The Latest on USD/CAD: What You Need to Know
Key Points:
- USD/CAD hovering below 1.3500 mark ahead of crucial data releases.
- Canadian economy predicted to show minimal growth in July.
- US PCE inflation data to impact Fed’s interest rate decisions.
In today’s European trading session, the USD/CAD pair is treading carefully below the significant resistance level of 1.3500. While the US Dollar (USD) has seen a slight dip, the Canadian Dollar (CAD) remains slightly stronger. All eyes are on the upcoming Gross Domestic Product (GDP) data release for July at 12:30 GMT.
Economists anticipate a marginal growth in the Canadian economy for July after a stagnant performance in June. The Bank of Canada (BoC) is already expected to continue its policy-easing measures due to a slowdown in inflation and weakening labor market conditions.
Meanwhile, the US Personal Consumption Expenditures (PCE) price index data for August will be closely watched. The core PCE inflation, a key metric for the Federal Reserve (Fed), is expected to show a year-on-year growth of 2.7%, up from 2.6% in July.
This inflation data will significantly influence the Fed’s decisions on interest rates for the remainder of the year. Market participants are anticipating further rate cuts totaling 75 basis points in the upcoming policy meetings.
Technical Analysis:
The USD/CAD pair is currently at a critical juncture near the immediate support level of 1.3400. Recent price action has led to a bearish trend, with a bearish cross of the 20 and 50-day Exponential Moving Averages (EMAs) around 1.3600 indicating further downside potential.
The 14-day Relative Strength Index (RSI) has shifted into a selling territory, suggesting that any pullbacks may be viewed as opportunities to sell by investors.
If the pair breaks below the support at 1.3400, it could target the lows of January 31 at 1.3360 and June 9 at 1.3340. Conversely, a move above the psychological barrier of 1.3500 could propel the pair towards the April 5 low of 1.3540 and the September 20 high of 1.3590.
USD/CAD Daily Chart
Canadian Dollar FAQs
- Factors Impacting CAD:
- Bank of Canada (BoC) Influence:
- Oil Prices:
- Inflation:
- Macroeconomic Data:
Understanding these key factors can provide insights into the movements of the Canadian Dollar (CAD) and its relationship with various economic indicators.