USD/CAD Price Analysis: Cushion around 1.3700 looks delicate ahead of Canada CPI and Fed policy

USD/CAD is expressing volatility contraction ahead of Fed inflation and Canada’s inflation.
The USD Index has corrected further to 103.65 as the Fed is expected to go light on interest rates.
A 40.00-60.00 range oscillation by the RSI (14) indicates that investors are awaiting a fresh trigger for further action.

Sagar Dua FXStreet

The USD/CAD pair has found a cushion around 1.3700 after a marginal correction in the Asian session. The Loonie asset is showing an expression of volatility contraction as investors are awaiting the release of Canada’s Consumer Price Index (CPI) data and the interest rate decision by the Federal Reserve (Fed), which will release on Tuesday and Wednesday respectively.

The option for an unchanged monetary policy decision by the Federal Reserve (Fed) is gaining the limelight as banking shakedown in the United States has impacted the confidence of investors dramatically.

Meanwhile, the US Dollar Index (DXY) has corrected further to 103.65 as the Fed is expected to go light on interest rates. S&P500 futures have shown a recovery move after a bearish Friday’s settlement, however, investors’ risk appetite for US equities is extremely weak.

On the Canadian Dollar front, investors are awaiting Tuesday’s Canada inflation data. As per the consensus, the headline Consumer Price Index (CPI) is expected to accelerate by 0.4%, lower than the former release of 0.5%. This might drag the annual headline CPI further to 5.5%. Also, the annual core CPI is expected to trim to 4.6% from the former release of 5.0%.

USD/CAD is auctioning in a Symmetrical Triangle chart pattern on an hourly scale, which indicates a sheer volatility contraction followed by an expansion in the same. The downward-sloping trendline of the chart pattern is plotted from March 10 high at 1.3862 while the upward-sloping trendline is placed from March 14 low at 1.3657.

Overlapping 20-period Exponential Moving Average (EMA) at 1.3724 with the asset price indicates a consolidation ahead.

Adding to that, a 40.00-60.00 range oscillation by the Relative Strength Index (RSI) (14) indicates that investors are awaiting a new trigger for further action.

A decisive breakdown of March 14 low at 1.3652 would drag the loonie asset toward March 07 low at 1.3600, followed by March 03 low at 1.3555.

In an alternate scenario, a confident recovery above March 14 high at 1.3773 would drive the major toward March 09 high at 1.3835 and the round-level resistance at 1.3900.

USD/CAD hourly chart

USD/CAD

Overview
Today last price	1.3717
Today Daily Change	-0.0012
Today Daily Change %	-0.09
Today daily open	1.3729

Trends
Daily SMA20	1.3658
Daily SMA50	1.3497
Daily SMA100	1.351
Daily SMA200	1.334

Levels
Previous Daily High	1.3773
Previous Daily Low	1.3678
Previous Weekly High	1.3828
Previous Weekly Low	1.3652
Previous Monthly High	1.3666
Previous Monthly Low	1.3262
Daily Fibonacci 38.2%	1.3737
Daily Fibonacci 61.8%	1.3714
Daily Pivot Point S1	1.368
Daily Pivot Point S2	1.3631
Daily Pivot Point S3	1.3585
Daily Pivot Point R1	1.3776
Daily Pivot Point R2	1.3822
Daily Pivot Point R3	1.3872

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.

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