Meanwhile, the USD/CAD (see chart below) has recently been putting in higher highs and higher lows, often after deep retracements which suggests large institutional investors are probably buying the dips. More recently, on Wednesday, the Loonie formed a nice bullish hammer candle at key support and 61.8% Fibonacci retracement at 1.3000/10 area, which correctly pointed to bullish follow-through which took place on Thursday and to a lesser degree today.

The USD/CAD has now tested the backside of the broken short-term bullish trend line and it has reacted there, which makes technical sense. Today’s Canadian data could spark the next move, so watch the short-term support levels at 1.3210 and 1.3140 closely. The key resistance area remains at 1.3295-1.3315 where the previous attempts to break higher have failed. A breakout above this area would be very bullish in my view.