Bearish bias keeps mounting on all currency pairs involving the U.S. dollar. Headline inflation grew more than expected last month, which exacerbated the selling pressure currently affecting the greenback. To read more, check out our latest EURUSD analysis.
Headline inflation in the U.S. grew more than initially expected in September, which added to the selling pressure currently prompted by the global energy crisis that is weighing down on the greenback. The Bureau of Labour Statistics (BLS) just published the September PPI report, revealing that producer prices just climbed to a decade-long peak.
As can be seen on the daily chart above, USDCAD's downtrend continued to gain bearish momentum today following the publication of the report. It was initiated after the previous Ascending Wedge, a type of trend reversal pattern, was recently completed. The MACD indicator illustrates this steadily growing bearish bias.
After having broken down below the 200-day MA (in orange) and the 100-day MA (in blue), the price action sunk to the 61.8 per cent Fibonacci retracement level at 1.23642. This psychological threshold is where bulls stand the best chance of regaining back control.
However, if the price action manages to close down below it, the next target for the downtrend would be the previous swing low at 1.22800.
The consumer price index reached 5.4 per cent in September, moderately above the previous month's 5.3 per cent and also above the consensus forecasts of 5.3 per cent.
Meanwhile, producer prices grew by 8.6 per cent over the same period, the highest level on record since 2010. The 0.3 per cent growth from the month before fell below the preliminary forecasts, which were anticipating a bigger increase in the PPI to 8.7 per cent.