USD/CAD advances beyond 1.3500 with US Retail Sales on tap

• The Dollar has accelerated its recovery, buoyed by fading hopes of early Fed cuts.
• The focus today is on the US Retail Sales figures before more Fed officials meet the press.
• USD/CAD is approaching 1.3545, where it might find some resistance
   

The US Dollar is trading higher against its Canadian Counterpart, with downside attempts finding buyers, as investors reassess their expectations of early and aggressive Fed rate cuts in 2024.

The pair pulled back on Tuesday, with the Canadian Dollar picking up following mixed Canadian CPI and weaker-than-expected US Manufacturing figures. Buyers, however, showed up at 1.3450 and boosted the pair to the 1.3500 area after Fed’s Waller reiterated that the Fed is unlikely to trim rates with inflation well above the 2% target.

The focus today is on the US Retail Sales, which are expected to have increased 0.4% in December, following a 0.3% rise in the previous month. After that, a slew of Fed officials are likely to provide further insight into the bank’s next monetary policy steps.

The technical picture shows the pair correcting higher after a two-month sell-off. Price action is nearing the 50% retracement of the mentioned decline, at 1.3545 where it might find some resistance. Above here, the next target is 1.3625.

Immediate support is at 1.3450, and below here, 1.3340.

Technical levels to watch