USD/CAD drops to session low at 1.3055 after Canadian data

The USD/CAD pair's reversal from weekly high level of 1.3139 gained momentum, dragging the pair to session low level of 1.3055 after the release of better-than-expected Canadian retail sales and CPI report. The pair, however, has managed to retrace few pips to currently trade around 1.3080 region.

According to the data, Canadian retail sales for May registered a growth of 0.2% while core retail sales (excluding automobiles) posted a strong rise of 0.9%. Meanwhile, Canadian inflation numbers for June showed CPI rose +0.2% m-o-m and 1.5% on yearly basis. Both the data points were better-than market consensus estimates and provide the much needed respite for the Canadian Dollar.

Adding to the upbeat data points, rebound in crude oil prices from 2-month low level provided some respite to the commodity-linked currency - Loonie. 

In absence of any fresh economic releases from the US, the pair might continue to benefit from positive releases while keeping close watch on sentiment surrounding crude oil prices 

Technical levels to watch

Weakness below session low support near 1.3070, and a subsequent break below 1.3050, seems to drag the pair towards 1.3000 psychological mark. A follow through selling below 1.3000 handle is likely to turn the pair vulnerable to continue drifting lower towards an important confluence support near 1.2960, comprising of 50-day and 100-day SMAs.

Meanwhile on the upside, the pair now needs to regain momentum above 1.3100 handle, above which it could make a fresh attempt to retest weekly highs and continue trending higher. Above weekly high resistance near 1.3140 region, the pair seems all set to continue with its near-term upward trajectory towards its next major resistance near May highs resistance near 1.3190-1.3200 area.