USD/CAD Unfazed By Weak Canada Retail Sales; RSI Divergence Emerges -

USD/CAD Unfazed By Weak Canada Retail Sales; RSI Divergence Emerges

Apr 26, 2017Jeremy ParkinsonFinance0

Currency

Last

High

Low

Daily Change (pip)

Daily Range (pip)

USD/CAD

1.3574

1.3606

1.3543

USD/CAD Daily

Chart – Created Using Trading View

USD/CAD ramped up to a fresh 2017-high of 1.3626 as U.S. President Donald Trump announced plans to implement a tariff on softwood lumber imports from Canada, and the broader outlook remains constructive as the pair largely preserves the bullish trend carried over from the previous year.

However, the near-term advance in the exchange rate appears to be getting exhausted as the 1.3630 (38.2% retracement) hurdle continues to offer resistance, while the Relative Strength Index (RSI) struggles to push into overbought territory; may see a bearish divergence take shape as the oscillator fails to break above 70.

With that said, the limited reaction to the 0.6% decline in Canada Retail Sales suggests the key developments coming out of the U.S. may have a greater impact on the exchange rate, and the U.S. 1Q Gross Domestic Product (GDP) may stoke a further decline in USD/CAD as the world’s largest economy is projected to grow an annualized 1.0% following the 2.1% expansion during the last three-months of 2016; signs of slower growth may also drag on interest-rate expectations as the Federal Reserve warns ‘participants continued to underscore the considerable uncertainty about the timing and nature of potential changes to fiscal policies as well as the size of the effects of such changes on economic activity.’

In turn, a closing price below 1.3560 (50% expansion) may spur a move back towards the Fibonacci overlap around 1.3450 (23.6% retracement) to 1.3460 (61.8% retracement), with the next downside region of interest coming in around 1..3360 (38.2% retracement).

Currency

Last

High

Low

Daily Change (pip)

Daily Range (pip)

AUD/USD

0.7462

0.7554

0.7461