- Tuesday’s presidential debate weighed on the dollar as Kamala Harris came out stronger.
- Analysts expect a cooler price pressure in the US of 2.6% on an annual basis.
- The Canadian dollar lost ground in the previous session as oil prices fell.
USD/CAD price analysis shows a slight move in the middle of a bullish trend as the dollar falls after the US presidential debate. Meanwhile, investors remained cautious ahead of US inflation data, which could provide clues about the prospects for a Fed rate cut.
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Tuesday’s presidential debate weighed on the dollar as Kamala Harris came out stronger. The dollar prefers a Trump victory because tariffs and government spending would increase, raising interest rates. However, after the debate, bets on a Trump victory fell.
Meanwhile, investors remained cautious ahead of the US CPI report. Analysts expect a drop in prices of 2.6% on an annual basis. Meanwhile, on a monthly basis, inflation is likely to remain stable at 0.2%. If price pressures fall significantly, bets on a 50 basis point rate cut will increase, putting pressure on the dollar. On the other hand, if inflation supports the cycle of gradual rate cuts, the dollar could rise. There is currently a 67% chance of a 25 bps speed reduction. The CPI report will provide more clues about the size of the rate cut at next week’s FOMC policy meeting.
Elsewhere, the Canadian dollar lost ground in the previous session as oil prices fell. Demand concerns have put a lot of pressure on fuel. At the same time, Bank of Canada Governor Tiff Macklem gave a speech saying there is a chance for a more significant rate cut if growth falls short of forecasts.
USD/CAD Key Events Today
- Core CPI m/m
- CPI m/m
- CPI y/y
USD/CAD technical price analysis: Bullish momentum stops at resistance at 1.3600
On the technical side, the USD/CAD price paused its growth near the resistance level at 1.3600. The bulls briefly broke the level before retreating below. However, the bullish bias remains as the price trades above the 30-SMA. At the same time, the RSI is in bullish territory above 50.
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If the pullback continues, the price is likely to return to the 30-SMA support soon. However, if the bulls maintain control, it will bounce off the SMA to retest the resistance level at 1.3600. A break above 1.3600 will pave the way for the price to climb to the resistance level at 1.3701.
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