On its shorter-term time frame, USD/CAD has been consolidating, as though getting ready for a break in either direction. 

With today’s set of data from Canada, a strong breakout could be in the works.

Canada is set to release its CPI and retail sales data in today’s U.S. session. CPI is expected to be up by 0.4% while core CPI could show a 0.3% uptick. Retail sales are projected to climb by 0.2% while core retail sales could stay flat. Stronger than expected data from both reports could trigger a downside breakout while significantly weak figures could set off an upside break above 1.0400.

A bearish divergence has formed on the 1-hour time frame, hinting that a downside breakout could be more likely. A short order below consolidation and a stop above 1.0400 would yield a good reward-to-risk for an event play.

By Kate Curtis from Trader’s Way