- Economists expect the US monthly CPI to rise by 0.2%.
- Trump’s import tariffs will affect the Canadian economy.
- OPEC lowered the forecast for oil demand growth this year and in 2025.
The USD/CAD forecast shows a firm consolidation as traders prepare for the US CPI report. Meanwhile, the Canadian dollar remained fragile as oil prices fell on China’s demand concerns.
–Are you interested in learning more about low spread forex brokers? Check out our detailed guide-
Economists expect US monthly CPI to rise 0.2%, similar to September’s rise. Meanwhile, the annual figure could rise by 2.6%, up from September’s rise of 2.4%. The unexpected jump will boost the dollar by reducing the chances of a December Fed rate cut. On the other hand, if inflation misses forecasts, the dollar will retreat due to increased expectations of a rate cut.
Recently, expectations of a Fed rate cut have fallen as traders expect higher inflation with the Trump administration. Trump’s policy proposals, such as tax cuts and import tariffs, will boost US business and increase demand. Therefore, inflation will jump, complicating the prospect of a Fed rate cut.
The Fed has kept interest rates high to reduce inflation to its 2% target. However, if price pressures increase before the central bank reaches its target, policymakers could vote to keep rates at restrictive levels. Furthermore, a continued rise in inflation could prompt the central bank to raise rates. This outlook has boosted the dollar against most of its major rivals, including the Canadian dollar.
Furthermore, the import tariffs will affect the Canadian economy as most of its exports end up in the US. Meanwhile, the bourse was weak on Wednesday as oil prices fell on demand concerns. OPEC lowered its forecast for oil demand growth this year and in 2025 due to China’s weak consumption.
USD/CAD Key Events Today
- Core CPI m/m
- CPI m/m
- CPI y/y
USD/CAD Technical Forecast: Bulls make third attempt at resistance at 1.3951
From the technical side, USD/CAD the price is testing the resistance level of 1.3951. Price is trading above the 30-SMA with RSI above 50. Therefore, the bulls are in the lead. However, they made several unsuccessful attempts to break the 1.3951 resistance. Moreover, the price made a bearish candle that signaled a reversal.
–Are you interested in learning more about AI trading brokers? Check out our detailed guide-
If the price fails to break the resistance, it will fall below the 30-SMA to retest the 1.3825 support level. On the other hand, if the bullish momentum increases, the price will make a higher high, continuing the previous bullish trend.
Do you want to trade Forex now? Invest in eToro!
67% 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.
