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Bearish Bias in USD/CAD Dominates - Upward Channel Dominates! 


The USD/CAD was closed at 1.41075 after placing a high of 1.41169 and a low of 1.40182. Overall the movement of USD/CAD remained bullish throughout the day. On Friday, the USD/CAD pair gained despite the strong demand for crude oil that day. USD remained mixed because of the mixed data release. The most important economic release of US Retail Sales for the month of April came in short of expectations and weighed on the US dollar while other economic data came in favor of the US dollar and supported its demand across the board.

The US Retail Sales showed a decline of 16.4% in the previous month while the Industrial Production from the United States was reported to be declined by 11.2%. The Business Inventories also showed a decline of 0.2%, which also weighed on the US dollar.

The Core Retail Sales from the United States for April were dropped by 17.2% against the forecasted decline by 8.6% and weighed on the US dollar. The Retail Sales data for April also dropped to 16.4% against the expected decline by 12.0%. The Consumer Sentiment from the University of Michigan for May increased to 73.7 from the 71.8 of the previous month. The surge in consumer confidence could be attributed to the recent massive government financial aid. Also, the re-opening of the US economy gave consumers more confidence about future economic perspectives, which made the US dollar stronger.

Strong US dollar against CAD pushed the USD/CAD prices on the positive track on Friday. On the other hand, from the Canadian side, at 5:30 GMT, the Foreign Securities Purchases showed a decline of 9.78B during March in comparison to the previous month of 19.42B. Furthermore, the Bank of Canada said that Canada's financial system remained strong even during the coronavirus crisis. According to BoC, the moves to keep the credit markets of country functioning, the financial system of Canada has been very effective.

Meanwhile, the WTI Crude oil prices moved near 30$ per barrel price on Friday, which gave strength to commodity-linked Loonie, but the pair USD/Cad traders ignored it and continued moving in an upward direction at the end of the day week and ended its day with posting gains.

On the technical side, the USD/CAD is trading at a price of 1.4050, and the upward channel seems intact. The bullish channel is providing support to the USD/CAD pair at around 1.4040 level. On the 2 hour timeframe, the USD/CAD has closed three bearish candles below 1.4113 resistance level. Below this 1.4113 level, we may see USD/CAD prices dipping further until 1.4008 level, mainly due to improved crude oil prices. Conversely, a bullish breakout of 1.4112 level may lead to the USD/CAD pair towards 1.4164 level. Good luck!

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