened slightly against the background of an increase in the volume of construction of new homes by 3.9%, while industrial production adjusted by 1.0%, and the number of construction permits issued was at the level of 0.1% with a forecast of -1.7%.

Thus, the long-term uptrend in the USD/CAD pair continued, and the trading participants reached the resistance level of 1.3550, in case of its breakout, the next target will be the 1.3655 mark. New purchases of the instrument within the trend may be considered in correction with the nearest support level of 1.3367, from which the upward movement will continue to the level of 1.3550.

Within the framework of the uptrend, the target zone 2 (1.3557–1.3535) has been reached, which market participants are likely to try to break this week. If successful, the next target for purchases will be 1.3791–1.3768. If sellers hold the 1.3557–1.3535 zone, a downward correction will follow to the 1.3348–1.3326 area, from which it is worth considering long positions in the asset with a target at last week's maximum of 1.3570.

Support and resistance

Resistance levels: 1.3550, 1.3655, 1.3830.

Support levels: 1.3370, 1.3139.

Trading tips

Long positions can be opened from 1.3370 with a target at 1.3550 and stop-loss at 1.3305. Implementation time: 9-12 days.

Short positions can be opened below 1.3305 with a target at 1.3139 and stop-loss at 1.3385.