USDCAD higher on the day. Retail sales weak pave the way for a BOC rate cut next week.

The USDCAD has climbed higher during the North American session following weaker-than-expected retail sales earlier today. This, coupled with a weaker CPI earlier this week, sets the stage for a rate cut by the Bank of Canada next week (Wednesday).

Technically, the price has broken above a downward sloping trendline, maintaining the bullish trend established by technical breaks to the upside this week. Earlier this week, the price moved away from the 100-day moving average (MA) at 1.3648, breaking and finding support against the 100-bar MA on the 4-hour chart at 1.3662, and also moving above the 200-bar MA on the 4-hour chart at 1.36867.

Despite these gains, the pair remains within the ‘red box’ that has defined its trading range since early April, bounded by 1.35899 and 1.3803.

At some point, this range will be broken. The trend over the last two weeks has been upward. The key question now is whether the momentum can continue to push through the upper extreme of this range. Will the rate cut help or is is priced in and just lead to a rotation back to the downside. The technical levels outlined in this video (and this post), will help tell the story from the traders.

The high price today has so far reached 1.3747.

This article was written by Greg Michalowski at www.forexlive.com.