- Trading was light on Thursday as the US celebrated the Thanksgiving holiday.
- The core PCE price index increased by 0.3%, in line with expectations.
- The US economy grew by 2.8% in line with expectations.
The USD/CAD forecast points to a recovery in the Canadian dollar stemming from a weakening US dollar and a slight increase in crude oil prices. However, the uptrend remains intact as traders expect Trump’s tariffs to boost the US economy.
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Trading was light on Thursday as the US celebrated the Thanksgiving holiday. However, the Canadian dollar rallied in the previous session amid speculation that Canada could negotiate to avoid the full impact of Trump’s tariffs.
The prospect of a 25% tariff on Canadian goods was weighing on the lunatic since Canada exports nearly 75% of its goods to the US. Tariffs would reduce demand for these goods and hurt the economy. However, experts believe that Trump may be willing to negotiate better terms of trade.
Meanwhile, the dollar fell on Wednesday as Treasury yields edged lower after the US inflation report. The core PCE price index increased by 0.3%, in line with expectations. As a result, markets were more confident that the Fed would implement another rate cut in December. If inflation behaves exactly as expected, policymakers will be confident enough to vote for a 25 basis point rate cut next month.
A separate report found that the US economy grew by 2.8 percent as expected. Moreover, jobless claims were slightly lower than expected at 213,000. A rate cut in December could weaken the dollar. However, the long-term outlook remains bright as markets expect the Trump administration to boost economic growth and inflation.
USD/CAD Key Events Today
Market participants are not expecting any key reports from the US or Canada. Furthermore, the couple might have a slow day due to the US Thanksgiving holiday.
USD/CAD Technical Forecast: Growing Bearish Momentum
From the technical side, USD/CAD the price is pulling back after failing to break the resistance level at 1.4100. Nonetheless, the price is still trading above the 30-SMA with RSI above 50, supporting the bullish bias.
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From the price action on the chart, it is clear that the bears are getting stronger. At the same time, while the price made higher highs, the RSI made lowers. Accordingly, there is a bearish divergence that could signal an impending reversal. However, to confirm this, the bears must break below the support at 1.3951 and the 30-SMA.
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