Cheerful engulfing pattern on USD/CAD

Trading volumes were expected to remain thin with markets in the UK, Germany and the US was closed for holidays. USD/CAD hit 1.2308 during early US trade, the session high; the pair subsequently consolidated at 1.2294, adding 0.12%.

The US dollar edged up against its Canadian counterpart yesterday, re-testing its five week highest level as demand for the greenback remained broadly supported by Friday's U.S. inflation data.

The dollar strengthened broadly on Friday after data showed that U.S. core consumer prices rose 0.3% in April and were 1.8% higher on a year-over-year basis, the largest increase since October.

Technical Insights: USD/CAD

A strong bullish candlestick occurred on both daily and weekly charts which resemble the bullish engulfing pattern. This pattern suggests the impetus to spike up in near future.

The oscillating indicators such as RSI (14) and stochastic also suggest converging direction to the price line.

We foretell if the pair breaches the immediate support at 1.2242 levels then the then the downside risks can be seen until 1.1978 levels. Else this pair tends to bounce back to 1.2363 and 1.2455 levels.

Crucial trade points:

S1 - 1.2242; R1 - 1.2363

S2 - 1.1978; R2 - 1.2455