USD/CAD Exchange Rate Prediction – The Dollar Drops Despite Solid Housing Numbers

The USD/CAD continued to decline after breaking out and rallying most of last week. Prices are retracing and are poised to test the 200-day moving average. The dollar was broadly lower against most major currencies. New home sales continued a string of better than expected housing data released in the U.S. for July. All eyes are on Jerome Powell, who is scheduled to speak at the Jackson Hole Symposium.

Technical Analysis

The USD/CAD reversed course and dropped for the second consecutive session this week and is poised to give back most of last week’s gains. The greenback continued to remain weaker against most major currencies. Support is seen near the 200-day moving average at 1.2550. Resistance is seen near 1.2626. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. Medium-term upward momentum is decelerating as the MACD (moving average convergence divergence) histogram is printing in positive territory with a decelerating trajectory which points to consolidation.

Housing Continues to Outperform

July was a robust month for home sales in the U.S. Both existing and new home sales rose. The median new house price soared 18.4% year over year to $390,500 in July. Sales of new U.S. New home sales rose 1.0% to an annual rate of 708,000 units last month. Expectations had been for new home sales, which account for a 10.6% of U.S. home sales, increasing to rate of 700,000 units in July. Sales dropped 27.2% on a year-on-year basis in July.