USD/CAD dips on US consumer confidence drop, steady crude oil

<p>The US dollar fell moderately on Tuesday immediately after the Conference Board released its monthly report that detailed a survey of US households with respect […]</p>

The US dollar fell moderately on Tuesday immediately after the Conference Board released its monthly report that detailed a survey of US households with respect to consumer confidence. For July, the Consumer Confidence Index fell to 90.9, well below consensus estimates of 100.1. June’s reading was also revised down to 99.8 from 101.4.

As a leading indicator of consumer spending, this data showed a rather marked deterioration in financial confidence, although it can still be considered reasonably strong.

These results, coupled with relative stability in US crude oil early on Tuesday, helped push USD/CAD down to dip below the key 1.3000 level, around which the currency pair has been fluctuating for the past week.

USD/CAD Daily Chart

 

Last week, USD/CAD reached nearly an 11-year high slightly above 1.3100 before forming a ‘shooting star’ candle, potentially a reversal signal, and retreating.

While a downside reversal may be possible for this over-extended currency pair, however, it should more likely become just a pullback within the strong bullish trend. This may especially be the case in light of a potentially impending Fed rate hike, the Bank of Canada’s recent rate cut, and continued weakness in crude oil.

If a significant pullback does occur, major support remains at the important 1.2800 level within the context of the long-term uptrend. To the upside, any resumption of bullish momentum should continue to target the 1.3200 resistance objective.

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