The pair dipped on Wednesday, extending bearish acceleration from the previous day, after bulls were trapped above daily cloud top.
Upbeat Canada’s inflation data (May CPI y/y 2.4% vs 2.1% f/c; 2.0% prev) showed the highest levels in seven months that is signal for the central bank to hold off on cutting interest rates.
Fresh weakness emerged below daily cloud base and hit support at 1.3337 (daily Tenkan-sen/50% retracement of 1.3239/1.3432 upleg), where fresh bears faced headwinds. Strong bearish momentum on daily chart, with south-heading stochastic support bears for extension towards 1.3313 (Fibo 61.8%), possibly to key supports at 1.3288/75 (weekly cloud top/200SMA).
Formation of reversal pattern after triple failure to break above daily cloud and bull-trap, add to negative near-term outlook.
Broken daily cloud base marks solid resistance at 1.3385, which should ideally cap and maintain bearish bias.
Release of Fed policy decision is expected to provide fresh signals for the pair.
Res: 1.3385; 1.3401; 1.3419; 1.3432
Sup: 1.3337; 1.3313; 1.3300; 1.3275