Baxia Markets
May 21, 2024

USDCAD Bulls Aim for Momentum Ahead of Key Canadian CPI Release

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The USDCAD pair is currently attempting to gain bullish momentum, making a significant push above the 200-period Exponential Moving Average (EMA) and the Ichimoku cloud. The key economic news driving today's market sentiment is the upcoming Consumer Price Index (CPI) release from Canada. Economists are forecasting a lower CPI, which is influencing traders to drive up the USD against the CAD ahead of the news. However, the actual CPI release could introduce more volatility, potentially leading to a reversal if the data comes in lower than expected. Conversely, a higher-than-expected CPI could suggest a weaker USD against the CAD, continuing the bearish trend.


The current market sentiment, based on four major indicators, presents a mixed picture with both bullish and bearish signals. Two short to medium-term indicators, the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI), are showing bullish sentiment. These indicators suggest a potential upward movement in the near future. However, medium to long-term indicators, such as the EMAs and the Ichimoku cloud, remain bearish. This mixed sentiment reflects the uncertainty and potential volatility surrounding the upcoming CPI release.image-png-May-21-2024-08-02-20-6814-AM


The EMA 50 is currently positioned below the EMA 200, which typically indicates a bearish trend. However, a closer look reveals that the EMA 50 is pointing upwards towards the EMA 200. This movement hints at a possible bullish reversal. Traders often look for a "golden cross," where the EMA 50 crosses above the EMA 200, as a strong bullish reversal signal.


The Ichimoku cloud is also in a transition phase, moving towards a potential bullish reversal. The Kijun-sen (baseline) is attempting to break above the cloud. When the Chikou span (lagging span), Kijun-sen, and Tenkan-sen (conversion line) all move above the cloud, it typically indicates a strong bullish sentiment. However, these indicators have not yet fully confirmed a bullish reversal, adding to the current market uncertainty.


As the market awaits the Canadian CPI data, USDCAD traders should prepare for potential volatility. The mixed signals from the key indicators highlight the importance of the upcoming economic data. A lower-than-expected CPI could drive the USD higher against the CAD, reinforcing the bullish sentiment seen in the short-term indicators. Conversely, a higher-than-expected CPI may weaken the USD against the CAD, continuing the bearish trend.


Traders should monitor the EMA 50 and 200 closely for a potential golden cross and watch the Ichimoku cloud for further confirmation of a bullish reversal. The CPI release will likely be the catalyst that clarifies the direction of the USDCAD pair in the coming days.

Key Takeaways

  1. USDCAD is attempting to gain bullish momentum by breaking above the EMA 200 and the Ichimoku cloud.
  2. Today's key economic event is the Canadian CPI release, with a lower forecast expected.
  3. Lower-than-expected CPI could drive USD higher against CAD; higher CPI may result in a bearish continuation.
  4. Short to medium-term indicators (MACD and RSI) show bullish sentiment; medium to long-term indicators (EMA and Ichimoku) remain bearish.
  5. A potential golden cross on EMA 50 and 200 and bullish Ichimoku cloud signals could confirm a bullish reversal if key levels are breached.


Key Economic Releases to Watch Today


Forecast 0.5% vs Previous 0.6%



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