USD/CAD consolidates after recent gains

The greenback traded unchanged against most of its G10 counterparts in the absence of any market affecting news during the European morning on Thursday. It was slightly higher against AUD and slightly lower against SEK.

·The only economic indicator we had this morning was Germany’s PPI for March, which missed market estimates. Nonetheless, euro investors ignored the figure.
·The loonie traded near its early morning levels waiting for Canada’s CPI data later in the day. Yesterday the Bank of Canada reaffirmed its concerns over the low level of inflation and this gives more weight on today’s data. The figure is expected to show an acceleration in consumer prices. In my view, any declines on USD/CAD after the data may provide renewed buying opportunities as I expect CAD to weaken more in the near future given that the BoC said that a weakening local currency would support the nation’s exports.

·USD/CAD moved in a consolidative mode remaining supported by the 1.1000 (S1) barrier and slightly below the resistance of 1.1050 (R1), near the 38.2% retracement level of the 20th March-10th April decline.
A break above that zone may trigger further bullish extensions towards the 1.1050 (R2) obstacle. As long as the rate is printing higher highs and higher lows above the blue uptrend line and above both the moving averages, the outlook remains to the upside. Only a dip below 1.0955 (S2) may signal that the recent advance was just a 38.2% retracement of the 20th March-10th April downtrend.
·Support: 1.1000 (S1), 1.0955 (S2), 1.0920 (S3)
·Resistance: 1.1015 (R1), 1.1050 (R2), 1.1070 (R3)