The USD/CAD pair is hovering near the crucial 1.3600 level, signaling a potential breakdown of the Broadening Triangle chart pattern. Investors are eagerly awaiting Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium, while keeping an eye on the Canadian Dollar’s reaction to the upcoming Retail Sales data for June.
In Friday’s European session, the USD/CAD pair retreated below 1.3600 after briefly touching 1.3616. The Loonie weakened as the US Dollar struggled to maintain its recovery momentum from Thursday, driven by better-than-expected preliminary US S&P Global PMI data for August.
The US Dollar Index (DXY) fell to around 101.30, with focus shifting to Powell’s speech at 14:00 GMT. Powell is expected to provide insights on interest rates and the economic outlook, with expectations of a rate cut at the September meeting but uncertainty about the extent of the cut.
On the other hand, the Canadian Dollar will react to the Retail Sales data for June, scheduled for release at 12:30 GMT. The data is expected to show a decline, indicating lower consumer spending and potential inflationary pressure. This could lead to expectations of further interest rate cuts by the Bank of Canada.
Technical analysis shows USD/CAD on the brink of breaking down the Broadening Triangle pattern, with key support at 1.3600. The bearish trend is supported by trading below the 200-day EMA at 1.3630 and the RSI in the bearish range of 20.00-40.00.
A break below 1.3540 could lead to further downside towards 1.3500 and 1.3456, while a recovery above 1.3750 may push the pair towards 1.3800 and 1.3840.
Analysis:
The USD/CAD pair is at a critical juncture near 1.3600, with key events like Powell’s speech and Retail Sales data driving market sentiment. A breakdown below 1.3600 could signal further downside, while a recovery above 1.3750 may indicate a reversal in the pair’s trend. Investors should closely monitor these developments to make informed decisions in the forex market.