- The US consumer inflation report surprised to the downside.
- US retail sales beat forecasts by 0.0%.
- Price pressures in Canada decreased from 2.9% to 2.7% in June.
The USD/CAD forecast has turned weak as the dollar continues its decline on higher Fed expectations September rate cut. Meanwhile, even though the Canadian dollar is strengthening, investors are more confident that the Bank of Canada will cut rates in July.
–Are you interested in learning more about Forex brokers? Check out our detailed guide-
The US dollar started to fall last week after the consumer inflation report surprised to the downside. As a result, markets went full price in the first US cut in September. At the same time, Powell sounded more confident on Monday about easing price pressures.
As a result, recent upbeat economic numbers have failed to spark a significant rally in the dollar. Namely, data from Tuesday revealed that retail sales beat forecasts of 0.0%. Economists had expected weaker consumer spending, with sales of -0.3%. Following the report, the dollar rallied briefly before resuming its downtrend, boosting the loonie.
Meanwhile, in Canada, inflation data on Tuesday increased the chances of another rate cut by the Bank of Canada in July. Price pressures eased from 2.9% to 2.7% in June, weighing on the Canadian dollar. Moreover, the figure was less than the forecast of 2.8%. After the report, investors increased the probability of a rate cut in July to 90%. This would be the second rate cut to boost economic growth. Moreover, it would indicate strong confidence among policymakers that inflation will continue to fall.
USD/CAD Key Events Today
There will be no key events from Canada or the US. Accordingly, the pair could consolidate.
USD/CAD Technical Forecast: 0.618 Fib triggers retracement towards 30-SMA
On the technical side, the USD/CAD price is pulling back after a failed attempt to trade above the 0.618 Fib level. However, the bullish bias remains intact as the price is above the 30-SMA and the RSI crosses 50.
–Are you interested in learning more about Crypto Signals Telegram Groups? Check out our detailed guide-
Consequently, the pullback could be stopped at the SMA line, which acts as support in the bullish trend. The sentiment will remain bullish as long as the price remains above the SMA. Therefore, the bulls could break above the Fib level to retest the resistance level at 1.3750. Meanwhile, a break below the SMA will signal a reversal that could revisit the 1.3600 support level.
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.
