|

USD/CAD Price Analysis: Remains subdued near 1.3700 as US Dollar slips

  • USD/CAD struggles to hold the 1.3700 support as the US Dollar edges down.
  • US bond yields consolidate as investors focus on US core PCE Price Index data.
  • BoC’s rate cut prospects remain strong as Canada’s inflation softens significantly in March.

The USD/CAD pair remains feeble near the round-level support of 1.3700 in Tuesday’s European session. The Loonie asset comes under pressure as the US Dollar drops amid improvement in the risk appetite of the market participants.

S&P 500 futures have posted some gains in the London session. The appeal for risky assets improves as investors see no further escalation in Middle East conflict on an immediate basis. 10-year US Treasury yields consolidate around 4.63% as investors shift focus to the United States core Personal Consumption Expenditure Price Index (PCE) data for March, which will be published on Friday. The US Dollar Index (DXY) edges down to 105.96.

The underlying inflation data will significantly influence market expectations to Federal Reserve (Fed) rate cuts, which traders anticipate from the September meeting. The annual core PCE Price Index is forecasted to have softened to 2.6% from 2.8% in February with monthly inflation increasing steadily by 0.3%.

Meanwhile, the Canadian Dollar has consistently performed better against the US Dollar since the last trading sessions. The Canadian Dollar could weaken as investors see the Bank of Canada (BoC) starting to reduce interest rates earlier amid easing price pressures. BoC’s preferred inflation measure that excludes eight volatile items softened to 2% in March, allowing policymakers to discuss rate cuts.

USD/CAD faced sharp selling pressure last week after a rally stalled near 1.3850. The asset rallied after a breakout of the Ascending Triangle chart pattern formed on a daily timeframe. The 20-day Exponential Moving Average (EMA) near 1.3674 will be a major support area for the US Dollar bulls.

The 14-period Relative Strength Index (RSI) returns to the 40.00-60.00 range, which indicates that bullish momentum has concluded for now while the upside bias is still intact.

Going forward, a mean-reversion move to near the 20-day EMA around 1.3674 will offer a buying opportunity to market participants. Investors would find resistance near the 22 November 2023, high at 1.3766, followed by the round-level resistance of 1.3800.

In an alternate scenario, a breakdown below April 9 low around 1.3547 will expose the asset to the psychological support of 1.3500 and March 21 low around 1.3456.

USD/CAD daily chart

USD/CAD

Overview
Today last price1.3699
Today Daily Change-0.0002
Today Daily Change %-0.01
Today daily open1.3701
 
Trends
Daily SMA201.3646
Daily SMA501.3574
Daily SMA1001.3496
Daily SMA2001.3531
 
Levels
Previous Daily High1.3753
Previous Daily Low1.3687
Previous Weekly High1.3846
Previous Weekly Low1.3724
Previous Monthly High1.3614
Previous Monthly Low1.342
Daily Fibonacci 38.2%1.3712
Daily Fibonacci 61.8%1.3728
Daily Pivot Point S11.3674
Daily Pivot Point S21.3647
Daily Pivot Point S31.3607
Daily Pivot Point R11.374
Daily Pivot Point R21.378
Daily Pivot Point R31.3807

Author

Sagar Dua

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.

More from Sagar Dua
Share:

Editor's Picks

GBP/USD clings to 1.3500 amid marginal losses

GBP/USD alternates gains with losses around the 1.3500 neighbourhood on Tuesday. Indeed, Cable struggles to further extend its incipient recovery in a context of continuous instability in the Middle East and modest gains in the Greenback.

EUR/USD alternates gains with losses near 1.1540

EUR/USD navigates a tight range near 1.1550 in the latter part of Tuesday’s NA session. The US Dollar’s vacillating price action accompanies the pair while market participants gear up for the crucial US inflation data due on Wednesday.

Gold loses the grip below $4,400

Gold retreats from its earlier tops and briefly revisited the $4,350 region per troy ounce on Tuesday. The yellow metal’s modest retracement follows lacklustre gains in the US Dollar and declining US Treasury yields across the curve, all amid steady uncertainty from the geopolitical landscape.

Shiba Inu Price Forecast: SHIB extends sell-off despite surging futures Open Interest
Shiba Inu (SHIB) maintains a bearish outlook on Tuesday, as it edges lower at $0.00000450. This marks the seventh day the meme coin has sustained a sell-off, weighed down by a weak technical structure. Shiba Inu derivatives continue to gain momentum, with perpetual futures Open Interest (OI) rising to 11.08 trillion SHIB on Tuesday, from 10.46 trillion the day before.
The inflation narrative is still way more important than the employment story
Core bonds sold off yesterday with the belly of the curve slightly underperforming in the US while European curves showed more of a bear flattening. Daily changes on the US curve varied between +4.7 bps (2-yr) and +6.4 bps (7-yr).
9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?
The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.