USDCAD Attacks 1.30 Resistance

Retail sales ignored by traders

Following a 2.3% (revised from 2.2%) increase in retail sales in May, Statistics Canada data released on Friday showed that retail sales in Canada increased by 1.1% on a monthly basis in June. This result was better than the market's forecast of a 0.3% gain.

The publication's further data indicated that a 0.2% fall in retail sales is anticipated for July.
 

Technical analysis suggests further upside

Technically speaking, the overnight surge beyond the resistance level of 1.2980-1.2985, which corresponded with the 50% Fibonacci retracement level of the July-August decline, strengthens the optimistic picture. 

On the daily chart, oscillators have shifted towards a positive zone. As a result, investors are expected to buy into dips, and that the USDCAD pair will move upward along the path of least resistance.

If the pair moves through the 1.30 resistance, stop-losses of short positions could be hit, likely helping the USD to advance toward July's highs above 1.3220.

On the downside, if the pair drops below 1.2950, the short-term outlook could turn negative, possibly targeting the uptrend line near 1.2890.