FxWirePro: USD/CAD pauses decline, downside risk remains

• The USD/CAD declined sharply on Friday as the Canadian dollar gained strength after stronger-than-expected growth in the Canadian economy supported expectations for another interest rate hike from the Bank of Canada in the coming months.
   
• Canada's gross domestic product expanded 0.6 percent in May on growth in the energy, manufacturing and retail trade sectors, Statistics Canada said, exceeding economists' forecasts for a 0.2 percent rise.
   
• The central bank raised rates to 0.75 percent earlier this for the first time in nearly seven years. Chances of another rate hike as soon as September have doubled since last week to 40 percent, while there is nearly a four-in-five chance of a hike by October, data from the overnight index swaps market showed.
   
• Adding to support for the loonie, prices of oil, one of Canada's major exports, reached fresh two-month highs as investors digested signs of an easing oversupply picture.
   
• Currently, the currency pair is trading at 1.2439 levels, it is set to decline further towards 1.2380 and later 1.2340 levels in the short term.
   
• The immediate support can be seen at 1.2400, break below this level will expose the pair to next support level at 1.2326.
   
• Major resistance can be seen at 1.2511, break above this level will expose it towards 1.2578 levels.
  
  Resistance Levels
  
  R1: 1.2459 (50% Retracement level)
  
  R2: 1.2511 (61.8% Retracement level)    
  
  R3: 1.2578 (July 28th high)
  
  Support Levels
  
  S1: 1.2400 (38.2% Retracement level)    
  
  S2: 1.2326 (23.6% Retracement level)    
  
  S3: 1.2300 (Psychological levels)

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