The USDCAD pair faces a potential extension of losses as improving crude oil prices contribute to the downward pressure. Recent candlestick patterns, featuring a shooting star and a bearish engulfing pattern, suggest rejection of upward movement. The market responded with a sell-off, nearing the key support level at 1.3630, with the likelihood of a break if today's US economic news outcomes are mixed or worse than forecasted. Weaker US inflation data and the concurrent rise in crude oil prices are reinforcing the downward momentum for the USDCAD pair, further supporting the Canadian Dollar (CAD).
From a technical perspective, the indicators emphasize the bearish sentiment surrounding the USDCAD pair. The 14-day Relative Strength Index (RSI) below the 50 level indicates a bearish momentum, reflecting weakened market sentiment. Similarly, the Moving Average Convergence Divergence (MACD) with a setting of 5, 34, 5 signals a bearish momentum. As the pair navigates through these economic and technical factors, the outcome of today's US economic releases, including Core Retail Sales, PPI, and Retail Sales for October, will likely play a crucial role in shaping the near-term trajectory of the USD/CAD pair. Meanwhile, Canadian Wholesale Sales are forecasted to remain stable at 0%, compared to the previous figure of 2.3%.
USD CAD Price Action
On the 4-hour chart, USDCAD is encountering challenges in sustaining its bullish momentum. While it found support at the EMA 200, the upward movement stalled just above the EMA 50. Notably, the appearance of a shooting star and a bearish engulfing candlestick pattern on November 10th and 14th triggered a significant sell-off, indicating a shift in sentiment.
Currently, the bears seem to be losing momentum as the USDCAD approaches a key support level, evident in the diminishing size of candlestick bodies. Despite the drop below the EMA 200 and the stochastic reaching oversold conditions, the RSI has not yet entered oversold territory. A slight further decline toward the key support level may push the RSI into oversold conditions.
A decisive break below this support could propel USDCAD to decline further, potentially testing 1.3600 and paving the way for a death cross on the EMA 50 & 200, signaling a strongly bearish market sentiment.
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