Canadian Dollar surges as sharp US Retail Sales miss hits the Dollar

The Canadian Dollar (CAD) surged to fresh two-month lows against the US Dollar (USD) on Friday, settling around the 1.3860 zone. This move followed the release of a weaker-than-expected US Retail Sales report, which dragged the Greenback lower. The Retail Sales fell 0.6% in July, far below the 0.1% growth anticipated and down from a 0.2% increase the prior month.

The Control Group, which feeds into GDP, declined 0.4% compared to a revised 0.4% rise from the previous month. These figures suggest a slowing US consumer, as the data was released amidst a broader economic downturn. Following the release, the US Dollar (DXY) index slipped close to the 99.50 range, prompting traders to believe the Federal Reserve (Fed) would maintain interest rates rather than raise them.

Consequently, USD/CAD traded at 1.3870, displaying a bearish near-term outlook under the 20-period (1.3925) and 100-period (1.4019) Simple Moving Averages. The pair had slipped into oversold territory, as indicated by the Relative Strength Index (RSI) at 25, signaling stretched downside potential without breaching the prevailing downtrend.

On the upside, immediate resistance was observed at 1.3884 and 1.3894, with the 100-period SMA at 1.4019 marking a broader resistance barrier. Should the Canadian Dollar move past these levels, it could ease the prevailing bearish pressure. Conversely, initial support at 1.3864 would need to be overcome for the downtrend to continue.