- The Canadian dollar hit a 5-week high after the US released its consumer inflation report.
- The US released its retail sales report, which revealed a significant drop from 0.7% to 0.0%.
- Canadian home sales fell 1.7% in April.
The USD/CAD forecast slips into a bearish trend as the dollar hovers near recent lows following a disappointing inflation report. Meanwhile, after rallying alongside US stocks in the previous session, the Canadian dollar retreated slightly.
–Are you interested in learning more about crypto robots? Check out our detailed guide-
On Wednesday, the Canadian dollar hit a 5-week high after the US released a report on consumer inflation. The data revealed a lower-than-expected figure for April, solidifying bets that the Federal Reserve will cut rates in September. The CPI increased by 0.3% in April and 3.4% on an annual basis. This was a decline from the previous month’s readings and gave policymakers confidence that inflation was still on a downward trend.
At the same time, the US released its retail sales report, which revealed a significant drop from 0.7% to 0.0%. This was another sign of the economic slowdown due to high interest rates. That put more pressure on the Fed to agree on a timing for the first rate cut. Accordingly, expectations of a rate cut increased, weighing on the dollar. Meanwhile, the Canadian dollar, which tracks Wall Street, jumped as investors cheered the bad report.
Elsewhere, data from Canada showed home sales fell 1.7% in April. Although the Canadian dollar received a boost from the dollar’s weakness, investors were sobered by the fact that Canada’s economy is also deteriorating. Therefore, the Bank of Canada is likely to implement its first rate cut before the Fed.
USD/CAD Key Events Today
USD/CAD Technical Forecast: Bearish bias strengthens below 1.3650
On the technical side, the USD/CAD price broke below 1.3650, which is a significant support level. The bias is bearish as the price is trading well below the 30-SMA and the RSI is in bearish territory below 50. After breaking below 1.3650, the bulls could initiate a retest of the level before the downtrend resumes.
–Are you interested in learning more about buying Dogecoin? Check out our detailed guide-
Furthermore, the price could retest the 30-SMA resistance line. Notably, the price made a lower low in a significant downtrend with a resistance trend line. So, bears are in charge of big and small moves. Accordingly, there is a good chance that the price may fall towards the support at 1.3551.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
