USD/CAD Hits Five-Week Low Despite Supportive Factors – Find Out Why
The USD/CAD pair continues its downward trend, reaching a five-week low around 1.3625-1.3625, despite some positive factors in the market. The drop is driven by falling Crude Oil prices and a slight recovery in the USD, which are not enough to counter the bearish pressure. Traders are now awaiting the Canadian CPI data for potential market moves before the FOMC minutes release on Wednesday.
The decline in Crude Oil prices is attributed to hopes of a ceasefire in Gaza, easing concerns about supply disruptions in the Middle East. Additionally, worries about an economic slowdown in China, a major Oil importer, are contributing to the decline in Oil prices. On the other hand, the USD is seeing a modest recovery from recent lows, supported by expectations of a rate-cutting cycle by the Fed.
The Fed’s dovish stance, reinforced by recent comments from Fed officials, is keeping the USD’s upside limited. The market is closely watching for any hints on the Fed’s rate-cut path, with the July FOMC meeting minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium expected to provide clarity.
From a technical standpoint, the USD/CAD pair has broken key support levels, indicating a bearish bias. The path of least resistance remains to the downside, with a possible retest of sub-1.3600 levels. On the upside, resistance is seen around 1.3650 and 1.3700 levels, with a potential short-covering rally if the 1.3725 level is breached.
In conclusion, the USD/CAD pair is facing downward pressure due to falling Oil prices, USD’s modest recovery, and dovish Fed expectations. Traders should watch out for the Canadian CPI data and upcoming Fed minutes for potential trading opportunities. The technical outlook suggests a bearish bias, with key support and resistance levels to monitor for possible market moves. Stay informed and trade wisely in this dynamic market environment.
