USD/CAD Price Analysis: At make or a break below 1.3400

USD/CAD consolidates below 1.3400 as investors await the US Inflation data.
Bets in favour of rate cuts from the Fed in March may deepen if the US CPI report turns out sticky.
USD/CAD reflects a volatility contraction pattern formation.

Sagar Dua FXStreet

The USD/CAD pair falls slightly to near 1.370 after failing to sustain above the round-level resistance of 1.3400. The Loonie asset demonstrates a sheer consolidation as investors shift focus towards the United States inflation data for December, which will be published on Thursday.

S&P500 futures struggle to hold gains as market mood remains cautious. The US Dollar Index (DXY) drops to near 102.44 despite persistent uncertainty over rate cuts by the Federal Reserve (Fed). 10-year US Treasury yields have slipped slightly below 4.0%.

Investors will keenly watch the US inflation data as it will provide fresh cues about likely rate cuts by the Federal reserve (Fed) in March. According to the estimates, the headline inflation rose by 0.2% against 0.1% growth in November. The annual headline Consumer Price Index (CPI) grew by 3.2% from 3.1% increase a month ago.

Meanwhile, core inflation grew steadily on a monthly basis. The annual core CPI data decelerated to 3.8% against the former reading of 4.0%.

USD/CAD struggles for a direction amid formation of a volatility contraction pattern on an hourly scale near 1.3400. A sharp decline in volatility indicates indecisiveness among market participants amid absence of a potential trigger. Horizontal resistance plotted from December 15 high around 1.3405 continues to act as barricade for US Dollar bulls.

The 50-period Exponential Moving Average (EMA) around 1.3380 continues to provide support to the US Dollar.

The Relative Strength Index (RSI) (14) oscillates in a 40.00-60.00 range, which indicates a consolidation ahead.

Fresh upside would appear if the Loonie asset breaks above January 9 high of 1.3415. This would open upside towards December 3 low at 1.3480, followed by December 5 low at 1.3540.

On the flip side, a downside move below January 5 low at 1.3288 would expose the asset to December 22 low at 1.3220. Breach of the latter would build more pressure on the asset and will drag it towards December 27 low at 1.3177.

USD/CAD hourly chart

USD/CAD

Overview
Today last price	1.3381
Today Daily Change	-0.0018
Today Daily Change %	-0.13
Today daily open	1.3399

Trends
Daily SMA20	1.3324
Daily SMA50	1.3532
Daily SMA100	1.3576
Daily SMA200	1.3481

Levels
Previous Daily High	1.3415
Previous Daily Low	1.3341
Previous Weekly High	1.3399
Previous Weekly Low	1.3229
Previous Monthly High	1.362
Previous Monthly Low	1.3178
Daily Fibonacci 38.2%	1.3387
Daily Fibonacci 61.8%	1.3369
Daily Pivot Point S1	1.3355
Daily Pivot Point S2	1.3311
Daily Pivot Point S3	1.3281
Daily Pivot Point R1	1.3429
Daily Pivot Point R2	1.3459
Daily Pivot Point R3	1.3503

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD trades with negative bias, eyes 1.3600 ahead of UK jobs data

The GBP/USD pair trades with a negative bias for the second straight day, though it lacks bearish conviction and holds above the 1.3600 mark through the Asian session on Tuesday. Traders now look forward to the release of the UK monthly jobs report, which will influence the British Pound and provide some impetus to the currency pair.

Gold sticks to a negative bias below $5,000; lacks bearish conviction

Gold remains depressed for the second consecutive day and trades below the $5,000 psychological mark during the Asian session on Tuesday, as a positive risk tone is seen undermining safe-haven assets. Meanwhile, bets for more interest rate cuts by the Fed keep a lid on the recent US Dollar bounce and act as a tailwind for the non-yielding bullion, warranting caution for bearish traders ahead of FOMC minutes on Wednesday.

AI Crypto Update: Bittensor eyes breakout as AI tokens falter

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

US CPI is cooling but what about inflation?

The January CPI data give the impression that the Federal Reserve is finally winning the war against inflation. Not only was the data cooler than expected, but it’s also beginning to edge close to the mystical 2 percent target. CBS News called it “the best inflation news we've had in months.”

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.