The Loonie pair faces strong negative pressure to approach testing 1.2725 key support, noticing that stochastic shows clear oversold signals, to support the chances of bouncing bullishly again and resume the main bullish trend.
The US Dollar Index has recently made numerous tries to settle below the support at 98.70 but failed to develop sufficient downside momentum and remained in the 98.70 – 99 range.
Yesterday, the US reported that Producer Prices increased by 0.8% month-over-month in February, compared to analyst consensus which called for growth of 0.9%. On a year-over-year basis, Producer Prices grew by 10%, in line with the analyst consensus.
Foreign exchange market traders also focused on the developments in commodity markets. WTI oil settled below the psychologically important $100 level and tested the 50 EMA at $94.60. In case WTI oil declines below the 50 EMA, it will gain additional downside momentum, which will be bearish for commodity-related currencies, including Canadian dollar.
Looking forward, the US and Canada will report its inflation statistics (Consumer price Index) and later at night the FOMC rate decision which is expected to create waves in the market.
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